The cost/value equation for data and targeting
Targeting is the backbone of effective media planning: identifying and speaking to the people we believe will buy a brand now or in the future, and trying to limit how much advertising effort is spent talking to people who’ll never buy.
We live in a golden age of targeting, the explosion of digital media touchpoints powered by rich, complex data and technology eco-systems allows us to profile and understand people’s behaviour like never before. This is leading to more effective advertising.
Except, it doesn’t feel like that’s the case.
Earlier this year, Profit Ability 2 was published, a collaboration between Ebiquity, EssenceMediacom, Gain Theory, Mindshare and Wavemaker for Thinkbox. It benchmarks over £1.8bn of recent media performance data from Marketing Mix Modelling (MMM) studies across 141 brands.
One of the striking trends is the relative performance of different media touchpoints on a short-term sales basis (within 13 weeks of the activity).
Potentially surprisingly, depending on your existing predispositions and biases, some of the more ‘data-driven’ channels such as Paid Social or Display are firmly mid-pack from both a return on investment (ROI) and volume perspective.
While Generic PPC shows strongly, this is very much driven by two core sectors – Finance and Travel. Meanwhile, what we would consider as relatively broad, less data-driven channels such as Print, Audio and Linear TV top the ROI table. This is an effect that only exaggerates further if you include long-term sustained brand-building effects.
On first pass, this can feel a little counterintuitive to the industry discourse of how we drive more effective campaigns. While a case can be made that channels like Print, TV and Audio are undervalued in the discourse around effective media planning, these results do present a conundrum for the future.
If consumer behaviour is shifting more to ‘digital’, albeit relatively gradually based on the other findings of Profit Ability, are we destined for a future of decreasing ROIs?
The short answer is no. The slightly longer answer is that we need to look closer at the role of targeting and precision in a media buy. As well as how that interacts with cost and effectiveness. There have never been more targeting options available to media planners, but before they go down that (digital) route they need to do the sums
Target when appropriate
When I started my career as a Direct Response planner back in the late 2000s, it was drilled into me that Direct Response TV (DRTV) was, and is, traded on All Adults. The reason given was that the increased response rate for being more targeted generally didn’t offset the cost of that targeting premium, so you might as well just take the ‘wastage’ for a cheap CPM.
The same principle holds today. The only thing that’s changed is that rather than talking about whether to apply a broad demographic targeting to a TV buy, we’re talking about a myriad of different audience segments. These are informed by a range of different types of data including behavioural, modelled, demographic, attitudinal, geographic and contextual etc.
The challenge that becomes apparent in the Profit Ability data is, at least on average, these are not yielding enough of an uplift in response to offset their cost. This is due to the cost of overlaying those different data sets and their associated technology requirements to move, merge and activate the data in media.
As with most things rather than a binary answer, the ‘right’ approach is ‘yes and’. We should be using data and technology to drive greater effectiveness where it makes sense to do so.
Equally, we should be using broad tactics in other circumstances. The key consideration is the cost of targeting vs its benefit and there are a few things brands should consider to ensure that balance is in check.
- Think broad and narrow down rather than precise and build out.
Often we are tempted to start with a very precise definition of an audience and then build in additional signals. Each of these additional signals adds cost which means the mountain is higher to climb to make those costs pay back. Start by thinking broad and narrowing down to focus on the key data sets that eliminate wastage but still allow us to reach everyone we need to. - Leverage different keys to join data.
One of the big issues in applying data is the technology cost to move, match and process data in a compliant way which particularly impacts ID data. Using different keys to join data – such as geo-keys or contextual signals – can minimise some of the data costs and improve effectiveness. - Calculate your exit CPMs.
A useful sense check is to calculate the exit CPM for your audience. Essentially the CPM for the specific audience you’re trying to reach, not the audience you’re buying. This can provide a more like-for-like comparison between broad buys and more targeted approaches. - Don’t forget about the message.
Being more precise with your media targeting can only improve effectiveness so far. More addressable messaging and a more targeted buy is the one-two punch that maximises effectiveness. - Sometimes it’s fine to just be broad.
If the audience is broad, just buy broad. It’s not always the sexiest recommendation but is often the right one.
Article originally published in WARC
