General, Marketing

Targeted Marketing: How Big a Net to Cast

The internet changed marketing forever. In many ways, it’s more complex than it’s ever been — there are millions of websites competing for attention across thousands of platforms. Ad performance is determined by unknowable algorithms and arcane bidding strategies. On the flip side, targeted advertising is much easier – big data is available for even the smallest of businesses to leverage, using tools like Google Analytics and Adwords, Facebook advertising, and various other ad platforms. Now, small businesses face an unexpected challenge: using the filtering options available to them, ad campaigns can be targeted so narrowly they may only reach a few dozen people. Without using any sort of targeting, ads could reach literally billions of people. Neither of these situations is likely, but both are possible, and it raises an interesting question. For a local small business, how big a net do you cast? You don’t want to limit yourself by advertising to a small segment of the market, but you also want to be as efficient as possible with your ad spend. Where’s the middle ground?

A Big Net: Inefficient for Conversions, Good for Brand Awareness

Digital marketing on almost any platform involves setting up your targeting preferences. This could include targeting only one gender or one or more age groups, choosing an interest group (exclusively those interested in online shopping, for instance),  or any combination thereof. Depending on the intended purpose of your digital ad campaign, you may want to appeal to a broader or narrower group. For instance, let’s say you want to spread brand awareness. You don’t care about getting specific customers into your store — at least not with this campaign. Your main goal here is more big picture: you want people talking about your brand and recognizing your logo. Any business you receive directly from this campaign is secondary; this is more about fostering trust and a sense of scale.

Get your business noticed with broad, brand-focused ad campaigns.

For this sort of advertising, you want to cast as big a net as is feasible. That doesn’t mean people outside of your market. If you work exclusively within Kelowna, don’t target anyone outside the Okanagan. Even very broad campaigns need some degree of targeting — I can’t think of any situation where an untargeted, global ad would make any sense whatsoever. You shouldn’t be too worried about demographics targeting, though. This kind of advertising is to encourage word-of-mouth and general awareness, not direct sales. If your target sales demographic was new mothers, for instance, your brand awareness market might be everyone with a single degree of separation from that sales demographic — fathers, grandparents, and friends. For this type of ad, you want to target anyone except those with little to no stake in your product. 18-year old men are fairly unlikely to be worth targeting, for instance.

The downside to broad advertising is in its ineffectiveness at converting views to meaningful interactions. This is a form of advertising ideally suited to building brand awareness or marketing very generally to a large audience. As such, it’s not the most cost-effective for lead generation or direct sales.

A Tiny Net: Higher Difficulty, Higher Reward

Many businesses know exactly who they’re selling to. If you are a financial services company that offers a very specific kind of investment vehicle suited to one demographic (very wealthy individuals over 50, for example), you may not want to waste any time advertising to anyone but the few who meet your customer profile. Digital advertising offers unprecedented control over your demographics targeting. In this situation, you would make full use of your targeting tools, removing all the background noise and focusing on older, high income adults in your region with an interest in your specialized product. That may amount to a few hundred relevant users a month, instead of the thousands or millions of users a brand awareness campaign. However, each user should, in theory, receive an exceptionally well-targeted ad. It’s also likely in this scenario that a single conversion is worth thousands of dollars, so your ad spend per conversion can be quite high and still be worthwhile.

Tight targeting is a high-risk, high-reward strategy. Don’t miss your mark!

On the flip-side, a smaller target is very easy to miss. Targeting a tiny slice of the market can be very efficient, but if your targeting is off, you may receive little to no worthwhile traffic. It’s a matter or marketing research, or at the very least, intelligent insight. If you make a wrong assumption on your ‘small net’ ad campaign, you’ll spend your whole budget targeting the wrong people, drastically undercutting your advertising efficiency.

Is there a happy medium?

We’ve discussed both extremes so far — the broad, brand identity campaign, and the extremely narrow targeted campaign. Surely, there must be a midpoint? Well, sort of. Ad targeting exists on a spectrum, from very little targeting to the most extreme targeting imaginable — re-marketing campaigns target ads only to those who have already visited your website, and can specify the ad content to show what product the user last viewed — with a fair amount of room in the middle. That said, while ad targeting can vary in terms of scope considerably, it doesn’t change the fact that there are two main uses for digital advertising: building brand awareness and increasing conversions. A less targeted campaign aimed at conversions may be easier to run than a tightly targeted campaign, but it will be less efficient. A highly targeted branding campaign may not get your message out in the world as effectively as a broader one.

What it comes down to is that ad targeting is highly situational. Targeting an ad takes administrative time, research, and marketing know-how. For many, a perfect ad campaign just takes too long to administer. However, expecting tons of conversions at a low cost from a poorly organized or broadly targeted ad campaign is a good way to get disappointed.