• by October 25, 2018

Over the last decade, digital marketing has become a juggernaut, as home computer penetration has reached nearly 75% and consumer adoption of mobile devices has soared to more than 82%, according to Statista. 

Digital marketing nirvana is executing effectively targeted and personalized campaigns that achieve a high ROI.  Multiple research studies have shown that improved personalization can boost return on marketing spend (ROAS) by as much as 70% 

The problematic words here for marketers have been “effectively targeted” and “personalized.”  Marketers have relied on targeting tools that consist of macro data such as online behavior, demographics, geography and other macro-targeting variables. The arrival of cookies and device IDs have improved targeting to a degree, albeit using the same variables above.  Without effective targeting, digital marketing has remained in the Ice Age.

Digital marketing enables brands to quickly put their names in front of large numbers of consumers — and conversely, it creates the opportunity for them to embarrass themselves in front of these consumers just as quickly. 

Advertisers and agencies have recognized this fact, and several factors are resulting in new solutions: 

• Strategic vision – advertisers and agencies have recognized that ad effectiveness must be measured by positive purchase behavior changes.

• Investment – adopting ad technology that allows marketers to connect those who saw an ad with their actual purchase behavior.

• Methodology – strategies that merge and project data, and result in accurate, timely insights.

• Activation – the ability to change ad strategy in-flight to adjust key variables, such as media and messages.

Four additional factors critical for success in ad tech: scale, breadth, depth and speed. 

New capabilities such as sales lift and purchase propensity scores, hold the promise to achieve effective targeting and personalization.  However, many challenges remain.

If a white wine brand plans to execute a campaign to expand its customer base, targeting purchasers of other white wines in a similar price range is obvious.  But what about white wine consumers who tend to purchase more expensive or less expensive wine? Superficially, they seem like likely targets, but it is also very possible they are not:  consumers who tend to purchase more expensive wine may be “wine snobs” and those who purchase less expensive wines may need to keep to a specific budget. Other attractive target cohorts could potentially be bulk wine buyers and buyers of competitive brands in the same price range.

And what about consumers of products often consumed with white wine, such as high-quality cheeses and appetizers, or fish and shellfish?  Other potential targets might include luxury shoppers and luxury travelers. What is “lookalike” to one cohort of consumers may not be to another.  

Effective targeting and personalization is also greatly impacted by the “Have/Have Not” chasm; i.e., consumers who are regularly online versus those who are not.  Even with improved targeting, marketers must identify approaches to gain access to the “have nots.” It’s very likely digital is not the answer. Instead, it might be “good ol’ snail mail” or out-of-home advertising in venues such as theaters. 

While the promised land of improving ROAS by as much as 70% is an excellent motivator, achieving that level of improvement is a hard road that requires much testing and measurement.  While the ad tech industry has made enormous progress by making available solutions such as propensity scoring and purchase-based targeting, there is a long way to go.