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In this edition:

• Column: Why Targeting Still Has A Role To Play In Marketing Plans

• Inspiration: FIAT 500e “Italy is Now in America”

• Upcoming: Unlocking the Future of Customer Acquisition Panel

Column: Why Targeting Still Has A Role To Play In Marketing Plans

With the advent of the internet, marketers were equipped with unparalleled targeting capabilities.

The promise to be able to deliver highly personalized messages to the right people at the right time enthralled marketers all over the world. The future had finally arrived.

But as the years went on and marketers started to run targeted campaigns, the results started coming in. The picture wasn’t so rosy.

As Les Binet and Peter Field analyzed an onslaught of marketing cases submitted to the IPA database, they’ve confirmed what Byron Sharp and the Ehrenberg-Bass Institute had been saying for years: penetration is what drives growth.

And that’s when we returned to the era of mass marketing. Where traditional media channels such as TV, radio and OOH — which continue to show unparalleled effectiveness for reach — made a come back to the core of media plans.

It’s not that traditional media had ever gone away — savvy marketers running analysis of their campaigns knew its importance, it just wasn’t sexy to talk about it. But now it was officially back to the spotlight.

So, where does targeting fit into this picture? Is it worth it to pursue specific segments of the market?

The Role of Targeting

Once marketers complete their market segmentation, they then turn to targeting.

It’s part of every marketing plan — we need to understand who do we want to appeal to specifically. It wouldn’t make any sense to market your hip new seltzer to seniors — there are nuances to the market that one must acknowledge.

But how do we go about picking which segment?

If you’ve done your market segmentation properly, you should know which groups within your total category are the most valuable. It’s a simple exercise of estimating the total number of people in that segment and calculating the total value of it.

When you do that you begin to notice that not every segment is created equal. Some segments have much higher spend potential with a much lesser total population, because as one of the immutable laws of marketing has already shown us, 60% of our revenues typically come from 20% of the total market.

And that’s the sweet spot.

After you identify which of those particular segments have disproportional value then it’s actually worth it coming up with a plan to talk to them.

But don’t go ahead and blow all your budget on it. That would be unwise.

Two-Speed Targeting

The reason why we don’t over-invest in targeting is because of two simple facts:

1. The more targeted you go, the more expensive it becomes.

2. At any given time, only about 5% of the total market is looking to buy.

Let’s unpack that a little more.

The cost spectrum converges at both ends in marketing. If you try to reach the entire market, the closer you get to maximum reach the more expensive it becomes to reach those final “untouched” customers — this article by Matt Prentis does a fantastic job at explaining why.

And the more targeted you go, the more expensive it becomes to reach very particular customers because of the higher competition and precision found in those ad inventories (leading to higher CPMs).

To combat this singularity, savvy marketers have adopted the two-speed targeting approach, aka bothism.

As Les Binet and Peter Field have shown us, brand building campaigns, which work particularly well with out-of-market customers, are best designed to maximize emotional lift to drive recall. Because when you’re not looking to buy anything and you see a funny, or moving, or exciting ad that isn’t trying to sell you anything, our minds can actually experience entertainment from it.

And behavioural science has proven to us that the higher the emotional lift and attention we devote to something, the stronger mental pathways are formed in our brains. So, if your brand is always-on with brand building campaigns, hitting everyone in the category with emotive ads, when these people eventually enter the market to buy, your brand has a higher likelihood of coming to mind (and as Professor Jenni Romaniuk has proven through her research, the brand that comes to mind first is likely the one that gets bought).

On the other hand, you have 1 or 2 high value target segments that you want to over-index your investment with by running targeted and short-term activation campaigns.

This group will be comprised of customers that might or might not be in-market to buy, but because of their higher value it actually makes financial sense to target them with specific messaging to act now.

These short bursts of performance marketing campaigns that are targeted to high value customers are an excellent way to harvest demand. And if this group has already been hit with some brand building ads leading up to this moment, the chances of conversion are even higher.

The Long and The Short

It’s not one or the other — it’s both.

Market to the whole category all year-round, but also target high value segments a few times throughout the year to drive action now.

Let me show an example to illustrate the difference.

The New York Times is the most read newspaper in the world and generates its revenues from subscriptions and ads alike.

Recently they tapped into a highly emotionally resonant idea of being “the essential subscription for every curious, English-speaking person seeking to understand and engage with the world”. And that’s when they launched the “Essential Subscription” strategy. By using all of their distinctive assets (typography, photography treatment, music, colours, etc.) they created several ads that took the viewer through several key moments in history — from discoveries, to events, to cultural moments — but through the lenses of the NYT.

