Contextual targeting 'up to three times more effective'

Brands which embrace so-called narrow targeting using channels like social media, online video and display could potentially be pouring their budgets down the drain, with new evidence emerging that contextual targeting can be up to three times more effective.

So says Analytic Partners’ ROI Genome Report, entitled “Targeting Works, Except When It Doesn’t”. It reveals that in the past 12 months, 75% of all marketing spend was concentrated on channels with the potential for narrow targeting – up from 55% five years ago.

And yet, contextual targeting – buying ad space based on the relevance of a website’s content to your product – is claimed to be up to three times as effective as other forms of targeting when costs are comparable.

Analytic Partners senior vice-president Kevin O’Farrell said: “Despite the huge shift of spend towards narrow targeting, we can show that it has not lived up to its promise for most brands.

“This is in part due to a murky pool of data vendors, mystical algorithms and sub-optimal execution. Add to this, device sharing, walled gardens, and the crumbling of the cookie, and the accuracy of targeting with third-party data is becoming more and more questionable.”

O’Farrell maintains that increasing consumer privacy concerns are also creating a ripple effect: people are more protective of their personal data now than any time in recent memory, leaving large gaps in data and capabilities.

The report goes on to recommend that marketers should not focus on the customer segments that are most likely to convert; instead they should focus on the customer segments that actually deliver the highest short- and long-term value.

It also says marketers should prioritise broad reach for upper funnel tactics (including TV, and online video) and prospecting (paid social), while also prioritising contextual targeting for digital tactics that use third party user profiles (display) or are contextual by design (digital outdoor and affiliates).

Finally, marketers should prioritise more narrow targeting for tactics using first party data (including CRM, loyalty, email) and accurate second party data (paid social).

Analytic Partners claims that by taking these steps and optimising media spend, marketers can increase ROI by 30%.

O’Farrell concluded: “While there is a time and place for most types of targeting, depending on the industry and strategy, to make targeting work for your business, the right balance needs to be achieved with both broad and narrow techniques and due prominence to contextual targeting within a considered holistic approach.”