How to grow brands by targeting the masses
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This article looks at the factors that drive growth in a world of fragmented audiences, and the reasons why targeting is struggling to deal with these factors.
As the debate about broadcasting and narrowcasting rages on, it continues to be mired in unimaginative thinking, but marketers could be using the tools at their disposal so much better. Identifying three sources of growth that focus on feeding the funnel, moving the masses and being avant-garde, it is shown how targeting fails to capture those drivers due to its avoidance of people not in the market.
The article proposes that the solution lies in widening targeting to include people connected to those targeted - to fill the echo chamber and make products more desirable - and to target conversations, rather than people.
Throughout the history of advertising there has been a contrast between broadcasting and a more direct approach – something we now refer to as 'broadcasting vs. narrowcasting'. Technological advances have served only to increase the tension between these two approaches and the arguments have taken on a more entrenched, black-and-white rationale: on the one hand, 'broadcasting advertising is a dinosaur and it doesn't work'; and on the other hand, 'digital is all scam and no efficiency'. Sadly, often the argument is based solely on assumption, not facts. Often it is an argument aimed at destroying the opposition, rather than trying to make good use of the tools we have at our disposal to make things better.
Until the 1980s, there were a limited number of TV channels in most countries. The programmes were almost a part of the social glue: everyone knew what had happened the previous night on TV and talked about it the next day. Advertising could buy itself a way to appear in front of the masses.
And regardless of what has been written about the current status of TV, this situation no longer exists. While most of us still watch TV, we are not all watching the same programme. And not at the same time. And not without tweeting, or whatever is the latest way for people to connect on social media. Brands simply cannot reach the masses in as concentrated a way as they used to. Our one big audience has disintegrated.
We are told this is good news, because it addresses the old adage that 'half the money I spend on advertising is wasted; the trouble is, I don't know which half'. Yes, advertising has always paid to reach people it shouldn't: a baby-care ad will be seen by singles, and steak advertising will reach vegetarians. But with the advent of hundreds of TV channels, endless digital platforms and on-demand TV – each with its own specialised audience and with a stream of data about the audience – we can target ever more precisely. In short, the fragmentation of audiences brings with it the great opportunity to advertise only to those people who'll buy.
But this brave new world is starting to show some cracks. The CMO of one of the biggest marketers in the world, Procter & Gamble, announced in The Wall Street Journal: "We targeted too much, and we went too narrow." The IPA Effectiveness Awards – the most respected effectiveness awards of our industry – show a decrease in effectiveness of the campaigns submitted since 2006. And this decrease in efficiency follows a decrease in budget: while most reports consistently talk about growing advertising spend, this happens only in absolute terms. The Jack Myers advertising and marketing investment report shows that advertising's share of the total marketing budget is in long-term decline (by 6.2% from 1998 to 2016).
So, all is not well in advertising. And, whether we like it or not, there is no way back to the one big audience. I will now look at the factors that drive growth in this world of fragmented audiences, at why targeting is struggling to deal with these factors, and how it could do so much better.
The first source of growth
McKinsey Quarterly's 2009 study, 'Branding in the digital age', analysed 20,000 consumers and their purchase decisions across five industries. The study introduced the – now ubiquitous – consumer decision journey (Figure 1).
Along this journey, the set of brands people treat as options increases and decreases constantly. That means many people who have your brand in their initial consideration set will not end up buying it.
Applying targeting's objective to reduce wastage to the customer-decision journey thus means a tendency to spend less money on reaching people at the early stages of the journey, and focus on people at the end of the evaluation phase or the moment of purchase.
However, a cross-market analysis from Byron Sharp in his seminal book How Brands Grow found that the biggest driver of growth was located earlier in the journey – penetration or bringing new people into the market. Those campaigns "were twice as likely to report very large improvements in all hard measures of effectiveness including sales and profits".
Rather than trying to define the one and only important stage of the journey, multi-stage regression analysis calculates the influence of the stages upon each other. Anderl et al.'s (2016) such model of three different industries analysed more than three million customer journeys. The result: the influence of the last stages of the customer journey is overestimated by up to eight percentage points and the role of mass marketing is consistently underestimated.
Abhishek et al. (2015) use the data from more than 6,000 users of a multi-stage online campaign for a car manufacturer. They show that the ads of the early stages of the customer journey might not lead directly to sales, but are essential in moving people 'one stage further', i.e. into a place where a sale is possible. Display ads have almost the same contribution to sales conversion as do search ads (22.1% vs. 23.5%).
Targeting the people with the highest buying propensity means focusing on the later stages of the journey. This has a tendency of emptying the pool of people in the market without refilling it. Yet while not leading as immediately to a sale, the value of bringing people into the market is as high as converting interested people into buyers.
FIGURE 1: THE CONSUMER DECISION JOURNEY
So to sum up for the first source of growth: growth does not come from simply skimming from the top but also from building a market from the bottom up.
