What a Waste

Like Ian Dury, marketers have choices. One choice they must make is who to target their messages to.

Should they target broad or narrow groups of people? Existing or potential users? Loyal or occasional buyers? Who, in short, will be their most profitable likely customers in the short and long term?

Media planners and buyers usually translate a brand’s target into demographic surrogates that can be traded in traditional mass media (TV, radio, magazines, newspapers etc.). Major media outlets need to allocate a finite amount of inventory amongst hundreds or even thousands of brands, each of which will put a different value on each placement according to their particular target. Their only interest is in maximising the price, while advertisers seek the opposite.

Whatever they do, there is bound to be ‘wastage’. Wastage occurs when a message falls on deaf ears.

Reaching somebody who will almost certainly not be in the market for a particular brand is certainly a waste. Examples could include marketing retirement plans to children, home insurance to somebody who has just taken a policy out or meat to vegans. But it is not always so clear cut.

Men’s clothes can be bought by women as well as men. Toys are purchased by grandparents for their grandchildren. And, rather more obviously, many kinds of fast-moving consumer goods (food, drink, household goods etc.) are bought by practically everybody on a regular basis, with frequent opportunities available to persuade them to try new brands. Buyers may be deaf to marketing the day after shopping, but not the following week.

Part of the digital/programmatic sales narrative is about how digital media helps advertisers minimise wastage and execute ‘laser-precision’ targeting. Which means, in practice, that targets are identified by their search history (e.g. searching for a new car or for house insurance), their browsing behaviour (looking at furniture or holiday sites) or by the products they have bought before. Once identified, they can be instantly reached with a message.

This ‘precision’ can often be misguided. Like when advertising for luxury holidays or new cars chases somebody around the internet long after their purchase decision has been made. Or when an accidental slip of the mouse invites a torrent of banner ads for something they have no interest in.

Precision targeting is not risk-free. If an advertiser only targets people who have bought its brands in the past, it will be very difficult to grow its user base. According to work by Andrew Ehrenburg and Byron Sharp amongst others, the key to brand growth is to increase penetration (the number of people buying a brand). Purchase frequency (or loyalty) generally follows penetration upwards and vice versa.

In other words, it is difficult to increase brand loyalty without also growing the user base. Targeting only people who have bought a brand before will limit its growth. Demographic surrogates may seem imprecise, but they do have the advantage of including potential new buyers or low frequency users.

Ian Dury made a choice to be a musician and not to be a doctor or a lawyer. Marketers don’t necessarily have such an either/or choice. ‘Traditional’ mass media reaches people both inside and outside any target audience, helping to build or maintain brand awareness. For brand building, mass media – and wastage – have a role to play.

Narrower targeting of people whose online behaviour suggests they are open to change can also play a part. But there is probably room for more targeting precision – reducing, for example, the number of times people are sent messages they do not respond to, having made their purchase decision or shown no interest in a product despite repeated exposure to it. This, surely, is where most of the ‘waste’ in advertising is today.