Marketing and Research Consulting for a Brave New World
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I’m sure most of you remember the movie Pleasantville, where happiness was an illusion because the town had set its sights on happiness in a black and white rendition of a world that was ready for full technicolor. Recall the great scene when William H. Macy comes back home after work announcing “Honey, I’m home…” and no one answers…

So when an article in Ad Age by Jack Neff reported growing adherents to the Ehrenberg Bass Institute’s (EBI) belief in mass marketing and the destructive path of precision targeting, it felt to me like it was the court room scene that was a last ditch attempt to preserve the way things had been in Pleasantville.

The reality is this. Digital ad spending, with persistent double digit growth, now exceeds TV.  The fastest growing ad sectors within digital are programmatic and mobile (20% annual growth rates or more).  Three-quarters of digital display advertising is triggered by bidding rules for precise segment targeting. Digital marketing is growing because of the very promise that is being downplayed by mass marketing firsters…precision targeting of segments and moments attacks the problem of significant media waste in top down mass media. Marketers are telling you where marketing practice is headed by voting with their ad dollars…to digital, to segment targeting to technicolor.  Follow the money.

More facts in evidence…recent white paper research I conducted with Viant and NCS proved that recency targeting (getting the ad message to the consumer close to an upcoming purchase) doubles ad effectiveness with no loss in reach.  Clearly, that form of targeting works! Furthermore we found that targeting heavier users of the brand produced another multiplier to ad effectiveness.  Combining the two, you can achieve as much as ten TIMES (yes a multiple, not a percentage), more return on advertising.

I imagine that the EBI response would be, “But targeting your own users will not build penetration which is highly correlated to market share.”  Not completely true…actually, just because someone bought your brand over the past 12 months there is no guarantee they will buy it during the next 12 months. Certainly, there is no guarantee that a loyal buyer one year is loyal the next.  About 8 years ago Catalina found that the year to year retention rate of loyal buyers was only 50%.  This conformed exactly to my own research ten years earlier while at NPD using the BrandBuilder model and recontacting the same respondents one year later (35+ brands in my study and one of the most read and cited JAR articles over the past 20 years).  Loyal buyers still require marketing reinforcement! Also, note that a brand’s share is just as correlated to the size of its loyal core as it is to penetration.  Hendry proved that way before Ehrenberg Bass stuff gave the industry a misdirect play away from loyalty to penetration. I confirmed it while at Unilever leading the US analytics function. Forget your own best users at your own peril, and shame on you if you do eliminate loyalty programs and communications with loyal buyers.

Now let’s talk about conquesting; even there, precision targeting is still a major weapon.

In partnership with Marketing Evolution, I have created a new system for new product success called MoreCastR.  It is all about identifying a segment of consumers who are high propensity triers and targeting them.  Now, existing brands have high propensity triers too! Consider a brand with 10% penetration among category buyers.  If we apply MoreCastR math to existing brands it is easy to imagine that the method will identify a sub-set of maybe 20% of the remaining 90% of non-buyers who are high propensity triers for this existing brand and are likely to respond at 2-3 times the rate to marketing communications vs. non-buyers who are out of scope. So precision targeting of segments also is the right strategy for building penetration.

While I believe in the power of precision targeting, I also believe in TV and radio. they tell the best brand stories and create demand and desire.  Even traditional media channels like TV and radio are not anchoring marketers to old marketing practice because those channels are embracing advanced audiences…the ability to target an audience that looks like the kind of segments available for targeting in digital…defined by interests, behaviors, and preferences, not just demos.  In fact,  TV and radio MUST move to precision targeting approaches or lose to online video and streaming audio over time.

Targeting precision segments is a marketing force, but every action has a reaction.  Marketers need to validate 3rd party segments available for targeting.  How do you know how good an auto intender segment is? How was it validated?  There is a lot of looking under the hood needed…but that is simply a new analytic challenge as marketing transforms which keeps things dynamic and exciting for us research and analytics professionals.

Recall words from Irwin Gottlieb (CEO Group M)…”Marketing has to look a lot more like digital; it can’t go the other way…” Let me add, and “digital is all about moving from mass marketing to targeting segments and moments…building reach from the bottom up.”

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