Targeting is Overrated – and Overpriced

In a previous issue, I wrote about the dangers of chasing marketing ROI. To recap, ROI is a function of the denominator. That means it’s much easier to maximize ROI with tiny budgets, which typically mean very tight (digital) targeting. That’s all well and good, and it can make results look great, but the data overwhelmingly suggests that it’s not the way to extract maximum yield from your marketing dollars. (See Binet & Field, Sharp & Romaniuk, etc.)

We seem to forget how many of the mega-brands that we know today have been built using broadly targeted, mass-reach media. Coke, Nike, and Apple became the brands they are today, in large part because of their ability to project a powerful message into the minds of millions of people, over and over and over again. That is, they built their brands on TV.

You can attempt to build brands on the internet, but the ad formats are terrible.  Your options are often tiny mobile banners which accidentally create clicks users don’t want that cost you money, or crappy, uninspiring display banners that have little ability to either connect or message effectively. But wait, there’s video! Agencies love video, it’s great if it’s viewable, in a safe environment, not skipped, and then, if watched for more than 2 seconds, and accurately and faithfully reported. Then there’s the reach….

All it now has to do is reach millions of people over and over and over again. Think about it: how many digital video ads have etched themselves into your brain (and your friends’)? Surely a handful, at best? I bet you can remember more ad jingles from the 80s (ok, ok –  90s, or 00s)!

Yes, the targeting and reach of search and social are impressive. But paid social pricing is subservient to the demands of Facebook’s shareholders, and many clients report a decline in effectiveness there in recent quarters. Plus, paid search doesn’t drive demand as much as it harvests it. Truly great marketing drives demand. And demand only meaningfully moves the needle if it rises on a large scale.

One of the standout winners in the IPA’s annual Advertising Effectiveness Awards serves as a great illustration of all the trend in the data. UK insurance company Direct Line Group won the Gold Award for ‘Best New Learning’ in the 2018 awards. Marketing professor Mark Ritson wrote about the win:

“Despite marketers’ ongoing love affair with the new and shiny tools of digital and the ever upward snaking line that represents overall marketing spend on digital display and digital video…. it is abundantly clear that much of that spend is mistaken.

That is not to say that all digital is pointless or that it should be excised completely from the mix, just that most marketers have been bamboozled by YouTube and Facebook into spending too much with them.

Between 2013 and 2017, DLG substantially reduced its investment in digital display and programmatic online video. The company did this not because of some burning hatred for digital but because it has the kind of advanced analytics and independent thinking that is sorely lacking from most marketing teams.”

The client (the winner) said: “We call ourselves digital conservatives, but we are not anti-digital,” DLG concludes in its submission to the IPA: “We could find compelling evidence for both the long-term and short-term effectiveness of media lines such as TV and Radio. By contrast, our research did not support continued investment in a number of programmatic digital media lines even on a short-term basis.”

We’re not claiming here that digital is bad. That would be absurd. We’re not anti-digital. The point is that more careful reflection is required on the merits and purpose of individual channels, and their role in achieving overall marketing and business goals. We must evaluate the claimed benefits of these channels with care.

For example, the channels we work with at Oxford Road are typically broadly-targeted, high-reach vehicles. We like the idea of targeting, however, and so we approach it methodically.  We test and experiment with targeting overlays and different data sets, in order to test the efficacy of different targeting tactics. While targeting can work well, we often find that it’s overpriced; i.e. often the cheaper, broader reach approach still works very well.

Imagine that!

The reality is that data and targeting are a market like any other. If it’s indeed inflated, we expect it to self-adjust over time. In the meantime, Oxford Road will continue to apply the appropriate checks and balances to targeting and reach, ensuring that we put forward outstanding media plans with a methodical approach to evaluating the market.

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