Tuesday, July 17, 2012

Say Goodbye to Demographic-only Targeting

The reason smart marketers use segmentation is to avoid the waste and needless expense of targeting everybody--including all kinds of people who don't want or need the product, or who spend very little in that product category.

Despite all the tools for market segmentation and targeting that are available today, it appears that many businesses continue to buy media on the basis of demographics. Catalina Marketing's recent study of media targeting concludes that "for high-penetration categories, that’s a large percentage of money spent on people who are not spending much."

Social media may help. Facebook, for example, allows segmentation by school affiliation and many, many other factors. More important, it's a great tool for inviting customers to "raise their hands" to receive marketing attention from YOU. Even though General Motors may not find Facebook an effective tool for targeting, some marketers are finding it very useful and profitable.

Bulmers, a UK cider brand owned by Heineken, learned through research that its Facebook fans spend roughly $311 more per year on its products (at retail) than its non-FB fans. Bottom line: Demographics don't tell the entire story. Behavioral targeting and psychographic/lifestyle targeting are often more powerful than age, geography, etc.

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