Advertisers have a broad selection of targeting capabilities and audience options when building ad campaigns. In today’s highly evolved world of adtech, brands can rely on everything from traditional audience segmentation tactics, leveraging demographic and geographic data, to more sophisticated targeting options based on user behavior and transaction histories. While knowing which audiences are going to deliver the biggest results can be a challenge, one strategy consistently drives measurable outcomes: targeting heavy buyers.
Heavy buyer audiences—the customers who routinely spend the most in any product category—are a key tool to reaching your primary KPIs and increasing revenue gains. Why? Here are the top three reasons big spenders can significantly impact your ad campaign strategies.
Many advertisers are familiar with the 80/20 rule, that 20% of your efforts deliver 80% of your outcomes. Our research shows that it is actually closer to a 70/20-split: When analyzing purchasing data from more than 500 retailers, we found that the top 20% of spenders delivered 71% of category sales on average.
Before you can reach heavy buyer audiences, you must first identify the consumers making purchases in the specified category. In some cases, like bathroom tissue, it may be easy to identify the top spenders, but the audience starts to narrow for more niche categories.
For example, within a luxury women’s apparel category, where only one-third of the population shops, only 7% of people are driving 70% of category sales. Determining the percentage of buyers driving the majority of purchases in any category is key to building a targeting strategy based on purchasing behaviors, especially when leveraging heavy buyer audiences. If your targeting options are not including data based on transaction trends that target these top spenders, there’s a very real chance you’re missing out on massive revenue opportunities.
The tidal wave of digital transformation initiatives during the last two years has resulted in an abundance of purchasing options. The proliferation of ecommerce brands and online retailers combined with the constantly evolving landscape of shopping channels—retail networks, social platforms, ecommerce apps, and more—has left advertisers struggling to retain customers, and boost brand loyalty metrics.
But not all is lost: By understanding how, when, and where consumers shop in this omnichannel landscape, advertisers are able to home in on the audiences that are most likely to perform.
Because we were able to access purchase data from a variety of retailers, we captured a granular view of consumer behavior across broad data sets. Here’s an example of what we discovered: A brand in the energy bar category had a loyalty rate of 50%, meaning that consumers who made a purchase with that brand spent 50% of their category purchases on that brand’s products and 50% on competitor’s products. But, when we looked at the data from another angle and broke down purchase behavior by light buyers, medium buyers, and heavy buyers, we uncovered key insights based on purchasing frequency.
Light buyers, who only made a purchase once a year were considered the most loyal as they only bought from a single brand. Medium buyers, consumers who made a purchase twice per year, achieved a 50% loyalty rate. Meanwhile, heavy buyers of the brand, who made purchases within the specified category ten times per year were the least loyal achieving less than a 20% loyalty rate.
The distinction between your most loyal customers and top category spenders is critical. Heavy category buyers represent your biggest sales opportunities and are key to achieving your advertising objectives. It may be tempting to focus on your most loyal audiences but looking at your data from a more granular level based on transactional trends may show that your least loyal buyers often have a substantial revenue opportunity.
Advertisers have multiple objectives: build awareness, drive engagement, acquire new customers, and positively impact sales results. These goals rely on understanding your audiences and having keen insight into purchasing behaviors and frequency. For many product categories, especially high-dollar items, most buyers make a limited number of purchases per month or year.
Statistically, light buyers and medium buyers make purchases less frequently, accounting for only one or two purchases a year when looking at various product categories. Heavy buyers, on the other hand, make four-times the number of purchases or more in the same product category when compared to light and medium buyers.
What does this mean for advertisers? Your ads have a greater impact on heavy buyers because they are never too far from making a purchasing decision compared to light or medium buyers who may be months or quarters away from a purchase. In other words: Timing is everything. When you target consumers who shop more frequently, you have a greater chance of moving the needle and improving your return on ad spend.
Of course, you never want to ignore customers outside of your top spenders. When nurtured correctly, todays’ light and medium buyers have the potential to become tomorrow’s heavy category buyers.
Oracle Advertising solutions offer a broad range of top spender and heavy buyer audiences across multiple verticals, including CPG, retail, restaurants, entertainment, and more. Our modeled audiences leverage over one trillion dollars in annual purchase transaction data spanning more than 50,000 merchants. In addition to syndicated audiences, custom segments can be developed to meet the targeting needs of individual advertisers.
Our audience data can be activated nearly anywhere an advertiser chooses to run their campaigns: DSPs, social platforms, streaming audio, CTV, and commercial platforms. It also comes with the added benefit of portability, giving advertisers the power to move their audience data and segments seamlessly across platforms and from one agency partner to another.
Find out more about Oracle Audiences and how they can help you lift your key KPIs and drive measurable results.
Tim Carr leads product marketing for Oracle Advertising’s suite of digital media activation solutions, including first- and third-party audience targeting, contextual intelligence, data onboarding, and data enrichment. Before joining Oracle, Tim spent 20 years working in the CPG industry, holding various roles in sales, insights, and strategy at Pfizer Consumer Healthcare and in shopper analytics and loyalty marketing at IRI and Catalina.