Demo-based media plans are inefficient in reaching the consumers who are most valuable to brands, according to [download page] a Catalina study released in July 2012, which examined 10 leading CPG food brands that spent more than $415 on measured TV media in 2011. Despite heavy category buyers being worth almost 5 times more to a brand than the average consumer (with an index score of 483), these buyers received TV ad exposures at almost the same rate as the average household (103). Indeed, consumers who were deemed to have just 8% of the average household consumer’s brand value (non or one-time category buyers) received 95% as many brand exposures as the average household.
The report is based on a single-source data view of the demographics, media exposure, and in-store purchasing behavior of American households. The study combined Catalina’s shopper database (measuring consumer purchase behavior) and data generated by Nielsen’s US National People Meter (NPM) TV panel. Tracking 3,787 NPM households, it reviewed TV advertising exposures and brand and category spend across groups of households, segmented by their demographic make-up, level of category engagement, and level of brand loyalty.
Higher-Value Households Left in the Cold
Data from Catalina’s “Deconstructing Demographics” indicates that only 36% of the TV exposures reached the households that accounted for 98% of brand sales, and only 15% of media exposures reached households that accounted for 80% of the average brand’s sales volume. In fact, the average brand in the study delivered 30% of its TV media exposures to households inactive in their category.
Demo-Based Plan Doesn’t Account for Consumer Value
The problem with the demo-based approach, argues the report, is that ad exposures are delivered to buyer groups nearly exactly proportional to their population size, without regard to what their brand value is. For example, although active category buyers accounted for 70% of the households, they only received 70.5% of exposures. This represents a missed opportunity for brands seeking to influence a potential group of new buyers.
And while demographics provide some level of targeting, they’re often not specific enough to drive real efficiency: across the 10 brands studied, households headed by women aged 25-54 accounted for 47% of sales on average, meaning that targeting this group would entail ignoring 53% of sales volume outside of this large target. Indeed, on average, 29% of households headed by women in this age group were inactive in the average brand’s category, and only 22% could be classified as heavy buyers.
The report recommends that brands make use of new technologies that have more precise ad targeting based on purchasing profiles, rather than demographics, suggesting that while more expensive from a CPM standpoint, these have the potential to be far more efficient in ROI. In online media, also, heightened targeting can enable brands to tailor ads towards specific buying behaviors, although, this may also be difficult: comScore research from March suggests that the complexity of targeting variables hurts display ad campaign efficiency.