Waste Not, Grow Not

There’s a restaurant in my neighborhood that’s very popular.

You can go there any evening about 7 pm and I can predict with absolute certainty that every table will be occupied and there will be 80 people there. But I can never predict which 80 people it will be.

It’s the same with toasters. I can tell you with absolutely certainty that tomorrow there will be 1,500 toasters sold in the United States. But I have no idea who will buy them.

Also tomorrow there will be about 500,000 t-shirts sold (I’m making these numbers up.) But who’s going to buy them? No idea.

Marketers used to deal with these uncertainties in a reasonable but wasteful way. We would use experience and knowledge of the market to anticipate the type of person who would be most likely to eat at a restaurant, purchase a toaster, or buy a t-shirt. Then we would direct advertising at these types of people.

Because we used mass media, this media strategy had the disadvantage of being wasteful. Most people we reached would not be in the market for, say, a toaster.

But it also had three advantages: First, we would reach just about everyone who we thought would be looking for a toaster. Second, we reached an awful lot of people who we did not think were interested in a toaster, but were. And third, it reached just about everyone who would someday buy a toaster.

Advertising has changed. Now we believe we can predict exactly who will be buying a toaster tomorrow. We believe we can identify not just the most likely group of people, but the actual individuals.

All we have to do is follow them around the web and find out where they’ve been, collect the  data and soon we’ll know when they’re ready for a toaster.

The idea is to make individual targeting so precise that it replaces demographic likelihoods as the basis for media strategy.

So far this has been a spectacular failure. Each of us is currently inundated with dozens, if not hundreds, of online messages a day — banner ads, emails, social messages, etc — that are assumed by  marketers to be particularly relevant to us and reflective of our individual purchasing needs and behaviors. We pay almost no attention to any of them. They are essentially invisible.

The math tells the story. A generous number for display advertising is that it generates 8 clicks in 10,000 exposures. A generous number for Twitter interactions is 4 engagements in 10,000. It’s hard to get much closer to zero.

We are thinking like direct marketers, not brand marketers. We are ineffectually using “precision targeting” to try to engage the perfect individual, and by eschewing mass media we are harming our brand in three ways. …

… read on at adcontrarian.blogspot.co.uk

Originally posted by Bob Hoffman on his blog, The Ad Contrarian
16th February 2016