The Opportunity Cost of Targeting to Death: Part IV of IV - Steve Bookbinder

Previously we discussed how overtargeting potentially costs advertisers in terms of lost conversions and learning opportunities We explored how concerns about overtargeting may be overshadowing the potential data gold mine we get from testing the impact of Grouping Referring and Taxonomy on conversions This week we will look at the fourth consideration Cost of ScalingWhat do advertisers gain from overtargeting Best case is they hope to run an efficient campaign But those marketers may be confusing optimizing with scaling Let39s take a closer look at both if you give me 1 and I return to you 105 you are making money on this exchange and you may seek to optimize the deal Suppose after optimizing you give me 1 and now I give you 110 You keep optimizing and now for every 1 you give me I return 2 You have increased the efficiency by 100 Impressive numbers until you realize that you only made one dollar for all of that work Scaling is when you try to keep that same ratio but increase the original spend from 1 to 10 or to 100 or 1000 In online marketing usually the recipe for optimizing is not the same as for scaling At some point the marketer has to choose between optimization and scale Is it worth more to you if I can back off the optimization from 100 to 90 but increase the scale by 100000monthSimply doubling the ad spend may not double the conversion rate Why not Well for one thing at lower ad spends I can sell you the least expensive inventory which I have in great abundance Or give away my best inventory at a ridiculously low rate just to win a new account Both kinds of inventory are limited If I am a remnantinventory network I buy inventory at various price pointsamp8212some so cheap I can resell it on a CPC or CPA basis But as the advertiser increases the spend we run out of the least expensive inventory and now move into higher priced inventory which we can39t scale at the same ratioamp8230the quotincreasedquot inventory has 2 limitations amp8211the CPM media cost is higher and the inventory is different Different inventory converts at a different rate Inventory which is a blend of various price points will tend to have more higher priced inventory baked into the blend as we attempt to scale We39re usually blending better performing inventory with worseperforming inventory andor higherlesser demanded inventory as well as higher and lower media costs Branded publishers have the same kinds of issues When the advertiser insists on overtargeting that is insisting on a specific combination of demotargeting specificity with preferred placement on specific content they are digging themselves into a hole The more specific the targeting the less inventory there will be The targeting specificity should follow testing of grouping referring data taxonomy optimization and scaling on each site or networkamp8212all of which collectively points the advertiser to the best blend of efficiency and scale of conversions not the other way around How do I know which specific target works best on each site and each network Going to site or network to see how well they can reach an impression goal against a very specific target is missing the point of the game amp8211 make more money than you spend Otherwise the game is a beauty contest of who can reach more of a particular target regardless of the potential of increasing conversions by looking just outside that boxYou really want to help the advertiser or help yourself you are a marketer Targeting should follow testing which needs to be done on a site by site network by network spend limit by spend limit basis and not the other way aroundThe opinions and points of view expressed in this commentary are exclusively the views of the author and do not necessarily represent the views of MediaBizBloggerscom management or associated bloggers MediaBizBloggers is an open thought leadership platform and readers may share their comments and opinions in response to all commentaries

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The Opportunity Cost of Targeting to Death: Part IV of IV - Steve Bookbinder

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