With the industry’s insistence on measuring media delivery via reach, frequency and GRPs against demographic targets, behavioral targeting can get overlooked. Underscore Marketing’s president explains why it shouldn't.

Over the past few days, I’ve taken an inventory of where I spend much of my time online. Aside from accessing news stories and reading up on some of my favorite writers on blogs and in other environments, I tend to spend most of my time in communities that cater to my particular interests.

I have a lot of interests outside of work, and I’ve been thinking about how those interests affect my media consumption habits.

My top content and conversation topics center around these interests: ATVing, treasure hunting, home improvement, musical instruments, blogging and other niche activities. There seems to be a common thread among them. These interests can be shared by a wide variety of people, without regard to age, gender, household income or county size. I suspect I’m not alone in enjoying my participation in leisure activities that cut across traditional demographic groups.

Think for a minute about what it means if you happen to be advertising a product that aligns with any one of these interests. Take home improvement, for example. If you manufacture and sell replacement windows, you might be evaluating delivery of your media plans based on the reach and frequency against one or more of the popular demographic groups that represent the sweet spot of your target audience.

In focusing on demographics, you could easily cut people out of your target who could be perfectly good customers and brand loyalists.

Behavioral targeting's superiority
Online, most people align with websites and online communities in much the way I described earlier: by interests and lifestyles. They don’t neatly organize themselves into demographic buckets for easy targeting by advertisers.

By way of example, you might think of the AARP site as a great way to target adults 55+. And it is, but according to syndicated research, more than half that site’s audience falls into the 25 to 54 bracket. We all know the AARP is aiming younger with its marketing efforts, but it goes to show that the things that interest people who are 55 and older also interest people much younger.

If interests and lifestyles drive web behavior, then isn’t behavioral targeting a better way to target media than the application of demographic filters?

Let’s get back to our home improvement example. I may be able to look at my target audience for my replacement window company and make some broad generalizations about its demography. A media planner might say that few people under the age of 18 own homes, so media buys should at least carve out the under-18 set. Demographic refinements might place the sweet spot at Adults 35 to 64 with household incomes of $60K or more. 

Yes, this helps focus your media dollars. It also disregards plenty of people who might want replacement windows.

If we look at this target through the lens of web behaviors, we end up with a targeting strategy that more accurately fits the customer base. It is easy to pick editorial environments on HGTV.com, within selected content areas on portals and in online communities that would produce better results than applying demographic filters.

Online's disadvantage
Yet, when looking at online in the context of a larger media plan that includes television, radio, print and other offline media, delivery is traditionally evaluated on demographics. That is, opportunities are compared from a quantitative standpoint based on their delivery against Adults 35 to 64 household income of $60K+, in the case of our home improvement company. 

I can’t think of a more short-sighted way to plan media.

Evaluation against demographics hurts the online industry because better-targeted opportunities are often overlooked in favor of opportunities that reach more of the target demographic.

Let’s take a look at what this means in terms of the pocketbook.
The cost to add a demographic filter to a buy with a specific site can cost anywhere between $5 and $50 CPM, with most filters falling into the $10-25 range. Meanwhile, behavioral targeting tends to reach people via inventory that would otherwise sell as ROS or untargeted tonnage. The incremental costs are slight, and, since the inventory used for BT is cheap to start with, it’s a wash. It’s not uncommon to see behaviorally-targeted inventory average out at half or even one-third the cost of demographically-targeted inventory.

Yet, demographic targeting tends to win when these two targeting methodologies go head-to-head. A demographic filter will let media planners count 100 percent of the impressions bought against the target demo, which boosts reach, frequency and GRPs in an impressive fashion.

It’s a dilemma that boils down to the following: do you want to look good on paper or do you want to look good in terms of results?

Personally, I know where I want to be. Unfortunately, that may require working against decades’ worth of institutional inertia.

Tom Hespos is the president of Underscore Marketing and blogs at Hespos.com. Read full bio.