BVOD Blind Spot Part 3: Does Targeting Work?
Stu Carr, Director of Client Insights, Adgile
The 3rd of four articles in Adgile’s BVOD Blind Spot series explores audience targeting on BVOD – its prevalence, usefulness and performance. By Stu CarrCustomer Intelligence Director, Adgile
Backed by Adgile’s collection and analysis of over one billion BVOD impressions, we examine the performance of different targeting approaches based on response, with surprising results.
The prevalence of targeting
All advertising should be considered “targeted” to an audience, with a broad distinction being made between “mass targeting” and “segmented targeting”.
Segmented targeting has been the foundation of direct response campaigns for many decades, primarily through controlled testing across different segments and vendors. Mass targeting has a wider reach and has been the main method applied to broadcast media, such as television and radio.
However, the digital age now offers segmented targeting to broadcast media like never before – now accounting for over 25% of all BVOD impressions.
Instinctively this makes sense, if I target someone who looks like my typical customer, I will get a better result. This intuition has led to thousands of “personas,” many more acronyms, and more dollars spent per impression.
But do the results confirm this?
Standing on the shoulders of giants
There are 4 key learnings championed by Professor Byron Sharp and Andrew Ehrenberg (supported by research by Les Binet and Peter Field), which Brand should pay attention to when considering targeting techniques:
1. Customer retention is hard to control. Therefore, brands need to focus their efforts on the acquisition of new customers.
2. 82% of growth comes from penetration among infrequent buyers while only 2% of growth comes from loyalty.
3. Nearly half of a company’s sales come from light shoppers who constantly change their minds about what they’re buying.
4. The biggest buyers of a brand in one period often turn out to be small buyers in another period, and vice versa. Therefore, advertising must be targeted to reach a wider segment of buyers.
Segmented targeting reaches the wrong audience
Adgile analyzed its database of more than 100 BVOD campaigns and identified those that use both mass targeting and segment targeting, classifying the data overlays according to the following principle:
Comparing brands with segmented targeting to those with mass targeting, we found that the segmented targeting group was 4.5 times more likely to have visited the advertisers’ website before exposure – i.e. say they were much more likely to be existing customers.
In addition, viewers targeted by segments were much less responsive to advertising. Mass-targeted viewers were 20% more responsive to BVOD advertising than segmentation-targeted viewers.
When you consider the science of marketing, segmented targeting seems to reach the wrong audience – either existing customers or heavy buyers who are loyal to other brands.
Mass targeting seems to reach the right audience more effectively – lapsed customers and shoppers in lighter categories.
Sophisticated targeting requires sophisticated measurement
Segmented targeting on BVOD, like all forms of targeting, provides brands with tremendous opportunities to refine and improve their advertising results. However, with greater opportunity comes greater risk. If advertisers reach the wrong audience, results can go the wrong way.
If you’re using highly targeted segments, it’s imperative that brands exclude existing customers, a feature offered by most broadcasters and programming specialists.
But fundamentally, if brands are using targeting techniques borrowed from direct-response campaigns, they must also borrow the testing, measuring, and fine-tuning rigor intrinsic to DR.
As you approach your next BVOD campaign, ask yourself the role of targeting, how you will measure performance, and consider its balance with broader targeting.