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Oracle Data Cloud Blog

  • April 21, 2016

How brands [actually] grow

This week’s post is contributed by Mike Merna, Senior Director, Brand Strategy, Oracle Data Cloud.

Have you noticed the concerning trend of saying something extreme just to get noticed? Whether it’s a book or blog, I frequently find myself confronted with authors who promote one idea or strategy at the expense of all others, with the idea of, “for one thing to be good, all others have to be bad.” Actually, let’s change the word from “bad” to, “the absolute worst.”

Ah, if only life (and business) were so cut and dry. Wouldn’t our lives be so much easier?

Take the hot topic of How Brands Grow, made famous by its author, Byron Sharp. One of the core concepts is that a brand can only grow via a household penetration strategy. Do not attempt to also increase the buy rate of an existing brand buyer or risk a public lashing by Mr. Sharp. I hear this sentiment echoed repeatedly by marketers on a weekly basis.

I suggest a decidedly less edgy approach, though it may come across as controversial: balance. Oracle Data Cloud has seen that by measuring the offline sales impact of online advertising across more than 1,000 studies, a dual strategy is the best.

First, marketers should focus on heavy category buyers who are light or medium brand buyers. Why? These folks spend significantly more than light category buyers on an annual basis, and are already somewhat familiar with your brand, which means they are easier to convert. Show them some love and your brand will be rewarded.

The next step is to conquest non-brand buyers who are heavy category buyers. This segment will likely be a bit harder to convert, but the potential rewards pack a big punch.

Since we are taking a balanced approach, let’s not leave out the other side to this story. There’s this blog by The Ad Contrarian which rails against audience targeting all together, claiming, Big Picture Marketers work very hard to produce widely appealing materials and put them everywhere. Then they stand back and let probability do the work.” In other words, if you are using any targeting at all you are a Small Picture Marketer. Ouch! Who wants to be a Small Picture Marketer?

This notion of putting your materials everywhere is so fraught with waste that it should be illegal.

Yes, audience reach is critical to growth. If you sell mass merchandise you need to reach the masses. But remember that most brands have a multi-faceted marketing mix and each part can serve a different role.

Purchase Based TargetingLet’s take a major beverage brand I’ve recently been working with who has an annual media budget of $20MM: 80% on TV and only 10% on digital. The overwhelming majority of this budget will be mass reach: unable to greatly discriminate with whom it reaches.

With demo targeting (TV or digital), we’ve consistently found that over 50% of the average audience reached doesn’t even buy the category. A message delivered to non-category buyers is usually a waste of an impression, especially in a declining category, like the one in which this beverage competes. And, since this category only has a 33% household penetration, they are likely to waste even more than 50% of their impressions through demo targeting alone. That’s at least $8MM of potential waste!

Waste aside, one of the other benefits of targeting is the ability to find the most valuable buyers. Heavy beverage buyers spend (gulp) +30x more than light category buyers.

Clearly, a brand would want to prioritize these consumers, wherever and whenever possible. The other shortcoming of, “just putting your message in front of as many eyeballs as possible,” is a lofty assumption that one amazing piece of creative will work equally well with all potential buyers. On the whole, with diverse categories like Consumer Packaged Goods targeting audiences from every walk of life imaginable, I’d argue for a simple but segmented creative strategy to be more authentically relevant. Audience insights and targeting can enable this.

A brand like the one referenced in my example can strike the right balance: mass reach and the ability to heavy-up on the buyers in the category who matter the most, with more relevant messages. One strategy need not be exclusive of all others. Working together, they can actually do more.

That’s the big picture, as I see it.

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Photo: LDprod/Shutterstock
Photo: Jasminko Ibrakovic/Shutterstock

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