The second source of growth
In its quest to address only consumers who will actually buy, targeting tries to define those consumers as precisely as possible – their characteristics, interests and desires. And the more precisely the consumers are known, the more precisely personalised they can be addressed. A basic example would be: when a hotel chain knows a set of customers to be a young family with two children, one dog, having voted for the Green Party, and the son being interested in all things 'Transformers', it can target them with things attractive to exactly this kind of family.
The ideal is the completely personalised offer and communication, perfectly addressing the needs of one person. And communicating this message only to that person – invisible to other audiences. Thus, brands communicate with people almost in private isolation.
Yet research shows that recommendations by others influence people's purchase decisions. For example, a McKinsey study describes word of mouth as "the primary factor behind 20 to 50% of all purchasing decisions" depending on the product category. Moreover, 26% of all purchase decisions are sparked by social recommendations. According to Gaspar and Hofman's 2013 'Purchasing decisions' study, this is a stronger influence even than product features.
The decisions people make are social, and so is the value brands create for them. Binet and Field's Marketing in the Era of Accountability shows that those campaigns that aim for fame (i.e. become social currency) show 10% higher business results. More specifically, the brands people choose signal something to the world. A part of the value of a Mercedes comes from my neighbours knowing that it is more expensive than their car. Part of the benefit of buying The Economist comes from people seeing me reading it. This effect is quantifiable: Heffetz' macroeconomic analysis in the Journal of Economics and Statistics calculated the price elasticities of various products. The more visible a product is to others, the larger the part of their income people are willing to spend on it. One-fifth to one-third of the change in spending between categories can be explained this way.
So we have established that social input by peers and the visibility of products drive growth. Yet targeting tends
to privatise communication and brands. Thus, the second source of growth can be summed up as: growth does not come from privatising communication but from stirring up society.
The third source of growth
If you want to grow rather than keep the status quo, then you need to change. Oxford Economics estimates, for example, that the impact of innovations on the UK economy is £32–36 billion. An analysis from Brunel University of more than 8,000 companies shows that innovation negatively impacts liquidity but boosts annual stock returns by around 1% and increases the growth rate of total assets by 5%.
Similarly, marketing theories – from myopia, to blue ocean strategy and disruption – recommend innovation as a way to move into an unconquered market that can be dominated. In a study by Kim and Mauborgne of newly launched companies, only 14% of the projects did move into a new market, but those accounted for 38% revenue impact and 61% profit impact.
But newness can play another role in growth. Byron Sharp shows that the most fundamental driver of growth is salience, which makes light buyers think of the brand before making a purchase decision. Neuroscience research shows that, in order to work, these memory structures need to be activated repeatedly. But we should approach this theory with caution, and heed the warning from the following quote: "The repeated exposure to particular stimuli results in a decrease in the recruitment of attention to those stimuli." (Attention and Memory, Oxford Psychology series) So the familiar stimulus needs to be enriched with some novelty (Frontiers in Psychology).
Here communication can help: it can provide news, but it also can be news itself. So-called creative communication is nothing more than doing something that has not been done before (or doing it very differently). James Hurman's The Case for Creativity calculates that 1% of advertising is creatively awarded; 18% of all IPA effectiveness cases are. That's overindexed by 128,500.
Yet targeting has a tendency against newness in communication. Targeting means we learn more about the consumer and even what they want; thus it becomes easy to take the shortcut and simply offer that consumer exactly what they want.
Targeting has a habit of creating echo chambers. There is a tendency to jump from 'I want this' to 'here is exactly this'. This is not just boring, but ignores the growth potential of brands to inspire people and take them to places they didn't know. To show them things they didn't even realise they wanted.
So the third source of growth can be encapsulated as follows: growth brands lead; they don't follow.
Three drivers of growth have now been identified: feeding the funnel, moving the masses and being avant-garde. But targeting's focus on avoiding people who are not in the market struggles to capture these drivers. This was not an issue when targeting was safely stored below the line and these growth drivers were captured above the line. But now the line has disappeared in the great media fragmentation.
I believe the problems described above are only problems in terms of application. So there might be different ways to use targeting to create exactly these growth effects. For instance, it could be used not to split audiences but rather to bind them together. Let's have a look at some new ways of targeting that have more growth potential.
Grow through targeting
So far, targeting has been mainly used to convert sales. Yet not all people can be driven down the journey immediately. With many goods, people remain passive for years – for example, cars or life insurances. And this opens up an opportunity to use targeting differently by engaging long and lightly.
Targeting could in fact be used not to push people down the journey but to keep a brand on people's radar, before they actually buy, thereby building salience. Retargeting could be used to expose people not to the same content again and again, but to ensure people get to see new executions over time, thereby building a longer story arc. This will help to activate the memory structure of the brand again and again.
