Targeting Our Way To Lower Profits

Should an advertiser purposely choose to be “invisible” to the majority of its customers? What if I told you that not only is this practice being employed, but it is also being highlighted as a unique sales proposition?

Targeting by age/sex demographic, which is reliant upon consumer registration data, is being touted as a strategic benefit to advertisers by digital music streaming services in that it eliminates “wasted” impressions. In short, targeting in this manner, when using audio streaming options, guarantees that only those within the advertiser's specified target demo will have the opportunity to be exposed to the messaging. This premise of classifying impressions outside the target demo as “wasted” is based on the belief that any consumer who is not in the specified target demographic is of limited value to the advertiser. This is rarely, if ever, the case.

Let me explain. The advent of target demographics in the 1960s was more a result of available technology, the need for some sort of accountability, and a negotiating tool than it was the result of the belief that a target demographic was a perfect proxy for actual product consumption. A national brand targeting women 18-34 doesn't want to completely ignore women 35+. It's simply saying that younger women, to some degree, are more likely to purchase the product, not that women 35+ don't purchase the product. Delivering a message exclusively to women 18-34 excludes women 35+ who currently engage with the product category.



When negotiating off a target demo, AM/FM radio stations not only price themselves against the specified cost-per-point, but also deliver impressions against consumers outside the target demo, at no charge to the advertiser. These so-called “wasted” impressions can make or break any audio-based ad campaign, as in many instances these consumers actually account for the majority of category or product usage -- a key benefit of "broadcast." Communicating a message that is delivered solely against the target demographic will completely ignore these valuable consumers.

Analyzing the 2012 Doublebase GfK/MRI data, we quantified the importance of those adult consumers who fall outside typical categorical target demos:

Quick-Service Restaurants: While the A18-34 demo accounts for 37% of total visits to fast food restaurants, those customers who fall outside A18-34 demo account for almost 2/3 (63%) of all QSR visits.

Grocery Stores: W25-54 account for 35% of all dollars being spent at grocers. Those shoppers who fall outside the W25-54 demo account for 65% of all grocery store sales.

Beer: Young men (M21-34) consume 25% of all beer sold. However, consumers who fall outside this demo account for 75% of all the beer being consumed in the U.S.  

The above analysis holds true for just about every product category.

Is there a benefit to an advertiser to exclude consumers who purchase their product or shop the category in which they compete from hearing their message? If there is, we can't find it. To what existing customer would any advertiser ever imply, “Nope, you are not important, we don't want you hearing about or buying our product!” 

Negotiating off a target demo makes perfect sense, but to perceive impressions that are delivered outside the target demo as “wasteful” is not only damaging to an advertiser's ROI, but is also dangerous to its continued prosperity. As Jenni Romaniuk of the Ehrenberg-Bass Institute wrote in the Journal of Advertising Research in September 2012: “The first step toward smarter targeting is to make sure your targeting efforts reach, at a minimum, all of your current customers.” Limiting commercial messaging exclusively to a target demographic ignores this sage advice.

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