Big data has big promise, but marketers sometimes fixate on contextual and behavioral targeting to the exclusion of other profitable methods. Marketers with key performance indicators like engagement or sales should reconsider the science of local targeting, using online and offline data.
Key insights include:
- The direct purchase of contextual ads allows only the most basic kind of targeting, resulting in dismal engagement rates.
- The purchase of millions of impressions at scale guarantees plenty of inventory but also results in a lot of unseen or misdirected ads.
- Advertisers can target more precisely and efficiently by overlaying ZIP+4 data – industry, location and behavior – on top of their other data.
- Marketers can drill down even further by incorporating IP address targeting, finding consumers where they live and work and tailoring their messages for optimum engagement.
Local Advertising Introduction:
Local advertisers have always known where and how to find potential customers. Crisscross public record directories, flyers, radio spots, regional TV ad buys, direct mail circulars and ads in local papers – even community bulletin boards – helped deliver information to potential clients within a desired area or ZIP code.
But in the age of big data when everyone from publications to data aggregators to advertisers is collecting consumer information online, the science of local advertising seems to have been lost. Advertisers now rely on direct buys with mammoth publications or exchange buys via third-party data to reach millions of readers at a time.
These tactics may work well for advertisers who primarily want to improve awareness but not necessarily for those with key performance indicators like engagement or sales. After all, click through rates now average at about 0.2-0.3 percent, according to Forbes Online.
One way to improve engagement rates is by targeting consumers online where they live, work and study. This whitepaper will examine how marketers can apply the strategies of IP address targeting and offline marketing to better target audiences online with fewer wasted impressions.
Online and Offline Advertising
Over the past 10 years, online marketers have relied on a wide mix of audience-targeting strategies, some rooted in old-school media buying and others part of new and ever evolving online buying platforms.
Advertisers who value contextual placements continue to make direct buys with publications – WSJ.com for high earners, ESPN.com for sports nuts, and, of course, no one was ever fired for buying ad space in the New York Times. The benefits of these direct, contextual buys are many, but mainly advertisers know their messages are safe within the walls of these publications’ content. Based on the limited data collected by these publications, advertisers can be confident about what kind of readers are visiting these sites and what they are interested in.
The difficulty with contextual buys, however, is that they allow only for the most basic kind of online targeting, resulting in limited scale and sometimes dismal click through rates. To get better returns, most advertisers seek to go niche.
“The biggest problem with niche advertising is, the more niche you get, the more expensive the media space,” says Barry Lowenthal, president of advertising and media buying agency The Media Kitchen in New York. “Probably, the most efficient way to do niche is using third-party data on the exchanges.”
Buying impressions at scale may earn advertisers a lot of ad space for pennies, but it also results in a lot of waste. They may buy against a consumer profile delivered based on information from data aggregators, but where are those impressions being served, and can consumers even see them? The ongoing debate over impressions vs. viewable impressions addresses the very essence of the question. If an ad is served but the consumer doesn’t scroll below the fold to see it, should the advertiser pay?
Kazi Ahmed, VP group digital director at mediahub, part of Mullen Advertising in Boston, says, “As a general rule of thumb, the more narrow your audience, the more of a dependency you’ll have on niche targeting.
For example, the Toyota Motor Corporation may be interested in marketing its Corolla to all U.S. adults and is able to do so through a mass reach buy. However, if I’m a Toyota of Brookline car dealer, I’m only interested in reaching adults who are in-market shoppers of cars within the greater Boston area. This requires a much more targeted buy.”
Drill Down to Zip Code
So how can marketers drill down to precisely target audiences where they live, work and shop without relying too much on traditional ad buying methods? By layering offline data onto their contextual and behaviorally targeted buys, marketers might find a more receptive 21st-century audience online.
ZIP+4 advertising combines three types of data – industry, location and behavior – to help advertisers reach a desired population.
“At its core, local ZIP+4 targeting allows you to start segmenting audiences so that you have the ability to cater specific messages to groups of audiences,” says Ahmed. “This is useful for advertisers looking to add a bit more discipline to their marketing rather than blasting a general message out to a broad audience.”
Lowenthal says, “What’s great about niche advertising is that it allows us to drive relevance, which we know increases message receptivity. The more targeted our message, the more relevant our message and the more receptive our audience.”
