Commentary

To Segment Or Not to Segment: Where Is The volume?

Each year, executives, thought leaders and visionaries from the advertising and marketing industry flock to the 4A's annual Transformation Conferenceto discuss industry trends, outlook and the most important issues faced by the industry as a whole.

One of the main points of discussion this year was the conflict between an agency’s desire for data and hyper-targeting, which targets specific audiences with high level of intent to buy a product, and the need for reach. In other words, how to reach your specific target audience or the people with the highest potential to engage with your ad messages, while reach a high enough volume that will generate meaningful results.

Although a hot topic of discussion, a comprehensive solution that will allow both hyper segmentation and reach wasn’t actually presented during the conference. Rather, it was a discussion of what is more important and whether we became “slaves” to big data.

While programmatic moves by premium publishers can address the data and target a portion of the equation, the question of volume still remains. Will the programmatic exchanges actually have enough quality inventory of premium publishers with sufficient data? Will the premium publisher offer volumes in the exchanges or continue with their direct deals (“programmatic direct”)? Will these types of alliances be able to deliver the volume that is expected?

With this in mind, a more comprehensive method to solving the targeting reach conundrum is the network approach. The current network approach claims that users are users regardless of sites (as long as it is a brand safe site), in which the viewership is being made whatever the context in which it appears. You would have the same results from the same user as long as you advertise in a brand safe site.

The big advantage in this approach is that if you succeed in building a wide network of sites (over 10k sites) you will be able to present high volumes of diverse audiences. In a trivial way, 10k sites will always have a more diverse audience and a higher reach then any single site, even if it is a site called, let’s say, Hulu.

This leads us to the basic claim against the network approach and in defense of the premium site approach — the halo-effect theory argument.

The halo-effect theory claims that a user is not always the same user. This means that the content context has an effect on the user engagement and brand perception. If you are a male-oriented brand, being embedded in a Sylvester Stallone movie will do a better job than being embedded in a sushi-rolling competition in the Ukraine.

In this way of looking at things, the ad networks approach does not give a sufficient answer to marketers because they aren’t aware of the content in which the ad will be appearing. (However, the leading players could share information about the site itself.)

Some network players approach a solution by marrying the programmatic advertising with a programmatic content distribution. While the classic model of the ad network is agnostic to the content and takes user attributes and site environment into account, a programmatic content distribution will also calculate the content and its halo effect.

Full programmatic solution — content and advertising — enables someone to reach the specific target audience in volume, as a network model, while maintaining the halo effect by embedding the ads in the right content and the right site.

This programmatic approach is new to the market, but we can already see several players experimenting with it.

To summarize, the market is looking for a solution that could hyper segment and bring volume. This was always seen as two contradicting approaches (volume vs. quality). However, the programmatic approach for both advertising and content might finally present an attainable solution for both challenges.

  
1 comment about "To Segment Or Not to Segment: Where Is The volume?".
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  1. Suzy Sandberg from SuzySandberg.com, March 31, 2015 at 3:37 p.m.

    Some sort of transactional indicator could definitely help open up the audience. Assuming the cream of the crop is already being reached via programmatic, scale will have to come from elsewhere. Reaching contextually relevant sites and then targeting known buyers (with recency) would improve the performance -- and scale -- of this audience. Co-ops and/or use of second party data could potentially facilitate this.

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