Many small brands are never advertised on TV and do not get to experience the glamour and rewards of brand advertising. Often, the reason is the unattractive economics of trying to reach a low incidence buyer base. For instance, in a product category with only a 5% buyer penetration, a brand using a gunshot advertising approach on TV will reach 95 out of 100 people who are not category buyers. Unless the product has a very high lifetime value like diapers, advertising on TV would be prohibitively expensive. Fortunately, those neglected, advertising deprived brands now have a cost effective means of reaching their audience. The medium, as you might have guessed, is online advertising.
Comscore just completed a study where we built mathematical models to identify CPG product category buyers based on their surfing history. We used the single source database we’ve built with IRI where we track online behavior for a large sample of households who also record their grocery purchases using handheld UPC scanners. The results were very encouraging for categories with buyer penetrations around or below 5% of the population. Based on their online browsing activity, our predictive model “scores” people on their likelihood of buying a particular category and it turns out we can use the model to identify category buyers with a high degree of accuracy. If we take the people with modeled scores in the top 20% (i.e. these are people that our model says are in the top 20% in terms of the likelihood of being category buyers), we get targeting lifts between 250 and up to almost 500 (where an index of 200 represents an increase of 100% in precision over no targeting). For example, Nail Treatment is a category with a 5.3% penetration. By targeting the likeliest 20% of buyers, one can achieve a targeting lift of 341. Another way of looking at this is to say that a campaign targeted to 20% of the scored population reaches 68% of the category buyers, significantly improving the economics of advertising as a result of a targeting lift of 341 (i.e. 68/20). The following table summarizes a few category examples:
PRODUCT CATEGORY
Category Buyer Penetration
Targeting Lift at Top 20%
Percent of Category Buyers Reached by Targeting Top 20%
NAIL TREATMENT
5.3%
341
68%
FROZEN ONION RINGS
317
63%
INTERNAL ANALGESIC LIQUIDS
5.1%
262
52%
ASIAN COOKING OILS
1.3%
421
84%
PIZZA CRUST MIXES
2.7%
319
64%
SHOE/VINYL POLISH/CLEANER/WAX
3.6%
326
65%
MEN'S HAIR COLORING
2.6%
304
61%
This is a win-win scenario. The good news for brands in these types of smaller categories is that they may be able to advertise affordably for the first time by using the Internet They represent new potential ad dollars that can be cost effectively spent online, and which were never captured by TV due to its more limited targeting ability.