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Online Marketing Targeting Your Audience (Part 1 of 9)

October 22, 2008

Insights on Targeting

  • “Targeting isn’t an either-or decision, so it’s best to mix and match targeting tactics—especially when it comes to educated, prosperous consumers who simply won’t respond to messages that aren’t personally relevant.”
  • “Though the media available online stretches out to nigh infinity, the number of hours in the day, or the relevance of a particular product or service to an individual at a particular time in that individual’s day, does not. Grocery shopping lacks certain relevance just as I’m arriving to work. Pork resonates more around dinnertime….It is this kind of additional value that can be extracted from the [online] medium if and when it is packaged in dayparts.”

Demographic Targeting

Demographic targeting is, arguably, the longest-running, most widely used concept for targeting advertising. Defining audiences according to their age, gender, income, occupation, and household size is deeply ingrained in marketing. As Jeremy Helfand, a former senior vice president at Advertising.com, wrote for iMedia Connection, “Demographic targeting has its place. It tends to work best for advertisers in broader product categories where links to specific behaviors are less clear. For broad-interest advertisers, such as those selling travel services or consumer electronics, demographic targeting will perform nearly as well as behavioral—and cost less”.
Demographic targeting could do a better job when combined with other types of customer characteristics. For example, Microsoft AdCenter offers the ability to serve ads based on consumer demographics, location, or daypart. Google also recently added demographic targeting along with keyword selection to AdWorks, its paid search advertising program. Richer targeting criteria increase the potential for reaching consumers with better-aimed brand advertising.

Contextual Targeting

Contextual targeting is a new concept for targeting, especially online. It places ads on web pages that have a relationship to the content of the page. For example, shampoo ads are placed in the hair care section of health and beauty sites. Financial products are placed on money sites, and hotel ads on travel sites. Well, you get the picture. Collectively, section pages within such properties, called contextual inventory, sell quickly, sometimes years in advance for prime locations.
Contextual targeting’s appeal is straightforward—be seen in places where large numbers of shoppers go to catch up on events or news and look for information about a specific product category or activity like traveling or cooking. Contextual locations are like a specialized shopping district, such as those in New York City for diamonds, garments, musical instruments, theater, and restaurant supplies, or auto malls in suburban towns. Concentrating buyers and sellers allows for efficient markets and enables the sellers to understand their customers and differentiate themselves.
Besides the expected business benefits of contextual targeting, such as reaching actively shopping consumers, online advertisers value the context, the location, and the editorial environment their ads appear in. According to an eMarketer study, 43% of online advertisers cited the association of the company’s brand with high-quality content as a key benefit. begins to suggest implications for advertising strategy. When planning contextual advertising, consider both advertising relevance and website reputation as they relate to your brand and its product type. Packaged goods marketers, for example, should strongly consider website reputation first and relevance second. More involving products, such as electronics, fashion, or household appliances, to take a few cases, may be served by a sharp focus on content relevance first, then reputation.

Behavioral Targeting

What happens when you surprise viewers by showing them ads in unexpected places for brands that might be relevant to them? That’s the concept behind behavioral targeting, and interest in this targeting approach is building fast. Spending growth more than tripled from $285 million in 2003 to $925 million in 2005, and is forecast to reach $2.1 billion in 2008, according to eMarketer Auto advertisers are early adopters.
On sites like NYTimes.com, individuals in different stages of car buying can be reached in areas that do not have a natural affinity for autos but are of interest to auto-shopping consumers based on tracking their site visiting.
Advertisers and their strategists use these profiles to serve ads that are relevant to individuals across the various sites they visit. Ads for Automaker X may be shown to you on the music site or child care site, or both. This is different from contextual targeting, where ads of the same type of content or subject appear that directly relate to a specific interest—auto ads on auto sites, music ads on music sites, baby products on child care sites.
• Raise Awareness and Brand Knowledge
• Target Purchase Influencer Segments More Efficiently
• Convert Shoppers Who Are Researching a Purchase
• Capture Sales from Website Visitors Who Abandoned a Purchase

