As media continue to fragment, two experts debate whether it is more important to achieve high response rates through targeted campaigns, or a large audience through a wide-reaching media buy.
CONTENDER
Olivier Chaine
CEO and founder of Magnify360
Founder of The Marketing Architects; former VP at LowerMyBills.com
Response rate always trumps broad reach. Broad reach campaigns generate low response rates, poor quality traffic and don’t provide the deeper insights needed for future campaigns.
Marketers are better served gaining broad reach through a pyramid of targeted campaigns, each stacked upon the insights of the previous one. The quality of customers that are gained through targeted media is what drives higher response rates and higher returns.
In addition to driving future campaigns, the value of the intelligence gathered from a niche audience can drive better creative, offers and, often, new products. By understanding the trends and profiles from targeted campaigns, marketers can easily find other sources of inexpensive media, like offline advertising, banners or e-mail.
For example, a sporting goods company, running a search campaign around sports equipment and activities, finds a concentrated segment of early adopter/gadget geeks. Next, I would recommend building a display advertising campaign on Gizmodo or Engadget, featuring GPS watches and waterproof MP3 players. This will drive a much higher response rate and ROI than casting a wide net. With the evolution of ad network technology, marketing automation and testing tools, marketers can target display, e-mail, mobile and offline efforts to achieve the results they need.
CONTENDER
Sandeep Kharidhi
VP of analytics and marketing strategy at ChoicePoint Precision Marketing
Former VP of DM for Wachovia
For most direct marketing campaigns, a case can be made that high response rates are more important than broad reach. After all, poor response rates almost always ensure an unsuccessful campaign. But response rates alone give no indication as to the cost per response, the resulting conversion rate, or the overall campaign profitability, each of which is just as important in determining the success of a campaign.
A marketer’s primary focus should be on response rates only when justifiable from a campaign cost vs. new revenue obtained perspective. An example could be a retailer launching a direct sales channel to augment in-store sales. Most direct marketers fall into this “required cost justification” category.
Alternatively, some campaigns are used primarily for increasing brand awareness and therefore broad reach is the overriding objective. Consider direct-to-consumer marketers of auto insurance who use direct channels to build and maintain brand awareness. A consumer may not be in the market for auto insurance today, but eventually he or she will be. Brand awareness then becomes paramount. Furthermore, the channel many consumers use for purchase may not be the same channel most successful in reaching them.
The cost of reach must be aligned with response rates and conversion rates so that both total revenue objectives and profitability objectives are achieved.
DMNews’ DECISION
The experts agree that response rates are fundamental to a good campaign. However, Kharidhi notes that they are only one part of a valuable equation. He points out that some consumers use several channels to make a purchase decision, and a wider net snares more potential buyers. Direct marketers must weigh a targeted message with overall growth goals.
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