I’m always on the lookout for marketing facts and insights that defy conventional wisdom and offer real opportunity for CMOs to be more effective.  Demolishing marketing shibboleths should be on everyone’s agenda.  That’s why I’d like you to take thisR B Targetingl.jpg simple quiz.

True or False:  70%+ of the volume from TV advertising comes from a brands key demographic target group.

I’ve asked this question of a lot of marketers, and they almost all say it’s true.  But it’s not.  Of course, you knew this statement was false, because you’re smarter than the average CMO.

The Facts around Source of Volume from Advertising

A recent study, “Deconstructing Demographics” by Nielsen Catalina Solutions (NCS), concluded that less than half of the volume from advertising comes from consumers in a brand’s key demographic target.  Here’s how they know this.

NCS asked ten well known and highly regarded food and beverage brands for their primary demographic targets.  They calculated the incremental sales lift from advertising using single source methodology, which matches the ads people watch with what they buy via loyalty card data.

The total sales lift due to the advertising was then broken out by demographic group—e.g. how much volume came from target vs. non-target consumers.  The answer?  Fully 53% of incremental volume due to advertising came from outside of the target demographic group.

Here are a few other eye-opening findings:

  • Just 15% of ad exposures were delivered to households that accounted for 80% of sales for the average brand.
  • Brand advertisers delivered 64% of ad exposures to households that accounted for just 2% of sales.

Where Does Advertising Driven Volume Come from?

How can we explain this learning?  Perhaps the brands media plans were ineffective in delivering ads to their respective demographic targets.  If very few of the ads went to target consumers, then it stands to reason that perhaps target consumers represented the minority of volume.  But, given that the brands came from a range of companies and categories and their demographic targets were broad, this seems unlikely.

The other option is that using demographics alone is not the best approach to finding consumers who will be most responsive to your advertising.  That is, perhaps demographics plus some other consumer characteristic is more predictive of sales response.

Buyer Behavior—the Secret Sauce

What is the secret sauce to add to your demographic target? Buyer behavior.  The NCS work showed that buyer behavior was highly predictive of which groups would best respond to the advertising.  For example:

Buyer Behavior Group

Advertising Sales Response

Heavy category / heavy brand buyers

Low

Heavy category / light brand buyers

High

Light category / heavy brand buyers

Low

Light category / light brand buyers

Moderate

Non category buyers

Low

When you think about each of these groups, it makes sense:

  • Heavy brand buyers are already buying your brand—a lot.  So, advertising has little short term impact on them.
  • Light brand buyers are highly responsive—they’re the group most likely to be persuaded to buy more of the advertised brand.  But light brand buyers that are light category buyers generate little incremental volume.
  • Non category buyers generate little, if any, volume.  After all, they’re not even buying the category (very much).

So, who are the most responsive consumers?  Heavy category, light brand buyers.  They use the category a lot, but your brand very little.  They’re usually your best source of incremental volume from TV advertising.

Perhaps an example will help.  Think about it this way.  For a brand with a demo target of women 25-54, women aged 54+ who are heavy category/light brand buyers generate more sales response than women 25-54 who are light category/heavy brand buyers!

What Your Most Responsive Consumers Watch

The question then is this:  what do these consumers watch?  Are the TV networks, genres, and shows they watch different than your traditional demographic target?  Generally speaking, they do have different viewing habits than your traditional demo based target. Two TV shows with exactly the same demo rating might contain very different amounts of your most responsive buyer group.

This point is key. It’s important because it means that you can plan your media against your most responsive buyer group, and you will get a greater volumetric response to your advertising.  How much better?  A large volume of studies show it’s about 33% better—not small change.

Demographics + Buyer Behavior = Better Results

Let’s be clear.  Demographics are foundational and aren’t going away.  The Brand Manager for diapers is always going to be interested in young women with babies.  The beer companies are always going to be interested in young men.  But adding buyer behavior data to your planning provides a great opportunity for CMOs to be smarter and more effective with their media spend.