So rather than trying to tell everything in a thirty-second film, brands can build a longer story arc over time. Rather than doing a Hollywood film, they could attempt something serial and ongoing – to engage long and light rather than pushing straight to the sale.
It will be important to use the data gathered from these interactions to identify the moment people move into the consideration stage – for example, getting married or having children will increase the role of life insurance. Then – and only then – should brands start to nudge people towards sales.
While the possibility of reaching the whole nation simultaneously has gone, there might be a way to recreate an impression of it. The phenomenon of echo chambers is widely documented. They consist of those closer social contacts, influencers and their media that mostly agree with our world view. And for most of the time, we live in that bubble.
If a brand wants to create the feeling of being a topic for everyone we know, and give the brand's communication the possibility to be talked about and enable people to effortlessly start a conversation about it, it might be enough to target that echo chamber very heavily. And make everyone in that chamber aware of the brand's communication. Inside out. And make influencers within the chamber comment about it. This should have all the benefits of being social currency together with the feeling of all-pervasiveness.
So without having to reach the whole nation, targeting can create the impression that everyone is talking about it. A brand simply has to target beyond potential customers and include their close friends and their tribe.
However, targeting can be driven beyond fuelling echo chambers. It can be used to expand and even break those chambers.
Given that brand growth comes from the social aspects of brands, targeting's tendency to slice audiences up can be a disadvantage. But it could also be a surprising advantage. Targeting can be used to identify the people who are in the market. But, similarly, and with the same techniques, targeting can also be used to identify the people who are the most valuable onlookers – the people whom the buyers want to be seen by. And targeting can ensure that this audience is aware of the status of the brand as well.
So, for example, Porsche advertising can convey the brand's exceptional quality to potential buyers, but it can also be used to address the neighbours of the buyers. To make sure that they know how great and expensive a Porsche is.
Through test and learn, targeting can also help identify the most valuable onlooking audiences. To quote from John Lowery,"The reader/displayer [of The Economist] probably doesn't care what the newsagent thinks when they hand over their cash (yes, I realise I'm generalising/being a snob) but they do care what their boss thinks
when they see a well-thumbed copy lying on their desk."
The concept of onlooker importance can be taken one step further. In the 1970s, three-TV-channel world brands were truly social: they would reach people who agreed as well as disagreed with what they said. In today's world of echo chambers, this rarely happens. But provoking disagreement can be extremely powerful. First of all, the internet is full of people disagreeing, and disagreement is one of the few things that are proven to go 'viral' – just look at the trolling phenomenon. Moreover, having someone disagree with you is proven not to convince you, but rather to actually harden your position.
So brands could not just target their 'fans' but also the people violently disagreeing.
Stirring that crowd will increase the reach, will increase and replicate the watercooler talk. And while many a marketer will say 'I don't want to attract trolls', the truth is, they will come whatever you do. Moreover, such an approach will burst the vanilla echo chamber, and thereby actually strengthen the audience's positive attitude towards the brand. And this leads to the last, and overarching proposal.
Stop targeting people: Target conversations
If brands want to become social currency and keep their news value, it makes sense not to just target individuals through media. Because today, no media channel has the power to reach the majority of people simultaneously. Conversations, however, do.
Despite all media fragmentation, there are conversations that go across all media channels and therefore can reach most of the people in one country at one time. These conversations inherently have news value: they are
the news. And they are emotionally involving and can reach people across the customer journey.
Just look at the election of Donald Trump. Or the topic of refugees. But also something more light-hearted like Valentine's Day and Christmas. These are the conversations where brands can reach entire countries and continents. This is what targeting should be about. Not individuals, who might or might not take part, but the conversations themselves.
To sum up this article, in advertising there has been an ongoing debate about mass media vs. targeting. Either/or. Which side are you on? Rather than deepening the divide, this article has tried to unite and find a way forward.
I have shown that there is no way back to the days where the whole country could be bought as your audience. I have shown that today's targeting suffers from flaws – mainly that it has a tendency to split audiences into smaller and smaller slices, thereby missing out on three big growth opportunities. I have also shown ways in which targeting could address these growth drivers: how it can bring people together rather than divide; how it can build new audiences rather than skim potential buyers; and how it can become a source of the avant-garde rather than mirroring and echoing. This opens up new ways of applying targeting – targeting no longer used just to define the audience of people willing to buy, but targeting to define the audience's surroundings. Targeting the people with whom our potential buyers interact. Targeting to stir these interactions. Targeting even to create new brands from scratch. Once these new ways are put into practice, applying multi-touch attribution models will help to define what works and what needs fine-tuning.
Let me conclude by saying that while the main thrust of this article is growth and how to make it work through targeting, I believe that there is a philosophical element here too: that bringing together is better than dividing; that trying something new is better than just repeating; that creativity is better than skimming off someone else's ideas.
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