Geographic Targeting

National advertising gives 100% coverage, but searches for local products and services claim 27% of all searches. Geotargeting, serving ads to particular geographic areas, is a powerful technique for increasing the likelihood that customers see your ads and find them relevant.
The most precise geotargeting uses site or customer registration databases and ties that data back to market descriptors—such as designated market area (DMA), area codes, time zones, or Global Positioning System (GPS) coordinates, for example—or asks that visitors type in a country, state, city, or zip code to specify a location. Internet protocol (IP) addresses provide some geotargeting capability, but their precision varies and they have limited usefulness.
A new addressing scheme is important not only to better handle domestic U.S. traffic, but also to accommodate international visits. While most traffic to U.S. ad networks originates domestically, visitors from Canada and other countries make up about 15% of the total volume—a number likely to increase as internet adoption rises worldwide. Adopting country targeting allows website operators to tailor pages to Canadian or foreign visitors and address any location, pricing, or language issues (Posman 2001). Travel Alberta, for example, fine-tuned its marketing campaign based on visitors’ locations that it captured through site registrations. Multiple-currency solution provider E4X Inc. offers its e-commerce customers the ability to provide online pricing in the customers’ currency

Daypart Targeting

Radio introduced the idea of daypart targeting—a widely practiced targeting approach for decades. Radio’s morning drive, midday, and evening drive reach most listeners when they’re driving to work or home from work, or during lunch break. Television’s myriad day-parts span the full day, from early morning to prime time to late night. Dayparts vary by medium. Television prime time runs from 8 P.M. to 11 P.M., while radio prime time is the morning and afternoon drive times.
Each daypart has unique audience size, viewer characteristics, and product category affinities that advertisers use to target their advertising messages. On television, for example, syndicated talk shows like Ellen, game shows like The Price Is Right, and soaps like General Hospital typify the TV daytime daypart, generally targeting consumer packaged goods advertising to women aged 25 to 54 with a high school education. The core notion of daypart targeting is timeliness and cost-efficiency—exposing your message to large numbers of the target market at the right time. Now think of advertising doughnuts, floor cleaners, vacations, luxury cars, or beer. Which part of the day would you choose?

Affinity Targeting

We all know there are numbers of sites for any particular interest, whether it’s cars, planes, celebrities, social networking, independent films, music, soccer, or stamp collecting. When someone likes one site better than others in a category and feels a connection with it—an affinity—does it matter? Yes it does, and in ways important to targeting advertising, according to the Online Publishers Association Audience Affinity Study
MBIQ also created an affinity gauge with high, medium, and low levels. The key finding: Websites attract loyal visitors. Fifty-one percent of visitors displayed high affinity for the sites on which they took the survey. Forty percent exhibited medium affinity. And the low-affinity group? Just 9%.
High-affinity visitors distinguish themselves in a variety of important ways.

  • They spend more time at the site. One-third spend more than 60 minutes per month. That’s not a self-reported figure; it’s based on actual measured usage.
  • They’re more favorable to the sites. On all attitudinal statements, there is a clear pattern of increasing favorability from low affinity to high affinity. Especially, high-affinity visitors are more likely to view sites as high in quality, relevance, content freshness, and features, and informative for researching purchases. Moreover, they perceive the sites as less cluttered.
  • They’re more favorable to advertising. High-affinity visitors agree that what are advertised are relevant, respected, quality products and services. (

All of these factors finally result in greater purchase/behavior intent, and lend support to the findings we discussed earlier on the importance of relevance and website reputation.

Purchase-Based Category Targeting

Purchase-based targeting is one of the newer targeting approaches made possible by online tracking of consumer behavior and integrating that information with related data. Purchase-based targeting serves ads to web surfers whose online personas suggest that they are in a brand’s target market. This targeting approach begins with a careful study of a brand’s segments and then identifies characteristic qualities they exhibit. Then, marketers look for a distinctive finger-print of online behaviors that predict that characteristic. Marketers might want to target the heavy half of category buyers or brand-loyal consumers, for example. “Heavy shaving gel users,” ACNielsen researchers explain, “spend a great deal of time at sports sites, online auction sites, and automotive sites, but spend very little time at bulletin board sites. Low-carb product users spend more time at health and wellness sites”

