July22TargetingWorksOver the past two decades, Analytic Partners collected a vast quantity of marketing intelligence across industries and countries which comes to life in the ROI Genome Reports. By understanding and quantifying how factors such as brand health, marketplace and country dynamics, or competitive landscape impact performance for each type of offline and online marketing activity, Analytic Partners provides context and perspective for their clients.

In a nutshell, the mission of the "ROI Genome Intelligence Report" by Analytic Partners is to “create wisdom from accumulated numbers and knowledge". After all the company examined more than two million marketing key figures from its database for the analysis. The resulting conclusion is that “targeting works – except when it doesn’t".

The ROI Genome Reports show that over the past 20 years, the marketing budget has been shifted significantly from measures aimed at greater reach to narrower targeting tactics. In 2021, channels with the potential for precise targeting (e.g., social media, display, online video) accounted for three quarters (75%) of all revenue generated from marketing investments. Five years ago, it was only 55%. However, when looking at the track record of user-based targeting, it often fails to produce the desired results. The data pools of third-party providers are too opaque and their algorithms too unreliable.

Furthermore, the reports show that the accuracy of targeting demographics using third-party cookies is disappointing and that second-party data from social media providers perform better. Certainly, first-party data is the most accurate, since they are collected directly from their own customers, however, limits their reach and excludes the acquisition of new customers.

But reach is sometimes more important than addressing specific target groups. Hence, according to the reports, the most effective way is to address people with a wide range in combination with contextual targeting. Advertising is placed here to match the content of a medium, Analytic Partners explains: "Contextual targeting works very well for some brands. However, targeting concepts only unfold their true potential as part of a holistic approaches – usually a combination of high-reach (often still traditional) channels as a backbone with selective addressing for special target groups or for specific messages."

In addition, the reports derive concrete recommendations for action for marketers, including:

  • Think short-term and long-term: marketers shouldn't just focus on audiences that can convert fastest in the short-term, but plan based on short-term and long-term value potential. Not to mention that the higher costs of a targeted approach should be weighed against the option of a broader reach.
  • Set clear goals: in principle, all channels can serve all goals, but strengths can be identified:
    • High-reach channels (e.g., TV, PR, outdoor advertising) and prospecting (paid social) are particularly well suited for "upper funnel marketing", for instance, creating brand awareness and consideration.
    • Targeting in digital channels is particularly good, but not limited, to conversion to purchase.
    • Contextual targeting is an effective alternative to strategies that otherwise rely on third-party cookies - in addition to strategies that are contextual anyway, like digital outdoor advertising.
    • User-based targeting is appropriate when first-party data (e.g., CRM, email) and accurate second-party data (like paid social) are available.

According to a study by Seedtag and Nielsen, contextual advertising boosts consumer interest by as much as 32%, versus the traditionally used demographic targeting, which is one of many good arguments to consider, don't you think?

By Daniela La Marca