Marketers Must Balance Targeting With Audience Reach

The Wall Street Journal recently published a story that caused some alarm in marketing circles: “P&G to Scale Back Targeted Facebook Ads.”

The Wall Street Journal recently published a story that caused some alarm in marketing circles: “P&G to Scale Back Targeted Facebook Ads.” A more representative, albeit longer, headline would have been: “P&G to Scale Back Highly Targeted Ads in Order to Increase Broader Reach Buys on Facebook.”

According to the WSJ: “P&G two years ago tried targeting ads for its Febreze air freshener at pet owners and households with large families. The brand found that sales stagnated during the effort, but they rose when the campaign on Facebook and elsewhere was expanded last March to include anyone over 18.”

Brand marketers–especially consumer-packaged-goods companies–that need to reach a wide audience through multiple channels, including TV, should use a broad-reach strategy. As the article underscored, Procter & Gamble does not intend to spend less on Facebook, only differently with broader targeting.

Advertisers experiment with new precise ad targeting

In the past few years, SocialCode has seen many CPG brands experiment with more precise targeting approaches. For example, the team at Pampers could hypothetically use third-party purchasing data to deliver ads on Facebook to Huggies customers. Or the Pampers brand team could target loyal Pampers customers with messages on Facebook to encourage customer loyalty and the trial of new products in the extended Pampers line.

Buying very targeted, smaller audiences resulted in higher CPMs (cost per thousand impressions), but not much else. These higher CPMs rank poorly in Media Mix Modeling (MMM) results, a method marketers use to attribute sales or other outcomes to different media investments. Note that this outcome of shifting to broader reach was for brands driving in-store purchase of lower-priced products, as opposed to direct-response advertising objectives. For direct-response ads selling products, online measurement is clearer from impression to purchase, and more specific targeting, even though it is more expensive, usually makes sense.

Now many of the CPG brand marketers, such as P&G, that experimented with narrow audience targeting are recalibrating their strategies. Instead of targeting very specific, small groups of people, like pet owners, these marketers are building quality audiences on Facebook that are broad enough to reach more people, at a lower cost per person, and deliver measurable sales impact.

Whether they are small or large, addressable audiences on global platforms like Facebook remain among the best digital channels. Broad, efficient and fraud-free reach to such massive audiences is a huge value proposition on its own. When you can reach three times the users at three times the cost efficiency, you can achieve real business impact.

Balancing targeting with reach

While there are many big brands in P&G’s scenario, there are many brands with niche audiences (craft beers, for example) that are experimenting with a concept we call “broad segmentation.” This involves applying the principles of broad, efficient CPMs, while concurrently deploying more personalized messaging and tailored media strategies against key customer segments within the broader group.

To be sure, more precise targeting will always be hugely valuable for marketers and retailers engaging in direct-response advertising, like Verizon trying to sell phones and plans, Kayak selling hotel rooms and flights and Bloomingdales selling fashionable clothing. The right mix of reach versus targeting always depends on the specific brand, its category and its business goals.

Opening up its targeting was the right call for P&G. Hundreds of SocialCode’s proprietary studies among Fortune 500 brand partners support this approach for large CPG brands. Advertisers that pair broadly targeted marketing buys with studies to measure what consumers are buying in stores often achieve sales lifts upward of 10 percent on a single digital campaign. This result is driven by increased purchase volume among existing customers, as well as by significant lift in new household sales and new customers.

But the lesson is not to turn away from targeting–it is, instead, to validate strategic decisions and big media investments by measuring consumer lift. Advertisers and their partners must understand digital platforms well enough to capitalize on their mass reach and targetability–in unison—in order to maximize sales and return on investment.

Sarah Snyder is the general manager of advanced solutions at social ad technology and insights provider SocialCode.