Consumer Expectations

Bloated Segments are Good

unnamed-13 Bill Guild is the VP of Marketing for ChoiceStream, a full-service DSP that delivers top-of-plan results by optimizing each phase of online, video, and mobile campaigns. Prior to ChoiceStream, Guild was part of several marketing positions at companies like AOL, Nexage, and Oracle.

We often hear that third party segments are bloated with consumers who have shown mere interest rather than true intent.  We think that these broadly inclusive segments are useful and valuable. Third party data providers that deliver intender segments much larger than the amount of actual purchasers should be considered accurate and beneficial, not over-excessive. The job of a third party data provider is to give certain information about consumers.  These providers have built technology and partnerships that monitor consumers as they interact on the web and in the world, classify the observed behavior into meaningful segments, and deliver those segments in a timely, efficient, cost-effective manner. Third Party Data Providers are doing remarkably well at this.

Take the auto industry, for instance. While the auto intender segment includes 20 MM consumers, only 7MM of these intenders actually purchase a car each year. Third Party Data bashers cite this as a failure on behalf of the data provider, but this is not the case. Rather than viewing the 20MM auto intender segment as “bloated,” the industry needs to understand that a 35% conversion rate, especially for a purchase as large as a vehicle, is actually impressive.

Let’s look at an example, to put this into perspective. In email marketing, a 10-20% email open rate and a 2-3% click-through conversion rate are considered “good” responses. Say a B2B or B2C company distributes an email to a list that is pre-targeted to the region, companies, and job titles that make up its ideal audience. A quarter of recipients open the email, and only 5% actually click a link within the email once they’ve opened it. That 5% conversion rate requires a simple click; the auto intender example above requires a multi-thousand-dollar purchase. Going back to the car example, shooting blindly from the hip at all 20 MM auto intenders, and seeing a few million purchases, is an extremely efficient conversion rate.

But let’s not rest easy with that information. The goal here isn’t to hit the norm; it’s to surpass it. In order to increase sales and maximize your advertising budget, you need to properly analyze the intender segment. Once the Third Party Data provider sends you this segment, the job is done on their end, not yours. You need the ability to take the information that has been given to you, and find trends that provide you with customer insight.

Say that you represent Jeep, and you are tasked with increasing sales. Out of the auto intender segment, who bought a Jeep within the past year? You need to find characteristics that the majority of these people share. You’d look further into this sub-segment to understand who should be your top-priority target when you advertise. Customer insight will allow you to develop a user persona for your digital ads – one that you can later extend to campaigns in other media.  Performing analysis (often involving programmatic advertising algorithms) allows you to dig deeper than your competitors and find trends that you and they have previously overlooked. Using an automated DSP to discover your audience will drive efficiencies and increase the relevance of your advertising.

You will also need to closely observe the remainder of the auto intender segment that you have received from your third party data provider– the portion that does not ultimately buy a car in a given year. Even though these consumers don’t purchase, this does not necessarily make them audience waste.  Auto intender segments should and do contain all types of intenders – those who intend to buy some day, those who intend to buy used, those who need a replacement car but can’t afford one, those who intend to buy luxury, those who are helping others decide, and so on.

Those who do have true intentions to buy a car, but who fall outside of the percentage of consumers who purchase in a given year, are typically just at the top of the sales funnel. They need to be nurtured accordingly. Developing personas for each stage of the funnel allows you to target these consumers within their context, treating them with a rewarding experience that guides them down the funnel and brings them closer to a purchase.

So, filter the waste – those who are researching cars frivolously or on behalf of another consumer – and then break down the different segments of true intenders. What’s the persona of the average consumer beginning the search for a car? What about those who are in the middle of comparing different makes? Or someone who’s further along, and has decided on a make but has yet to finalize a model? What about someone whose mind is set on a Jeep Cherokee, but is shopping around for where to buy and what color to go with?

The key to increasing purchases lies not in finding a better third party provider but in optimizing the analysis of your intender segment.  In reality, you need bloated intender segments to determine the characteristics of consumers who are ready to buy, to identify consumers who’ll be ready to buy down the line, and to map out the advertising experience for these intenders who are less advanced in the buying process. It is up to advertisers and the DSPs working on their behalf – not the third party data providers – to identify the perfect cross sections and combinations of the audiences.  Done wrong, results will be disappointing; done right, campaigns will perform very well and exceed advertiser’s expectations.