It's a new year. Accompanied by renewed advertising budgets, lofty performance targets and a blank canvass, many marketers are still refining their 2006 marketing strategies. Behavioral, demographic and contextual targeting will likely be important ingredients in many of these plans. After all, in 2005, targeting usage grew rapidly, a number of new targeting capabilities (and companies) were launched and a multitude of published targeting case studies cited significant online campaign performance improvement.
If targeting is likely to be an element of your 2006 planning, here are six ideas that you should consider testing in the coming months. While some of these tactics are proven performers, others are only now emerging as options. Regardless, given the infancy of online targeting, marketers who are quick to innovate should gain competitive advantage.
It's a new year. Accompanied by renewed advertising budgets, lofty performance targets and a blank canvass, many marketers are still refining their 2006 marketing strategies. Behavioral, demographic and contextual targeting will likely be important ingredients in many of these plans. After all, in 2005, targeting usage grew rapidly, a number of new targeting capabilities (and companies) were launched and a multitude of published targeting case studies cited significant online campaign performance improvement.
If targeting is likely to be an element of your 2006 planning, here are six ideas that you should consider testing in the coming months. While some of these tactics are proven performers, others are only now emerging as options. Regardless, given the infancy of online targeting, marketers who are quick to innovate should gain competitive advantage.
Idea #1: Implement cross-campaign frequency controls
When many marketers discuss customer targeting, they often think exclusively of their most valuable prospects. While identifying and messaging these segments is certainly valuable, eliminating wasted spend on less desirable customers can be even more lucrative. Just by controlling frequency to the "impression eaters" -- the small portion of online consumers that may devour 50 or more ads per month -- advertisers can pocket significant performance improvement. Of course, frequency controls are hardly a new concept. Most sophisticated publishers have offered frequency caps on their own sites for some time. Unfortunately, many consumers surf and receive advertising across many sites. Thus, advertisers who deploy a targeting solution across all sites (typically in conjunction with their third-party ad serving solution) can better control frequency and message sequencing across their entire media plan.
Idea #2: Target your best prospects: your current customers and visitors
During the direct mail explosion of the late 20th century, many cataloguers created sophisticated predictive data models to determine which households should be marketed. Often, these models had hundreds of variables -- including geographic, socio-economic and behavioral data. One data element typically trumped all others -- if a consumer had purchased from a catalog before, they were the best prospects to do so again. This insight is directly applicable to online targeting. If a consumer has been to your website before, he or she is an ideal candidate to target with a subsequent advertisement! This is particularly true for high consideration purchases (e.g., travel, cell phone, home mortgages, automotive) and repeat purchases (multi-product retailers). By assigning past site visitors to a unique customer segment, online marketers can re-message to these users elsewhere on the web and generate exceptional results.
The following case study illustrates the effectiveness of re-marketing to recent site visitors. A multi-product specialty retailer examined lift for several single variables. While targeting broadband users generated nine percent conversion lift relative to untargeted media (across the same placements), reconnecting with past site visitors generated an exponentially higher lift.
Idea #3: Produce tailored creative for cross-selling and up-selling
While re-marketing to past site visitors and former customers typically generates strong performance, advertisers can further improve their effectiveness by building specific creative for cross-selling and up-selling these customer segments. In fact, the most effective advertisers incorporate their creative team into segmentation planning. After all, even with an effective targeting scheme, the difference between compelling creative and weak messages can be startling.
A recent analysis of targeted campaign data proved this point. Once the desired prospects were located online, the spread between the best performing and worst performing creative treatments (as measured by cost per desired outcome) was approximately 800 percent on average. By better matching creative to segment, advertisers can unlock stronger performance.
Idea #4: Experiment with multi-variable targeting
Of course, re-marketing to past visitors and customers is not the only effective targeting tactic. Many airlines generate strong results by geo-targeting ads against their route structure, electronics providers will vastly improve results by targeting broadband users and many marketers generate lift by targeting to web surfers who have tripped certain trigger events web-wide (e.g., researching a car, shopping interest rates, et cetera). While such schemes will generally perform better than untargeted advertising, the strongest performance is generated by stringing together multiple segmentation variables. Rather than targeting "broadband users," a consumer electronics retailer would perform better if it were to target broadband users who have recently downloaded music and are currently surfing on an entertainment site. In this case, the second and third variables more tightly define the relevant audience, filter out wasted impressions and facilitate the production of far more relevant creative messages.
In the earlier specialty retailing case study, for example, the lift generated from a three-variable campaign combining several segmentation criteria generated a lift over twice that of past site visitors alone.
Idea #5: Introduce targeting to rich media
Two of the most popular trends of 2005 -- the rapid growth in rich media and the surge in targeting -- should become fast friends in 2006. The effectiveness of rich media is limited largely by its higher media costs. Rather than waste rich media on users who are not and will never be prospects (or your high frequency impression eaters), marketers should instead begin to plan their rich media efforts in concert with their segmentation planning. Each tactic will fuel the success of the other.
Idea #6: Test "on-demand" targeting
Finally, but importantly, recognize that targeting effectiveness does not necessarily require sophisticated technology or rich media. In the early 1980s, the growth of cable television changed the economics of television advertising for many marketers. Those who could not afford to broadcast their message to an untargeted network audience could suddenly find a more relevant and affordable niche audience through cable. Stations like ESPN, HGTV and MTV attracted a concentrated audience that was previously far more difficult to find on network television. That trend continues today. AOL's introduction of archived television content, streamed on-demand, is just one example of the trend to increasingly granular and relevant content. By simply determining what content their prospects are likely to consume, advertisers can test on-demand targeting and potentially secure the most appropriate real estate before their competitors have a chance to act.
While 2005 witnessed the emergence of online targeting as an effective and commonly utilized media tactic, 2006 will usher in an era of even more sophisticated and intelligent messaging. It's a new year, but your competition remains as fierce as ever. Perhaps by testing some new ideas, you'll find that you can distance yourself from the pack.
Scott Howe is president for DRIVE Performance Media (DRIVEpm), an operating unit of aQuantive, Inc.
