The Oracle Data Cloud blog highlights the latest data-driven insights and trends in digital marketing and ad tech.

  • CPG
    March 8, 2016

10 Tips for CPG marketers using purchase-based targeting and ROI

This week’s guest blog was contributed by Ben Sylvan, Director, Client Solutions, Oracle Data Cloud.

In an NBA that’s getting more and more data-savvy each season, the Houston Rockets’ front office is considered one of the most sophisticated in the league.

The Rockets made the Western Conference finals last year by playing a style of play heavy on advanced analytics. But this season the team is on the brink of missing the playoffs. Acquisitions like Ty Lawson looked like an analytical fit but didn’t mesh with a team already full of complicated personalities.

The lesson? Data should be the foundation of a successful strategy, but data in a silo can also set you back if you ignore other considerations.

The same applies to data-driven marketing. In order to best achieve your marketing objectives, it’s best to combine hard data with the human element.

Below are 5 of the 10 best practices for using Purchase-Based Targeting and ROI that will help streamline your brand’s data-driven strategy so you focus on driving sales and measuring what matters. (For rules 6 through 10, be sure to tune into our blog tomorrow!).

These best practices are grounded in analysis of more than 1,000 measurement studies conducted by Oracle Data Cloud on the sales lift produced by digital campaigns for Consumer Packages Goods clients.

Rule 1: Increase your reach:

Let’s say you’re a CPG manufacturer running a $500,000 digital campaign aimed at driving incremental sales of an organic granola bar brand. Your KPI is to have a return on ad spend (ROAS) of at least $1, which means your campaign needs to drive $500,000 in incremental sales. If a package of your granola bar runs $5 on average, your campaign must move 100,000 incremental units in order to hit meet your goal.

If the campaign drives an incremental unit for 1 of every 100 households – pat yourself on the shoulder if that’s the case because your campaign did well – you’d need to expose 10 million households in order to hit your KPI. That’s a lot of households.

From a measurement perspective, larger reach reduces noise and makes it easier to measure a statistically significant lift between your exposed group and a control.

10 Best Practices for CPG Marketers Using Purchase-Based Targeting and ROI

Rule 2: Target category buyers:

So your organic granola bar campaign targets a demo audience of 25-49-year-old women. If lucky, 50 percent of your exposures will go to households that actually buy in the wholesome snack category.

Or, put another way, you just blew 50 percent of your ad buy on households that would never consider buying your bar. If you’re trying to move 100,000 incremental units, you can’t afford that type of waste.

Unfortunately this story is all too common.

Oracle Data Cloud research has shown that nearly half of impressions delivered against demographic or native platform targeting goes to households that never buy the category being advertised, let alone the advertised brand. That’s bad, right? It gets worse: ODC has shown a strong correlation between sales lift among category buyers and overall campaign lift. So if you’re not reaching category buyers, you’re making campaign lift a pipe dream.

Rule 3: Don’t treat all category buyers the same.

So you changed your targeting from demo-based to purchase-based, focusing on an audience of households that have purchased wholesome snacks during the past year. That’s a great start. The challenge, however, is that there’s a lot of variety in your audience definition.

Knowing the relationship between category-and-brand purchases can help you hone in on audiences that can best help you achieve your marketing objective. The answer will vary by brand and by campaign.

In this case, targeting medium-to-heavy wholesome snack buyers provides you with the best upside. Heavy category buyers make more than 11 category purchases per year. Light wholesome snack category buyers, meanwhile, make on average 1.4 purchases year, meaning there’s not much room to capture more sales.

Rule 4: Keep your brand buyers top of mind.

Of course, given that your campaign objective is to maximize incremental sales, it’s imperative not to forget your brand buyers.

Oracle research shows that targeting medium or light brand buyers – your bottom 70 percent of buyers, based on annual spend – consistently produces the strongest incremental sales lift. This group already knows your brand but also offers upside for more purchases due to their lower spending on the brand.

That’s not to say you should completely ignore your best buyers. It’s crucial you keep loyalists loyal and fend off conquesting attempts. Additionally, they could have room to grow, especially via new product innovations.

10 Best Practices for CPG Marketers Using Purchase-Based Targeting and ROI

Rule 5: Don’t get too specific with audience selection.

You likely have insights galore on your brand. You have personas that define your ideal customer, all the way down to the type of yoga pants they wear. That’s great data to have, for sure. It can help with creative development and overall brand strategy.

But when it comes to defining a purchase-based target, you want to keep it fairly broad. If you build an audience with too much Boolean logic, you’re going to be left with so few buyers that you won’t be able to achieve any real reach.

And, remember, reach is crucial to driving meaningful sales.

So you need to find the right balance of building purchase-based segments that are broad enough to get scale against but niche enough to eliminate waste.

Oracle Data Cloud recommends focusing on four audience types:

· Heavy category buyers who are light/medium brand buyers

· Competitive buyers who are also heavy category buyers

· Lapsed buyers

· Brand buyers

By following these five steps, you can better ensure your product is being marketed to the right people at the right time. Tomorrow, we will delve into the five remaining best practices for CPG marketers, so don’t miss the next installment!

Are you a CPG Marketer looking for more resources? Be sure to read Valuable Online Marketing Lessons for Consumer Brands, as well as The Next Steps in the Audience Planning Evolution, on the Oracle Data Cloud blog.

Stay up to date with all the latest in data-driven news by following @OracleDataCloud on Twitter and Facebook! Need data-related answers for your next marketing campaign or client partner? Contact The Data Hotline today. (What's The Data Hotline?) 

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