The Future: Tiered Targeting

Between that time and now most of the intervening decades have been described by some as the longest periods of economic growth in history The thing about sustained economic buoyancy is that it trains us that we can be sloppy and still succeed Therefore the survivability of bad practices has persisted for a long time The key identifying characteristic of bad practices is oversimplification We have stuck with the idea of binary targets for far too long because we could get away with it the economies supported us despite every sloppinessOne overhears conversations at Michaelamp8217s where everyone in the industry goes to lunch when they are in New York debating whether products used by nearly everybody really need targeting and some advertisers are known to pendulum swing from being pro to antitargeting about every decade or so These are signs of oversimplification Please be wary of such signs They are clues to opportunities for pragmatic improvement in success ratesThe economic conditions today are much more challenging to established companies Although trusted brands retain considerable value distrust has been on the rise for decades and today is so prevalent that new startups have a tailwind in every field The brands that most need to shed the old sloppy ways and to adopt the most pragmatic proven practices are the biggest brands They know they are wasting terrific amounts of money but they are blind to the solutions staring in their facesFor example they have finally realized that they are delivering excess frequency they have spent five years so far building hegemony around models that make weak predictions of reach and frequency that are no better than Sainsbury and Agostini formulas of the 1960sThe latest bandwagon of Attention has finally somewhat focused their attention on the fact that not all impressions have equal sales and branding effect To a pragmatist not eager for oversimplified overhyped amp8220solutionsamp8221 this would cause them to think about how to maximize the impact of each impression amp8211 which is by aligning the ad and the media environment most carefully amp8211 and by targeting people who are most likely to be positively responsive to an ad amp8211 which can be done two ways at the same timeDetect the subconscious motivators in the ad and send the ad to people known to have those motivations most stronglySend the ad to the types of people that have shown the highest tendency to salesrespond to ads in generalYou can see in the items 1 and 2 above that there are at least two types of targets that ought to be used in every campaign amp8211 returning full circle to where we started with Jack Hillamp8217s idea which incidentally he called amp8220targetnessamp8221 Targetness might be quantified and measured as the potential to contribute to payback on the ad investmentFor example letamp8217s take a CPG brand TRA found that 80 of all incremental sales made by advertising for a CPG mature brand were made by Heavy Swing Purchasers HSPs amp8211 people who already bought the brand occasionally amp8220Swingamp8221 and spent a lot in the product category amp8220Heavyamp8221This suggests that the bullseye target for a CPG brand are those HSPs whose subconscious motivations align with those in the specific creative executions being used in the campaignAnd the closest target ring to the bullseye are those people who fit one of those definitions but not the otherThe next target ring out might be people who are either heavy purchasers in the category or have motivations aligned with the adThe ring surrounding the latter ring might be other people who buy the category but are not 100 loyal to one competing brand thus apparently persuadable such amp8220frequent shopper cardamp8221 data in the US are available for more than 86 of all CPG all commodity volume over 100 million householdsThe penultimate ring might be all other people known to buy the categoryThe outermost ring would contain all the other people in the countryTRA data show that advertising every once and a while actually causes sales in that outermost ring The short term ROI is very low and typically negative you lose money for a while but in the long run bringing in someone new to category in general pays off eventuallyThe math available today enables optimizing the amount of money you allocate to each of those targets If you set it to optimize against 36month sales you can find a reasonable balance between sowing short and longterm branding and reaping shortterm sales performanceNow that we have AI clean rooms data science vast amounts of privacy protected deterministic big data and cookieless identity solutions are we going to continue to focus doggedly on lowest CPM and crude heuristics and footrules handed down from a century back That will not cut it for big brands in the current economic and social climate of antibigness and changeseeking Itamp8217s time to do it the right waysStreaming is addressable TV so soon all TV will be addressable Twothirds of the US population can already be reached by addressable TV and 95 are reached by addressable digital so the degree of targeting recommended above is totally achievableFunny the people who would gain the most by investing in studies to prove the above points beyond the shadow of a doubt are the television networks and MVPDs The more they can learn to work together the JIC proves it can be done the sooner they can take back potentially 20 billion a year from digital adspend 2024 forecast US digital adspend 298B US TV adspend 61BWhy do we say this Because addressable TV was invented to lower the CPM against the target Thatamp8217s what addressable TV can do but only if the buy side is actually using sophisticated targeting If the buy side is aiming to reach a broad demographic the math doesnamp8217t work out for addressable TV If they are buying a base layer against a broad demographic they can use linear and all sorts of media for that but then layer on sophisticated targets that have higher short and longterm payback per dollar and use addressable media for the high payback layers Then the economics work out very well a win for both sellers and buyers Continuity and recency can be achieved for the higher payback layers and the low frequency in the base layer can be impactful by context effects which if done in a sophisticated manner work even at very low frequency If context effects are checkthebox dealt with in an oversimplified overhyped manner their effects will unfortunately tend to cluster below 15 when they can be 2X to 5X among the lowfrequency groupamp160amp160Most of the financial pain to the television industry of the conversion to streaming stems from the reduction in commercial load from 1014 minutes per hour down to 6 minutes per hour The only solution is higher revenue per minute which if done with addressable TV and sophisticated targeting and a small fee for ad program alignment can keep buy side CPMs and eCPMs steady while netting much more for the seller The trick is to charge a lower eCPM for the high payback groups than the brand is now paying to reach those groups within the context of linear buysSophisticated targeting and context alignment also make it possible to prevent excessive frequency if the television industry collaborates together so that frequency capping works across the entire TV buy In an earlier article I show that it takes 18002800 GRP to get over 90 reach but using addressable TV to target those not reached by the first 400 GRP can achieve over 90 reach at far lower GRP costWhen my company Next Century Media brought a productized system of addressable commercials to the television industry in the 1990s there was no pressing need I warned that digital would take away many dollars if TV didnamp8217t introduce addressability firstToday there is a pressing need and a pressing opportunity for a winwin for seller and buyer All we have to do is to give up on oversimplificationPosted at MediaVillage through the Thought Leadership selfpublishing platformClick the social buttons to share this story with colleagues and friendsThe opinions expressed here are the author39s views and do not necessarily represent the views of MediaVillageorgMyersBizNet

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The Future: Tiered Targeting

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Bill Harvey

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The Future: Tiered Targeting

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