Whether you’re on the brand side, agency or publisher side, you’re aware that consumer targeting is a hot topic. If you’re relatively new to the business, it can feel like walking into the middle of a discussion without context about where it started or where it’s going.
So let’s take a step back, unpack both demographic and purchase-based data, how they’re used, and look into some revealing research about how they’re being leveraged in the marketplace.
From its earliest days, demo targeting has been a cornerstone of data-driven marketing. And today, it’s as relevant as ever. It’s step one in customizing your marketing outreach. Use it to identify location, age and gender, marital status and education level of prospective customers. Marketers can then cherry-pick these inputs and create a “segment” that is closely aligned with consumers most likely to buy their product or service.
The advantages of demographic targeting are two-fold: you market only to customers suited to your offering—your most potentially profitable audience. And you don’t commit marketing spend to customers who aren’t suited to your offering—boosting efficiency and cutting waste.
“The proof is in the purchase,” as the saying goes. Purchase-based targeting (PBT) goes after consumers who have a purchase history with your offering. Statistics bear it out: those who bought once are more likely to buy again. PBT is highly productive—more so than Demo.
And the richer the purchase history, the greater the marketer’s ability to bring more relevance, customize messaging and shape attractive offers.
Google has long been employing credit card transaction data, allowing them to show how their ads drive in-store sales. Loyalty cards, as you can imagine, provide a treasure trove of purchase data. Multi-channel interactions, browsing histories and social media are valuable sources, too. With access to this kind of data, marketers can really get creative and cross-index purchase behavior. Consider customer X, who’s been buying prenatal vitamins. Purveyors of everything from diapers to car seats will be eager to engage with her.
Data-savvy advertisers often feel like they have to choose between demographic and purchase-based audiences when targeting customers. But now, testing has shown us what happens when you use both.
Oracle Data Cloud conducted research into the effect of both demographic and purchase based data in driving campaign performance.
The results showed that compared to demo-only targeting, a mix of demographic and purchase-based targeting reduces cost per buyer by 28%, it improves buyer reach by 55%, and it increases total campaign cost by just 3.7%.
That last point above is significant, because while PBT strategies are known to reach more buyers, they’re also known for higher data costs (The CPM for demos is around $0.75, while PBT CPM’s are closer to $1.00).
Your approach, no matter what your KPI, should be to prioritize the PBT data. This lets you zero-in on your ideal buyers, instead of relying on broader demographic characteristics. An effective method is to fulfill high-quality and relevant PBT audiences first, then fill out scale with demos as needed. The demographic data plays an effective role in filling the gaps, allowing you to flesh out a well-round audience without losing that element of precision that lets you engage specific buyers within your customer group.
We hope your takeaway is a better understanding of both purchase-based targeting and demographic targeting, and how they complement each other in digital campaigns.
When purchase-based targeting and demographic targeting are used together, big efficiencies and cost savings are available. The implications for brands and advertisers are even more striking. Because the learning shows us that, for not much more investment in combined audiences, they can get maximized value for their ad spend.
For marketers planning their campaigns today, consider how this powerful combination punch of demo and purchase-based targeting can serve your efforts and improve your digital marketing strategy.
About Pete Louison
Pete Louison is Creative Director of Oracle Data Cloud and a veteran of both traditional and digital ad agencies. He lives on a lake an hour west of Boston with his wife and two unruly dogs.