Marketing and Research Consulting for a Brave New World
Subscribe via RSS

“For decades, marketers have been operating under the assumption they need two audience strategies: One to fulfill short-term goals (hyper targeted) and another to cultivate long-term performance (broad reach). But new research from TransUnion and MMA Global has proven this to be a myth.” Emiko Seale, Sr. Director, The Knowledge Lab, Marketing Solutions, TransUnion.

(I urge you to download the whitepaper: https://gag.gl/XQTw4m to learn more about building an audience strategy with Movable Middles at the foundation.)

Permit me to share the math of why this result was to be expected. For a less mathy explanation, please go to my LinkedIn blog.

First, the findings from Ally study. TU continued to analyze the Ally “brand as performance” data with a new question in mind. Which collection of their 16 TruAudience rollups would be the top priority if following a Movable Middle based audience selection strategy?  (This was based on on-boarded Dynata survey data where we flagged survey participants as Movable Middles.) With separate continual feeds of ad serving and conversions mapped back at an ID level, they were able to see if those Movable Middle-rich audiences actually outperformed other audience collections that would be chosen by following other strategies. 

Results proved that Movable Middle audiences delivered more short term incrementality AND brought more new customers to the bank over 18 months after the campaign ended.  The table below shows the degree to which Movable Middle audience selection outperformed other strategies (for full list of alternative strategies tested, see white paper).

 Movable Middle outperformed the comparison strategy by an index of…
Comparison media strategy3 month account openings18 month new customers to the bank
Choose audiences based on key demos350270
Broad reach (across all audiences, proportionately)260240

The mathematical basis for why targeting Movable Middle audiences leads to more new customers. 

The Movable Middle Growth Framework is based on two types of marketing math:

  1. The Beta distribution accurately models (r=.99 across 45 brands from 7 product categories as per Numerator data) the distribution of consumers’ choice probabilities for any brand. In turn, this statistical distribution causes a strong positive correlation among:
    • market share
    • Movable Middle size
    •  The average probability that low loyal consumers will choose your brand.
    • (Note:) These correlations exist across brands and across audiences for the same brand.
  2. The calculus of ad response which says that the probability that a consumer responds to advertising is proportional to p*(1-p) (literally the first derivative of the logit function, most used in MTA modeling.) This math has been proven out in 11 out of 11 real world experiments I have been involved with.

Now, when you put these principles together, we see why targeting Movable Middle audiences leads to more new customers.  Across audiences, the higher the concentration of Movable Middles, the higher the average probability that non-buyers will buy your brand. And because of this non-buyers should have higher responsiveness to advertising.

Illustration. Consider an audience where a brand has a low share and where non-buyers have only a 1% chance of choosing your brand.  Now contrast that with an audience where the same brand has a bigger market share and where the average probability of choosing your brand among non-buyers is 3%.  This doesn’t sound like a big difference, but it is. Using our p*(1-p) ad responsiveness expression, we can approximate that prototypical non-buyers in the higher Movable Middle audience should be 2.9 TIMES more responsiveness to advertising vs. prototypical non-buyers in the low Movable Middle audience…similar to our actual Ally case study results!

Conclusion: reach based media planning equals engineered waste.  I know that many marketers are obsessed with reach (the WFA, ANA, and Kantar have initiatives to measure this), especially when it comes to “upper funnel” campaigns…but the marketing assumption is proven to be faulty. Your best bet, regardless of performance vs, brand building goal, is to direct disproportionately more ad impressions to audiences with high concentrations of Movable Middles.

Marketing is not like slicing off a chunk from a loaf of bread where you get more in a bigger chunk.  At some point, as you strive for more reach, you are moving ad impressions from high Movable Middle audiences to low Movable Middle audiences…not a good deal.

When you solve your media plans for reach, you are NOT solving for either performance or customer growth which is what the marketer really wants to achieve with their ad dollars.

Tags: , , , , ,

Comments

Leave a Reply