With big data and its analysis on everyone’s minds, I’m going to take a look at the outcome of all of this number crunching: niche marketing. Proponents of this tactic argue that narrowing down the focus to find an extremely specific target market is the best way to turn your ad budget into conversions. Read on to find out why.
Big Data, Small Targets
More than ever, data is driving business decisions. Clickz reported today on a number of different studies, bringing up some important statistics that speak to an increased desire to use demographic and other data to get a handle on who a business’ biggest customers are going to be. Check this out:
- 91% of CMOs think that data-driven choices are one of the biggest factors in a brands’ success
- Using data to drive business decisions can result in an incremental 241% return on investment (ROI)
- Currently, only 11% of marketing decisions are made as a result of data analysis – but that number is growing as companies turn to algorithms and automated analysis
So what does this mean for niche marketing? All of this data collection and analysis results in businesses knowing way more about consumers, from basic demographics (age) to behavioral information (when they visit your site), even to information about their interests, values, and lifestyle. The outcome: you can better refine your target marketing.
In short, instead of aiming a campaign at “New Yorkers between 21 and 35,” you can target “people in Manhattan who buy sushi after midnight on their way home from the club” – and you can know exactly whom to target.
Word of Mouth Advertising and Loyalty
In addition to getting more bang for your advertising buck, targeting niche markets tends to come with the added bonuses of free word of mouth advertising and brand loyalty. Forbes interviews one of the founders of LensWork, a photography magazine with a very specific aesthetic and audience in this article. Brooks Jensen (the founder) makes a few key points about the value of niche audiences:
- Members of niche markets tend to be passionate about their specific interests, values, and hobbies.
- As a result, they’re more likely to talk about those interests – and your brand – with people they know, resulting in social network shares, conversations, and other word of mouth “advertising” that makes your brand seen and heard.
- In a combination of that audience passion and the general lack of competition for businesses that cater to niche markets, customers, clients, and brand fans will keep coming back for more.
These points fit perfectly into the ideas of big data proponents. Essentially, if you play your analysis cards right, you can tap into the very specific things that people love, driving your business forward along the way.
A New Business Model?
If you’ve been paying attention to startups, you may have noticed that the most successful brands are those that cater to a very specific product or service. As that Huffington Post article notes, just look at the social networking world. Instead of relying on Facebook to serve all of our sharing needs, people are now using Instagram for photo sharing, Twitter for status updates, Pinterest for DIY projects – if you can name a niche, there’s probably a social networking platform for it.
While this might be true for startups, it doesn’t mean that you need to pare down your own business to just one product or service, or make your target audience a tiny fraction of the total population. This Forbes article, for example, highlights a cruise business whose main clients are alumni of various colleges and universities. The owners were actually able to grow their business through word of mouth advertising and the strong communication networks that link alumni from prestigious schools (just one more example of what niche marketing can do).
Focusing on niche markets will allow you to create a strong, differentiated identity for your brand; will focus your advertising efforts; and will ensure that you can take advantage of the loyalty that comes with group membership or personal interest. So think about what niche your business serves, and how you can use the principles of big data and niche marketing to your advantage!
Is your business currently targeting niche markets? Are those efforts more successful than generalized campaigns?
Don’t forget to come back for the sequel to this article, where I’ll talk about the pitfalls of niche marketing!