It’s hard to believe, but in these times awash in data and information, marketers are still reliant on old demographic media buys. And they are passing up some of their most valuable consumers in the process.
According to a study from Catalina Marketing that looked at a cross-section of CPG brands, nearly two-thirds (64%) of the ad exposures delivered by advertisers are reaching households that account for only 2% of sales. Meanwhile, only 15% of those exposures are reaching the consumers that account for 80% of sales.
“For high-penetration categories, that’s a large percentage of money spent on people who are not spending much,” Todd Morris, executive vice president of brand development and marketing innovation at Catalina, tells Marketing Daily. “The fact that brands are spending just 15% of their media against consumers that represent 80% of their business presents a huge opportunity.”
The study looked at 10 leading CPG food brands that together accounted for more than $415 million in measured television advertising spending in 2011. The study broke down 10 buyer groups for each category to determine which consumers accounted for the most volume for each brand.
Because many marketers still rely on traditional demographic-based media plans, all buyers -- regardless of their propensity to buy in a given category -- were treated equally, the study found. The heaviest category buyers (those who spent almost five times more than the average household) were only exposed to 3% more advertising than the average buyer. At the same time, households that were inactive in certain categories were exposed to 30% of the advertising in that category.
The biggest issue, Morris says, is that many brands continue to rely heavily on demographic profiles when determining media placement, despite all of the other data available to inform deeper decisions. With so much of the industry still reliant on demographic models to determine ratings, measurement and success, much of a brand’s marketing is not as successfully targeted as it could be.
“The bulk of spending is still against demographic targeting, despite advances in targeting,” Morris says. “The entire ecosystem of media and advertising is built around a model that’s been there for nearly a century. And the reward systems and software and objectives and strategies and work are built around [that] belief and platform. When you have everything engineered around that, it’s going to take a while to evolve.”