Mary McCarthy, chief media officer at Blitz Media in Waltham, Mass., says, “This targeting capability is especially relevant for retailers trying to encourage foot traffic and in-store sales, as it ensures they are talking to potential customers right in their location neighborhoods.” McCarthy adds, “Messaging can, therefore, be customized and appeal to the consumer on a more personal level, thus driving opportunity for increased engagement.”
Let’s say an accounting firm wants to recruit college seniors. Knowing that young people spend so much time online, the firm would need to use the same technologies – and savvy – as its prospects. The question, of course, is, how?
Robert Thompson, professor of Television and Popular Culture at the S.I. Newhouse School of Public Communications at Syracuse University, says, “College students have abandoned so many of the old-school devices” – radio, television, newspapers, magazines and even textbooks. “They carry around those tablets, and that is virtually all their media.” Marketers who want to reach this desirable population need to “be where they are,” Thompson says.
By serving ads to devices within the college’s ZIP+4 location or even by drilling down to the IP address serving the college’s business management department, a company can pay for impressions it knows are hitting only students in its target.
“It isn’t just geography-based,” adds Susan Donovan, director of digital at Boston agency Small Army. Studying household members’ computer usage along with geographical location helps marketers “bring all the pieces of the puzzle together so that you’re getting that more complete picture of your target market. We’re able to get as specific as possible with whom we’re targeting and really use our resources as effectively as possible.”
Offline and online data – consisting of brand affinity, purchase propensity and lifestyle – can be used to discover attributes and demographics, such as age, sex and household income. Market research survey data and behaviors – retail purchase history gleaned from catalogs and loyalty and gift card programs, for example – can help marketers target would-be customers with greater precision.
“If done well,” Ahmet says, “you can eliminate or lessen ‘ad waste’ so that unnecessary advertising impressions aren’t being shown to consumers who aren’t important to you.”
“This type of targeting is not only a huge advance in helping eliminate waste from a geo-footprint perspective; it will also help identify mindset,” McCarthy says. “By aggregating the offline purchasing and consumption habits of each household, we are able to find areas that have a higher than-average interest in just about anything from fashion to healthcare,” thereby delivering only the consumers you want.
“Because ZIP+4 micro-targeting helps marketers identify online interests and behaviors that suggest receptivity or interest in their products or services, there’s an obvious cost saving,” McCarthy says. “We can often overlay geography with other demo or behavioral targeting (or both) to reach highly defined audiences. This type of targeting eliminates waste and drives conversion rates north.”
How Can the Location Data Be Used?
This kind of marketing works best for advertisers with unique target audiences that can be found in concentrated locations across the country. Universities, hospitals, business centers and hotels are all perfect targets for ZIP+4 IP address-based targeting. Here are some examples of how this precise targeting can work effectively for marketers.
- Hotels with chain competitors might do well to advertise to IP addresses associated with those competing locations, encouraging visitors to book with them at a discount on their next visit.
- If a large trade organization knows its members are staying at a specific hotel or in a specific geographic location during a convention, it might increase floor traffic with targeted messages within that ZIP+4.
- Upscale boutique chains might aim for ZIP+4 neighborhoods with household incomes over $150K, patrons of hotels with $500-a-night rooms and employees of private equity firms, law firms and similarly high income businesses.
- Restaurants or big box stores might drive in-store sales by advertising specials and sales during the lunch hour at business parks within a 10-minute drive of their physical locations.
Other applications might include cause-based campaigns directed at airport and hotel travelers, targeting neighborhoods or employees in a specific industry, and campaigns for consumer packaged goods aimed at college campuses and towns.
Of course, information must be gathered ethically. Offline data from Neustar, a provider of online and offline information, does not include sensitive categories (for instance, alcoholic beverage preferences, medical conditions, sexual orientation or religion), and personally identifying details are not used in customer-behavior research.
Used skillfully, ZIP+4 combines three research tools to paint highly accurate pictures of your prospects. By leveraging IP address-based location plus users’ industry and behaviors – including demographics, brand affinity, lifestyle attributes and purchase propensity – companies can benefit by reaching unique target audiences reliably and cost-effectively.
Neustar is a pioneer in the field of IP intelligence, accurately and reliably mapping routable IP addresses worldwide. The company’s IP geo-targeting for online advertising – the most accurate and reliable available – makes it a cost-effective choice for your business.