I’m not ashamed to say that in many ways I can be walking cliché. I can’t resist a shoe sale, a Starbucks latte, or a trip to Target. The majority of the ads I receive are a reflection of this—many times with products I didn’t even know that I wanted. With impressive accuracy, advertisers can discern that because their loyal consumers also like shoe sales, lattes, and shopping, that I match their preset definition of a quality customer, and therefore, am a quality prospect.
A Brief Introduction to Look-Alike Modeling
Lookalike Modeling, also known as Propensity Modeling, is a common technique used by marketers and advertisers. Often used in online marketing, it’s an effective means to extricate and focus on individuals who are similar to current high-value customers, and therefore, are more likely to engage with marketing outreach. Marketers realize that there is a higher chance of success when targeting the behavioral and statistical doppelgangers of their most valued consumers, and the current data revolution has provided the ability to utilize this tactic more than ever.
A 2014 study by eXelate showed that 73% of US ad agencies and 64% of advertisers use Lookalike Modeling to enhance their targeting marketing focus. Additionally, of the agencies using the strategy, nearly 50% saw between 2x and 3x better performance of campaigns.
In 2013, Facebook even jumped on board with the introduction of their Lookalike Audiences tool, which boasts providing businesses the opportunity to “find people on Facebook who are very similar to the audiences that matter to your business, enabling you to reach new people who are likely to be interested in your products or services.” Lookalike modeling processes vary in complexity, from plug-and-play widgets like Facebook’s, to intricate studies of consumer behavior. More multifarious strategies will take longer to accurately integrate into a marketing plan but ultimately lead to higher ROI.
Caption: Sample of a complex Lookalike Model where the closer the user (blue dot) to the red line, the closer their behavioral fit to the advertiser
Source: http://www.theguardian.com/media-network/media-network-blog/2013/sep/06/…
Data Quality: The First Step To Using Lookalike Modeling
Regardless to how extensive the Lookalike Modeling strategy, the starting point must always be an accurate and up-to-date database. But for many businesses, this isn’t the case. A recent study by NetProspex found that 84% of marketing databases are barely functional. Of their entire study, the average database scored 3.2 out of 5 – or barely questionable.
Before employing Lookalike Modeling, a business must overhaul their database to ensure they’re looking at the most precise profiles of their high-value customers. By investing in Data Quality & Integration Solution from a Data-as-a-Service (DaaS) provider, businesses can scrub databases for outdated or inaccurate information. In order to create a complete and transparent database, information must be combined from all other in-house sources as well.
Industry Experts agree that removing silos and assimilating multichannel information provides a more effective, in-depth look at customer patterns and inclinations which leads to a better understanding exactly what factors may drive a consumer from prospect to purchaser. A Data Quality Solution will also scrutinize 3rd party data sources to fill in missing details that a business may not know about. By appending any blank details in consumer profiles, marketers are provided with an unequivocal, 360-degree view of your best customers.
Analytics: The Key to A Successful Targeted Campaign
Once the database has been renovated, businesses can implement a Business Intelligence Solution to pull the newly amended information into easy to understand reports. These reports are the key to a successful Lookalike Modeling targeted campaign. They will provide the intelligence necessary to create an informed prospect list based on factors duplicated in the prospects and your best consumers. These factors can range from demographic, psychographic, or geographic based but are all equally valuable in generating the image of an ideal prospect.
Like any marketing strategy, Lookalike Modeling can’t guarantee a conversion, but it definitely sets your campaign off on the right foot. When combined with other Data-as-a-Service solutions, businesses experience a clear competitive advantage in locating in-market consumers where a purchase is imminent. To learn more about how investing in Data-as-a-Service solutions can improve your target prospecting, download this free solutions guide.
