In 2021, 75% of all sales driven by marketing investments were sourced from channels with the potential for narrow targeting (such as Social, Display and Online Video) – up from just 55% five years ago, according to newly published research from Analytic Partners.
The ROI Genome Report also finds that contextual targeting (buying ad space based on the relevance of a website’s content to your product) is 1.2x to 2.5x more effective than other forms of targeting when costs are comparable.
Key recommendations for marketers in the report include focusing on the customer segments that deliver the highest short- and long-term value (rather than those most likely to convert); prioritising contextual targeting for digital tactics that leverage third party user profiles (e.g. display) or are contextual by design (e.g. DOOH, affiliates); and adopting more narrow targeting for tactics using first party data (e.g., CRM, loyalty, email) and accurate second party data (e.g., paid social).
Kevin O’Farrell, Senior Vice President at Analytic Partners, believes that, by immediately leveraging these learnings and optimising media spend, marketers can increase ROI by 30%. He said: “Despite the huge shift of spend towards narrow targeting, we can show that it has not lived up to its promise for most brands.
“This is in part due to a murky pool of data vendors, mystical algorithms and sub-optimal execution. Add to this, device sharing, walled gardens, and the crumbling of the cookie, and the accuracy of targeting with third-party data is becoming more and more questionable. Increasing consumer privacy concerns are also creating a ripple effect: people are more protective of their personal data now than any time in recent memory, leaving large gaps in data and capabilities.
“While there is a time and place for most types of targeting depending on the industry and strategy, to make targeting work for your business, the right balance needs to be achieved with both broad and narrow techniques and due prominence to contextual targeting within a considered holistic approach.”
The latest ROI Genome Report, ‘Targeting Works, Except When It Doesn’t,’ is available to download here.