How much are marketers spending on targeting the wrong people?

  • Posted: 15th November 2015
  • Written by:

    Lizi Zipser


Advertising Trends

On the 20th of October the most recent UK advertising spend stats were released, showing we’re all spending more on advertising, and in particular digital and mobile advertising which grew 12.8% in 2015.

But we’re seeing our clients’ industries focusing on quantity instead of quality.

If you’ve invested more into your advertising programme, odds are you’re spending more because your competitors are spending more. This means costs are going up and up, with more media opportunities and channels becoming available every year.

But there is a way to do this without spiralling budgets…

More Channels, Higher Spend

Mobile advertising now accounts for 79% of total digital advertising growth, with an ad spend of £1BN. In a multi-channel world it is important to be at different touch points your customers engage with – but doing mobile advertising to say you’re doing it is not the answer.

So many companies still don’t use the data they have to analyse who to target and what content to present to them – the result is increased spend, but many are not necessarily seeing better results for their investment.

How sophisticated is your targeting?

Digital advertising allows you to specify your ideal customer, what channel to serve adverts to them, what time of day and how often. Different segments can receive ads relevant to them – it’s not overkill anymore to have a hundred versions of a creative, it’s standard best practice.

Integrations between platforms and channels can also recognise where the customer is in their purchase cycle, and make sure your message gets to your potential and existing customers in the right time – but so many out there are still using ‘spray and pray’ old fashioned targeting techniques, or basic retargeting…

Using your data to drive an advertising segmentation and personalisation strategy

Some questions advertisers need to ask themselves before embarking on a data modelling exercise to drive an advertising segmentation and personalisation strategy:

1. What’s your advertising budget?

Data modelling projects have a cost, and while programmatic algorithmic optimisation gets you a long way towards improved performance, using your customer data to analyse which online conversions deliver the highest value customers is significantly better in targeting your most loyal customers.

If the cost of a 2%-5% improvement in your results offsets or far outweighs the cost of an insight project you should consider improving your targeting with your customer data.

After all – you can’t target your ideal customers if you don’t know what they look like.

2. How much is the knowledge of ‘who not to target’ worth to you?

Better targeting doesn’t just help to deliver better results, it also helps to exclude certain audiences (for example those who return their purchases, use the call centre and cost more in support than they bring in).

You don’t want to pay to attract these customers, and knowing their characteristics could help you to exclude them from your campaign; instead you can save or re-allocate the budget spent on them to valuable segments.

3. How are you analysing your advertising performance?

Analysis of performance is also a crucial one. If you’re still in the ‘above the line’ phase of digital advertising you should progress towards conversion. This is difficult to do if your business model is not one where the conversion is online – but it’s still possible to tie data sets together for many businesses.

If you’re measuring and optimising performance according to conversions and ROI – that’s brilliant, but there’s still a more meaningful level of analysis than this.

Analysis on lifetime value and loyalty can change who you target – as a campaign that converts lower volumes of very loyal and returning customers makes for a better campaign in the longer term.

4. How much are you investing in your existing customers before you spend a fortune to acquire new ones?

Advertising budgets tend to be much higher than retention and customer experience budgets – but many brands could benefit from re-thinking their strategies and investing more in multi-channel marketing to existing and lapsed customers.

If your acquisition budgets are growing by six or seven figures like many of our clients – it might be wiser to split this investment and build up a customer journey to maximise the value of your existing and newly acquired customers.

Our strategists and insight analysts are keeping an eye on these trends to better support our clients – so if you share any of the challenges above, or have examples of effective strategies which have helped you buck this trend give us a shout!

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