Memorable, simple, and highly codified, building mental availability in the minds of consumers so that when they thought “news”, or “truth”, or “curiosity”, or several other highly resonant mental territories, the New York Times brand would come to mind.

A couple years back, the NYT also acquired the most popular game in the world, Wordle, and folded it into their extensive list of digital games offered through their subscription.

Around the same time of the “Essential Subscription” brand-building campaign, they started reminding certain target audiences that they offered several other games that are just as fun as Wordle. By leveraging the user data captured when non-members were playing Wordle, the NYT now had the ability to target them and tell them to try their age-old game, Spelling Bee.

But the caveat was — you can only play the Spelling Bee as a subscriber. Therefore, “subscribe now to unlock more games”.

Embrace Bothism

This balancing act between brand building and performance marketing is the most effective way to grow brands, as proven by several marketing scholars and practitioners (yours truly included).

The budget golden ratio is around 60% brand building and 40% performance.

Depending on the industry you’re in, brand building can be a little higher than that, or if you’re in the earlier stages of growth, performance could take up around 50% of your budget instead.

All of this to say that targeting still has a role to play in marketing plans. But it all comes down to driving growth the most effective way — and it’s not about picking between mass marketing OR targeted marketing. It’s about doing both.

Inspiration: FIAT 500e “Italy is Now in America”

Selling small cars in America has always been a tall task. — just ask VW about it.

FIAT, which is an iconic Italian car brand owned by Stellantis, has recently launched their new electric model, FIAT 500e.

The issue they’ve been dealing with is two-fold: despite EVs share of market continual growth in America, executives have been scaling back on their electric plans. Demand has softened so brands are trying to find new ways to make their newly released EVs attractive to the existing demand.

The second problem FIAT has been dealing with is that smaller cars in America are typically seen as not “masculine”, what compromises its revenue potential.

To combat that Spike Lee casted Giancarlo Esposito, the son of an Italian man himself, to be featured in the campaign which aims to show a different side of masculinity — one Italians know very well as they enjoy the “finer things in life”.

It’s an entertaining spot that was largely unscripted, so the interactions between Spike and Giancarlo are as genuine as they come, with a fun twist into the Italian way of life.

📢 Community Shout Out

Interested in more marketing and advertising content or have unanswered questions? All you have to do is the following:

• Share this week’s newsletter on LinkedIn.

• Write something nice about it and add a question.

• Tag me on LinkedIn so I can see it.

I’ll answer it in the post comments and pick someone to give a shout out in my next column!

Upcoming: Unlocking the Future of Customer Acquisition

• May 16 @ 4:30 pm - 7:00 pm MDT

• Earl Grey Golf Club - 6540 20 St SW, Calgary, AB T3E 5L2 Canada

• REGISTER HERE

In an era where the landscape of customer acquisition is ever changing, staying ahead of the curve is not just beneficial; it’s essential for any marketer looking to make a significant impact. This exclusive Panel & Power Hour session brings together a trio of local marketers (including yours truly), each with a distinct set of experiences and insights into the dynamics of customer acquisition in today’s marketing world.

What You Will Learn:

• Emerging Trends: Uncover the latest trends in customer acquisition, from technological advancements to shifts in consumer behaviour.

• Strategic Insights: Gain valuable insights into developing and implementing strategies that resonate with today’s consumers.

• Real-World Applications: Learn from the firsthand experiences of the panelists, who have successfully navigated the challenges of marketing in various industries.

• Interactive Q&A: Engage with our experts in a dynamic Q&A session, where you can seek advice, clarification, and deeper understanding of the discussed topics.

Whether you want to refine your strategy, explore new avenues for growth, or simply stay informed on the latest customer acquisition trends, we designed this Panel & Power Hour for you.

REGISTER HERE.

• May 16 @ 4:30 pm - 7:00 pm MDT

• Earl Grey Golf Club - 6540 20 St SW, Calgary, AB T3E 5L2 Canada

More of PPA:

• 🤝 Connect with Pedro on LinkedIn and/or X

• 🍻 Come by the WJ office for a brew

• 💌 In case you missed it:

  • Market Segmentation Explained

  • How To Approach Marketing Research

  • You Are Not The Customer

PPA 

Pedro Porto Alegre is a seasoned marketing professional with in-depth experience building brand and communications strategies for top-tier B2C and B2B organizations across Canada. His repertoire extends from crafting and executing integrated multi-media brand marketing campaigns to the commercialization of performance-driven innovations for multimillion-dollar and nascent brands alike.