The Data Vortex: Are We Actually Limiting Our Marketing?

Feb 26, 2019

Data is ubiquitous in digital marketing, enabling precise 1:1 connections. But is a hyper-targeting approach the best strategy for driving long-term sales?

As digital media customers, we provide a few pieces of personal information, such as name and zip code, in exchange for free (generally, ad-supported) entertainment. As marketers, this data is golden and allows for pinpoint targeting while limiting waste. However, as marketers strive to get in front of their target customer, they may be missing out on a more strategic opportunity of connecting with long-term prospects that can drive sales exponentially.

The Case for a Full-Funnel Audience Approach

In “The Long and the Short of It”1 Les Binet and Peter Field make the case that marketing to a known customer base allows for short-term sales effects, while reaching longer-term prospects enables broad, but slower effects—yet bigger paychecks. Binet and Field conducted a meta-analysis of 996 campaigns across 83 categories to compare these effects:

3863 insightsLab broadAudienceStrategy r2 effectiveness

As you can see from the above graph, targeting the whole market, compared to only existing customers or only new customers, allows for far greater brand effects and annualized excess share of voice (ESOV).

In addition, we see the benefits of reaching the whole market on the bottom line. A separate analysis in “The Long and the Short of It” measures the impact on profit when marketing to either existing customers, non-customers, or the whole market. We see that when taking into account both the revenue from these groups, as well as the associated marketing and other costs, reaching the whole market proves to be the most profitable strategy:

3863 insightsLab broadAudienceStrategy r1 profit

The research conducted by Binet and Field supports a marketing strategy that reaches known customers as well as long-term prospects in order to see the greatest impact on brand effects and profitability.

Analysis From CPG Campaign on Pandora

Short-Term Gains From Known Customers, Large Incremental Lift From Long-Term Prospects We saw similar effects from the Binet/Field study in a recent CPG campaign on Pandora that was seeking to measure sales lift. The brand targeted four different audience segments that ranged from precise known customer targeting to broad interest-based reach:

3863 insightsLab broadAudienceStrategy r2 funnel

To measure, Pandora enlisted Oracle Data Cloud, a third-party partner that matches online campaign exposures to offline purchase transactions using a test and control modeling approach.

Consistent with the findings from Binet and Field, the short-term analysis of the CPG brand observed the greatest amount of sales from its Known Brand Buyers, followed closely by the Lapsed Buyers segment.3 However, the segment that provided the largest incremental lift in sales was the Lifestyle segment, its broadest audience, which saw a 6% lift in sales and accounted for over 70% of the incremental sales observed in this study. In analyzing the number of households that purchased the product, the largest lifts were observed by the Lifestyle segment, at 6%, followed closely by the Competitive Buyers segment.

Had the CPG brand exclusively targeted its Known and Lapsed Buyers, the brand would have seen consistent sales volume, but may have limited their long-term brand effects and profitability with prospective customers. Now having converted many longer-term prospects into active customers, and continuing efforts to convert more long-term prospects into active customers, sales will multiply at a magnitude that would have been challenging to reach by just messaging Known Buyers alone.

Takeaways: What’s Your Targeting Funnel Strategy?

There are different schools of thought when it comes to how broad or narrow to target customers. While some argue that precise targeting brings about efficiencies, others believe mass reach enables a brand to get in front of current and prospective customers. Fortunately, with digital media, you can do both.

As we’ve seen from both the Binet and Field research and the recent CPG study on Pandora, a full-funnel approach with distinct target groups and messaging supports both short-term and long-term success. Consider the following for your next campaign:

  • Message current customers to keep your brand top of mind
  • Reach a broader audience (long-term prospects) to build brand awareness and drive new customer conversions.
  • Develop creative to connect with each of these segments in a way that feels personal. Consider using sequential messaging for new audiences who may benefit from a larger brand or product story. Current customers may benefit from simple messaging, such as short-form audio, to keep top-of-mind awareness.

Finally, develop a measurement plan to account for your targeting and media strategy. Track how sales volume is impacted by marketing efforts in the short term and long term across different cohorts (Known Brand Buyers through Long-Term Prospects), where short term and long term are relative time intervals based on your category’s sales cycle. Reviewing this data and analysis on a consistent basis allows for optimization decisions to continue to improve your media, creative, and targeting strategies.

  1. Binet, Field. The Long and the Short of It: Balancing Short- and Long-Term Marketing Strategies, IPA, (2013)
  2. Nielsen, “Budgeting for the Upturn - Does Share of Voice Matter”
  3. The Oracle Data Cloud analysis is based on estimated household lift and incremental value at the end of a four-week period.
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