The marketing world is buzzing about P&G’s announcement last month that they’re moving away from Facebook ads that target specific consumers.
As CMO Marc Pritchard described the move, “We targeted too much, and we went too narrow. And now we’re looking at: What is the best way to get the most reach but also the right precision.”
Coming from the world’s biggest ad buyer, this seems to question the steady march toward hyper-targeting we’ve seen the last few years, particularly for big brands.
Some of this is a simple media expense equation. Targeted media costs a lot more than mass media. As Peter Daboll from Ace Metrix put it: “If you could run an ad and reach a million people or run a targeted ad to reach 5,000, you have to have pretty impressive returns on that 5,000 to make it worth it.”
But I wonder if some of this may relate to what Byron Sharp describes as “the Heavy Buyer Fallacy.” Marketers frequently orient their marketing plan around targeting heavy buyers:
“It seems obvious, a brand’s currently heaviest buyers generate more sales and profits (per customer) so they should be the primary target for marketing…
“But if our aim is to grow sales then our efforts should be directed at those most likely to increase their buying as a result of our attention. It takes only a moment of thought to realise that customers who already buy our brand frequently are going to be difficult to nudge even higher.”
Marketers often refer to the 80:20 rule to justify targeting the heaviest 20% of buyers (assuming these activities this will impact 80% of sales). But the heaviest 20% of buyers actually only impact 50 – 60% of sales in consumer products categories. And swaying the larger pool of light buyers can might a bigger impact on sales than trying to get your heaviest buyers to buy even more.
As marketers continue to learn from the new digital tools at their disposal, it will be interesting to see what emerges as the right balance of relevance and scale.
I’d love to hear your thoughts.
7 CommentsJoin the Discussion
Gaurav Pande says
There is merit in both using a. “increase reach” and b. “hyper-target” .
The context is very important to define. If we take brands that have leadership position or close to leadership position in a market, and specially if they operate in a category that is highly penetrated category, reaching more audience is probably the right thing to do.
Take a completely different example of a baby care category. Typically 12-20% households in a country have a baby 0-2 yrs. If one goes on a carpet bombing approach for media you are definitely wasting 70% of your investment. It might be better to Follow a hyper targeting approach and use interest areas to identify parents and speak only to them.
Another example of lifestyle categories in lets say a country where 30% of population lives below poverty line. And only 5% fall in the income bracket which can afford your product, hyper targeting basis lifestyle may be the right thing to do.
Finally, I think hyper – targeting as an approach always existed eg. Use of lifestyle periodicals for advertising high end cosmetics and accessories. In the new digital world technology has only enabled hypertargetting much more than any other medium did. One thing which still remains a black box is how accurately the two largest players google and Facebook are able to identify consumers as a part of a larger segment basis their interests and behavior online.
Jono CG says
I’ve never faulted you before but maybe for the first time ever I think you may have missed the mark on this one – not in regards to hyper-targeting, but in regards to 80/20 rule. An assumption that you can continue to sell 80% of your volume month on month or year on year without proactively engaging them and delighting them is an imaginary concept. Consumers have never been less loyal and FMCG brands that believe people LOVE their brands are as fickle as the theory. P&G has proven that “loyalists” will only buy your brand 10% of the time(max), so to “maintain” 80% of the volume, you must continue to communicate and delight these people in the 20% – otherwise the 80/20 rule falls down.
Umm. Think you’ve mis-read that.
Tom (who’s paraphrasing Byron Sharpe) says “But the heaviest 20% of buyers actually only impact 50 – 60% of sales in consumer products categories. And swaying the larger pool of light buyers can have a bigger impact on sales than trying to get your heaviest buyers to buy even more.”
So. Yeah. You guys agree.
Henry Mason says
Ben Thompson nails what’s happening with marketing & mass market CPG brands here: https://stratechery.com/2016/tv-advertisings-surprising-strength-and-inevitable-fall/
Absolute must read (like all his insights), if you’re not familiar with him.
Allen Roberts says
Maybe others will be listening and those annoying remarketing algorithms will be adjusted so i can poke around in peace without being ambushed continuously with stuff I have no further interest in.
I think there is merit in hyper-targeting -the question is what is the intent of the targeting exercise, hence who do you target and what do you target them with? The intent has to always be about getting more people to buy our brand – because even if you are a big brand, anywhere from 30% to 50% of your buyer base lapse out every year. And hyper-targeting can help with this. For example, if we target folks who engaged with some branded content and were positively engaged with it. We can target them with offers/coupons/promos to get them to buy the brand.
Richard Warland says
“As marketers continue to learn from the new digital tools at their disposal, it will be interesting to see what emerges as the right balance of relevance and scale.”
As one of the “direct marketing dinosaurs” out there, I don’t know whether to laugh or cry.
It bemuses me that getting “pretty impressive returns” on small subsets of customers was something we were doing back in the 20th Century AND we were accurately measuring our results and ROI.
A major Hong Kong supermarket chain Marketing Director once said to me – “we are in the mass market business so we need to mass advertise”. I cannot argue with the first part of her statement, but I bet I could significantly improve her bottom line by applying data analytics-driven strategy to her advertising!