Demographic marketing has long been the industry standard, but does it have a future? Andrew Bailey, chairman at Proximity North America; Michael Benedek, president and CEO of Datonics; Gary Reisman, principal and founder of NewMediaMetrics; and Liz Deutch, EVP, global director, customer engagement at Draftfcb, weigh in.
Andrew Bailey, chairman at Proximity North America, 14 years of marketing experience
Demographic information has long been valuable to marketers because of the type of data it offers, such as age, sex, marital status, income and other details that can assist in targeting. It’s also easy to gather and can make marketers more efficient in quickly grouping people into segments they can leverage. However, the digital revolution — and more specifically, the social media revolution — is making true interest-based targeting a reality. This evolution of interest-based targeting, in my opinion, stands to marginalize demographic-based targeting, if not replace it altogether.
There are two main reasons why this paradigm shift is coming. First, interest-based targeting, akin to psychographic and behavioral profiling, is simply more effective than demographics at determining what consumers really want. It allows marketers to view consumers as they truly are: multidimensional individuals with many varied idiosyncratic affinities. As a result, brands can be more efficient in their marketing spend, garner better yield in their conversion efforts and, in some cases, broaden the addressable market of their products.
This level of targeting is a vast departure from what demographics provide, which is an “assumption” of what consumers’ interests are based on what most other consumers, who share their demographic makeup, have historically needed or tend to consume.
The high-level associations towards product interest that demographics offer simply don’t hold the integrity they seem to or once used to. Racial background, for instance, is becoming less relevant as America’s rising Millennial generation is proving increasingly interracial and multicultural.
Second, interest-based targeting is now actually attainable at scale. The deluge of consumer data being collected passively (such as cookies on users’ browsers) and proactively (such as users openly sharing personal data on platforms like Facebook, Twitter, Google + and Foursquare) is creating a true master interest graph, as well as a “database of intentions,” as the author John Battelle puts it, that provides real transparency into what brands, products, services and experiences in which consumers truly have an interest. This, along with newly advanced data and CRM-driven approaches to consumer analysis, will allow marketers to hone in on the most valuable consumers and products with pinpoint accuracy.
The truth is that demographic information has always been merely a proxy for what marketers really need: actionable knowledge on who are the best consumers to target based on what they actually want and have a likelihood to buy. And until now, we’ve never had the means of gathering and synthesizing such detailed data that can enable one-to-one marketing on this scale.
Which is why things will never be the same again.
Michael Benedek, president and CEO of Datonics, more than 15 years of marketing experience
There’s no denying the obvious: that interest-based targeting is a natural step in the growth and continual advancement of online advertising. However, in a game where data rules, targeting 1.0 — also known as demographic- based targeting — is a useful complement to behavioral data approaches. Think of it as macro-targeting and micro-targeting. The two work toward the same goal of providing the most relevant ads to online consumers at the most appropriate times.
Let’s say you are a sports shoe company who has just unveiled a new and high-priced running sneaker. You are now able to serve ads to active runners (via interest-based technology) who are currently in the market to buy your product. Through demographics-based data, you have the added ability to increase your relevancy by targeting a higher household income group, and in Venn diagram fashion, create a sweet spot, or group of consumers who are most likely to purchase your new high-end footwear. In the same vein, you may also use demo-based data to vary the creative approach you use when delivering relevant advertisements to male consumers versus female consumers.
Essentially, interest-based targeting and demographic-based targeting may work well together to help advertisers reach the most relevant audience. It’s a simple matter of logic. If you are presented with a large amount of information (interest-based) to work with, and that information is followed up with the opportunity to further organize it all with demographics data, wouldn’t you take the opportunity to better streamline using all of the information available to you?
This symbiotic relationship can also be compared to the manner in which messages are currently conveyed across multiple platforms such as print, radio, outdoor, etc. While each, individually, is an effective means of reaching your audience, it makes a lot of sense to utilize all forms available to you to broadcast your message. While interest-based targeting data is readily available and a must-have for online marketers seeking to reach a relevant target audience, demographic targeting is not going to go away. Instead, it will be integrated with behavioral data in a way that will allow marketers to pinpoint and reach their target audiences with far greater precision.