Key Considerations in Online Targeting

The best targeting strategy means little if the underlying data are weak. A number of factors may compromise data integrity. Gaps exist due to limited information, as we mentioned regarding geotargeting. Accurate tracking usage for individuals can be hard to collect when computer sharing occurs in homes, at work, or in public spaces like internet cafes and libraries. How can click-stream analysis differentiate children from their parents or siblings, or users from roommates, co-workers, or other library patrons? Who’s the user? Adware and spyware protection programs routinely remove tracking cookies, and pop-up blockers are included in browsers and search company tool-bars. Reach and frequency projections from syndicated research and actual campaign delivery vary from one to another .
The online data industry knows about these issues and diligently works to resolve them. DoubleClick, for example, commissioned studies by three media research companies to develop and share methodologies for improving postcampaign reports on target demographics. Advertisers learned to be eternally vigilant about offline media research and demand quality and accountability. The same needs to be true for online research. The quality of your online targeting and marketing depends on it.
Looking beyond data collection and data integrity, the new targeting capabilities available make it possible to overdefine your market. It’s possible, for example, to serve your ad only to people who have been to your site three times during the early news hours who clicked on it. In most cases, you wouldn’t do that (would you?), but we want to make the point that emphasis on too much precision can be a risk. You may be advertising to your most responsive customers, but they may represent only a small slice of your customer base. Because ad networks often charge premiums for such precision, those relatively few customers or prospects will be expensive to reach and may not generate sufficient revenue to achieve business goals.

Summary

  1. • A primary benefit of online advertising is the ability to locate precise groups of consumers who are current customers or attractive prospects for your brand. Often successful targeting strategies are those that combine several classic methods of selecting a profitable audience. It might be geographic markets combined with purchase patterns for a regional retailer; or it could be a demographic segment such as male office workers and the lunchtime daypart for a fast-food chain.
  2. • Targeting strategies must support your marketing objective. We’ve seen various targeting approaches work toward achieving branding goals, prompting direct response actions, and stimulating offline sales. These targeting approaches tied to key objectives included customer acquisition (Hollow Man), new product introduction (KFC Popcorn Chicken), increasing favorability and purchase intention (Budweiser), and customer retention (Pepperidge Farm Milano).
  3. • Each targeting approach provides marketers with different consumer lenses. Demographic targeting defines customers in terms of personal characteristics (their age, gender, and income) and therefore is best for broad usage categories. Contextual targeting looks for shoppers with interest in a category or subject matter related to your brand. Behavioral targeting describes online usage patterns of potential buyers. Daypart targeting is life- and work-style oriented. Geographic targeting overlays customer location data onto products and services categories and is particularly valuable for local business objectives. Affinity targeting reaches people where they congregate around shared interests. And purchase-based targeting looks to predict your best prospects based on their online behaviors.
  4. • The most popular way to target with online advertising is to select a “good fit” content site (or microsite) that matches the subject of your product or service, such as a site on fishing and your desire to sell rods and tackle, and ones with good reputations from your consumers’ perspective. This targeting strategy has demonstrated that not only does it find interested and motivated customers, but the engagement in the content of the site, or its halo effect, enhances the engagement in the specific brand advertising.
  5. • A much newer targeting approach, unique to the internet, is based on tracking internet site behavior, via a cookie, of an attractive customer and placing your ad in a highly visited site by that customer (which may have content unrelated to the product/service category). For example, a prospective car buyer may often visit a weather site. Thus, the weather site offers an excellent targeting opportunity to reach that prospective car buyer. The engagement in the specific ad often occurs because it is the only car ad on the site and benefits from the surprise.
  6. • Success in generating growth via targeting involves linking the targeting approach to the overall marketing goal. Simply selecting an interesting targeting approach without linking to the marketing goal will lower the chances of sales success. Daypart and behavioral targeting, for example, are good for expanding brand awareness when that is your primary marketing goal. If your goal is to generate good-quality leads for the brand, contextual and demographic or category usage profile combinations often work best. And if your goal is to remarket to customers, behavioral targeting is a good candidate. We would like to stress that these are not hard-and-fast rules, but serve as examples for matching targeting strategy to marketing objectives. Marketers should find the best fit for their brands.

The key is that the more information you have on customers or potential customers, the more innovative, cost-effective, and successful your targeting strategies can be.

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