As the world moves inexorably digital, Marketers increasingly want to understand how to improve the effectiveness of their digital ad spending.
Digital Metrics and Ad Effectiveness
In many ways, the digital revolution has been its own worst enemy—at least for brand advertisers. Supposed great advances beyond TV metrics like the focus on direct click-thru rates and other digital specific measures were anything but. I would argue that they’ve sometimes slowed the move of ad spending to the digital medium.
Let’s take click thru rates. For example, it’s now been well documented that for CPG brands click thru rates do not correlate with off-line sales. So, why do so many marketers still talk about click-thru?
Digital Advertising Objectives – Building Brands and Increasing Sales
What do brand advertisers want ? They want to build their brand and improve their sales and advertising ROI. How do they do this in the digital world ?
One new advance is the use of buyer behavior based targeting. New research shows that CPG advertisers can generate about a +20% improvement in average sales lift when their on-line advertising is delivered to consumers using purchase based information to better identify the most responsive consumers.
Now CPG brand marketers know two things with certainty:
- Brand focused on-line advertising drives off-line sales.
- Buyer behavior based media buys generate even stronger Sales lifts.
Purchaser Based Data – What is it ?
So, what is “purchaser based data”? Simply put, it’s using consumers past purchase behavior to identify consumer groups which are most responsive to your ads, and then targeting future advertising against these kinds of consumers.
For example, the CMO of Brand X discovered that heavy category users who were light buyers of her brand were much more responsive to Brand X advertising: they accounted for only 20% of the impressions delivered, but 80% of the sales lift due to the advertising.
Other buyer groups received 50% of the impressions, but accounted for almost no sales lift—e.g. Brand X’s spending on ad impressions against this group was a complete waste.
The central insight was this: Brand X’s media plan was comprised of many TV shows and web sites that were under represented by these highly responsive heavy category/light brand buyer consumers. In addition, there were many TV programs and sites that were over represented with these highly responsive consumers that were nowhere to be found in the brand’s media plan. Read this as ” big opportunity.”
Brand X’s CMO worked with her agency to plan and buy against programs and sites that had heavy concentrations of the heavy category/light brand buyer target—and generated a much higher sales lift by spending against those consumers who are most responsive to the advertising. Buyer behavior based targeting works– just like that.
Additional Buyer Behavior Based Targeting Learnings
So, what else have we learned about buyer behavior based targeting in the on-line space?
- Sales lift differs by category – OTC and health and beauty categories are even more responsive to buyer behavior based targeting than other categories.
- New products get an even larger sales lift – new products averaged about +30% sales lift using buyer behavior based targeting, vs. about +20% for existing products.
- Both small and large brands benefit from buyer behavior based targeting – this is especially good news for small brands which often find TV unaffordable.
With $1 of every $10 ad dollars now being spent on-line, and expectations of even more in the future, CMO’s can get a lot smarter about how they spend their on-line dollars by using buyer behavior based targeting.
So, if you’re a brand based advertiser, throw out the clicks and bring on the buyer behavior based model. After all, it’s only about 20% better. Go tell that to your CFO.