Nearly a century after John Wanamaker first gave voice to the entropic theory of advertising, marketers remain in thrall to a fundamentally profligate system.
“Half the money I spend on advertising is wasted; the trouble is, I don’t know which half,” the department store magnate said in 1919. And given today’s super-saturated ad landscape, that squandered sum is probably now closer to 80 percent.
According to a new study by Catalina Marketing , just 36 percent of television ad exposures are delivered to the households that account for the vast majority (98 percent) of CPG purchases. This is a direct function of marketers’ overreliance on demographic targeting, said Todd Morris, evp, brand development and marketing innovation, Catalina.
“Demo targeting tends to treat all consumer groups equally, no matter how active they may be in a given category,” Morris said. “Instead of super-serving the relevant ads to the most active consumers, the impressions are spread out equally among viewers who happen to coexist in the same demographic. It’s an incredibly wasteful and inefficient way to do business.”
Take CPG, a category that traditionally has drawn a bead on women 25-to-54. In a study focused on 10 national CPG brands—a roster of frozen entrees, cereals, yogurts and soft drinks that together spent $415 million on measured media in 2011—Catalina discovered that consumers outside the target demo were responsible for as much as 60 percent of all purchases.
Through its retailer loyalty-card program, Catalina tracks the purchases of 76 percent of U.S. households. After forming a joint venture with Nielsen  in late 2009, Catalina married its proprietary consumer spending data with the media research outfit’s national TV and online panels.
While Catalina’s new targeting system (BuyerVision) is primarily being used to optimize digital-media buys, the company is not ruling out a shot at bringing its consumer segmentation data to bear on the TV marketplace.
CBS last year commissioned Nielsen Catalina Solutions to run the numbers on some 20 CPG brands, and when the results came back the network expressed its disenchantment with mere demos. Speaking at an Advertising Research Foundation event in New York last spring, CBS Corp. chief research officer Dave Poltrack said the industry’s slavish devotion to age- and sex-defined demographics only served to guarantee the ongoing “misallocation of TV advertising investments.”
Poltrack added that targeting heavy category consumers has a significant impact on post-exposure behavior. For example, Catalina demonstrated that a 20 percent increase in ads served to frequent detergent purchasers ultimately led to a 147 percent lift in sales.
Of course, the national television market is by definition somewhat inhospitable toward this sort of microtargeting. In the absence of a national interconnect, TV targeting efforts largely have been restricted to the local level.
At the same time, a client could use the Catalina data in order to determine the overlap between brand affinity and a particular TV series. For example, if consumer data suggested that the NBC drama Grimm overindexes with people who spend a good deal of money on Boo Berry  cereal, General Mills might be persuaded to take a strong position within the program. Naturally, this isn’t the sort of direct targeting afforded by digital media, but it’s a step in the right direction.
“An evolution not a revolution—we’re not going to disrupt the way media gets purchased overnight,” Morris said. “But the brands and the agencies have to examine their goals and realize how the methodology has changed. And I think we can help the industry respond and adapt to this new, disruptive sensibility.”