When programmatic advertising arrived on the scene a few years ago, it seemed like a holy grail. Many marketers thought their prayers had been answered by these demand-side platforms (DSPs) and their algorithms. If you can figure out who’s the most likely — and most ready — to purchase your brand, and deliver ads to them (and only them), what else could you need?
Quite a lot, as it turns out.
The law of unintended consequences tells us that our actions always have effects that are unanticipated or unintended. Rarely is this as clear as in the case of targeted ad buys.
The first hazard is the money brands lose by hyper-focusing on consumers at the bottom of the purchase funnel. If you’re so intensely targeting only those who are primed to purchase right now, how are you filling the top of the funnel with new people who will be ready to buy from you later — or who might buy from you occasionally? No brand has the luxury of neglecting to produce desire in potential future consumers. As advertising researcher Prof. Byron Sharp, director of the Ehrenberg-Bass Institute for Marketing Science says: “If you concentrate your marketing on your current customers, then you hem yourself into an aging and shrinking segment.”
This highlights a hidden advantage of untargeted ads: You’re bound to build awareness and desire among those who aren’t yet ready to spend with you – or don’t know they are. Sharp’s analyses of CPG and other databases suggests that there is far greater potential to be gained from getting non-users or infrequent users to buy your brand once in a while than there is in trying to wrest yet another purchase out of loyalists.
Thanks to an increasing ability to target, many advertisers aren’t bothering to carve out a significant portion of their budget to build the brand. Which means they are going to have fewer and fewer wallet-ready consumers who will have the brand top of mind or in their consideration set. By definition, brand-building advertising must be at least somewhat broader in scope than ads intended to focus solely on those who have demonstrated prior brand purchasing behavior. While some advertisers are busy getting overly excited on the greater short-term ROI produced by highly targeted ad buys, they’re leaving unfathomable amounts of money on the table.
The second unintended consequence is that by the time they get to the point of purchase, those consumers you’ve identified as your prime prospects are likely to hate you. Everyone knows the extreme annoyance that results from being served the same advertising messages over and over. This is no less irritating when you’re being bombarded by ads from a brand you are already buying from – in fact, it is often more grating. “I just bought your product. Why can’t you leave me alone?!”
It’s a matter of simple math: If you have the same $15 million to spend that you had last year, but this year you spend it buying impressions against a group that’s one-fifth of the size, everyone in that segment is going to get five times the impressions. If you’re mindful of the effects of frequency and provide a sufficient range of valuable content, you can keep engagement up and exasperation down. But production budgets are shrinking more than ever, and restrictions on non-working dollars are tighter than ever.
Most brands simply don’t have the money to produce the broad pool of creative needed to make hyper-targeting successful. And most advertisers don’t increase the breadth of their campaign executions proportionate to the narrowing of their target buy. Not to mention that you’re still left with the problem of hitting people over the head with ads after they’ve already purchased from you.
This is not to suggest that advertisers shouldn’t make the most effective new targeting tools. But that must be coupled with looking outside the wallet-ready target consumer base to create interest among those who might not be aware of your brand. It also requires great sensitivity to the negative effect targeting has on oversaturated consumers within that target group – and who might never spend with you again after experiencing your ads as harassment.