Demographics such as gender, median age, education level, household income, etc., will always remain a useful complement to other targeting methods and approaches. Consumers want to and deserve to see advertisements that are relevant to their individual needs, and are more likely to respond positively to such an ad and ultimately buy the product. Leveraging demographic data as a complement to the essential interest-based targeting data out there will help marketers achieve this worthy objective.
Gary Reisman, principal and founder of NewMediaMetrics, more than 25 years of marketing experience
Interest-based targeting is, and should absolutely be, replacing demographic targeting as the new model. Direct marketers have known this for years and have been profiling and targeting people based on their behaviors and interests for a while. It’s now time for all marketers to move to interest-based targeting across all platforms.
We all know now that people “pull” to them the things that they are most interested in and that are most important to them. Just look at Google searches, where people “pull” to them anything in the world of interest to them.
Today, marketers are using proven methods for defining interests and consumers’ attachments to services and brands, and using these methods to directly target individuals based on their interests. Why? Because if someone is interested in something, they are more likely to engage and more likely to buy. It’s about relevance!
Technology, data proliferation, modeling and emotional attachment techniques have lowered the bar for interest-based targeting.
Demographics have become completely irrelevant and obsolete as a form of targeting, and we need to move away from it. It was the most acceptable way to target consumers in the 1950’s. It was the easiest way to select consumer segment and measure impressions. Demographics were put in place and became a currency because media execs could make justifiable “buys” and post-analyze them.
I ask: When was the last time you saw an 18-to-49-year-old? Or even two 25-year-olds who are identical in their needs and interests?
You can have an 18-year-old sitting next to a 45-year-old both listening to “The Stones” on their iPods because they both like classic rock. Marketing is about a mind-set, not about an age.
One 20-year-old might gravitate to Hollister while another likes Old Navy. Their preferences are based on their sense of style, brand affinity and a host of other factors. They will buy the brand that aligns with their interests the most.
The world is more complex than it was when demographic targeting was introduced. At the same time, the world has become “flat,” not just from a global perspective, but in the way we can target communities of people around the world based on their interests.
Liz Deutch, EVP, global director, customer engagement at Draftfcb, 25 years of marketing experience
Demographics remain a critical component of our targeting approaches.
Age still matters. Household income still matters. Ethnicity still matters. These remain leading indicators of how people consume media. However, there is no doubt that the rise of digital technology and social media is transforming how we approach marketing and communications today. Individuals’ interests are transparent and data is at our fingertips. It is how and when this information is leveraged in combination with demographics that is most powerful in today’s real-time world.
The more robust the data, and the more we layer our targeting approaches, the more relevant and effective we can become in our marketing efforts. So we need to think about how narrow we can make our targeting approaches: start with demographics, then overlay life-stage targeting, interest-based targeting, behavioral targeting, geotargeting. Or, start with behavioral-based or interest-based targeting and then overlay demographics. What is important is that the combination of data types is especially critical as we strive to drive deeper engagement with our audience.
Now more than ever, if we are not relevant then the audience will move on to the next brand, the next conversation. And to be relevant, we still need to understand the demographics of our audience. We need to know, for example, if we are talking to a teen, a boomer or a senior. This information will help us not only be more authentic in our creative ideas but also ensure that we are leveraging the appropriate communications channels.
In today’s world, the consumer is in control of how and when they consume media. It is important to understand who we are trying to target in addition to what interests and behaviors they have in common. Relying on interests or behaviors alone could alienate an
important segment. Without an understanding of the demographics, we could miss our mark and therefore an opportunity.
So the question isn’t, will interest-based targeting replace demographic targeting? The question is, how can they work together in order to develop the most powerful targeting? That is the huge win in today’s model.
Direct Marketing News Decision
Demographics have long been the industry standard for segmenting and targeting specific consumer audiences. However, while demographics are often representative of interests, it is not an exact science and only tells part of the consumer’s story. The new prevalence of search data, geotargeting and behavioral targeting is allowing marketers to hone their focus on those consumers most likely to buy a product or service. Demographics may still help marketers who want to cast somewhat of a wide net, but marketers who want to drill down further will likely shift their focus to interest-based targeting.
HAVE YOUR SAY. Email your topic to [email protected] or comment below.