Segmented audiences are 4X more valuable

This past week, Anna forwarded me an article from Adweek, Aim High: Ad Targeting Moves to the Next Level. It’s a brief but good write-up, evangelizing behaviorally-targeted advertising. It does, however, raise the concern of privacy — the description of how a start-up called NebuAd is cutting deals with ISPs to automatically track people’s entire behavior online is, in the words of AOL’s Dave Morgan, “a little creepy”.

However, after reading the article, a couple of thoughts struck me.

First, segmentation is immensely valuable. Behavioral targeting of ads is hot because — surprise, surprise — when you give people more relevant messaging and content, you get better results. The Adweek article quantifies the value of that advantage by citing a recent Merrill Lynch report that estimates the average web advertising CPM rate at $2.50 — while reporting that the average CPM for behaviorally targeted ads is $10.00.

Takeaway: a segmented audience has a 4X premium.

Second, as excited as online marketers are with the promise of behaviorally-targeted ads, many overlook the opportunity for segmentation that’s already in their backyard — segmenting respondents on page one of their post-click marketing landing experiences. Anna’s recent post on how to segment gives a clear example. I think of this as filling the gap between click and conversion in your respondent funnel.

You’re already paying for your existing search, display ad, and email marketing traffic — why not make the most of that spend and turn them into a segmented audience?

Employing directed behavioral segmentation on your landing experiences gives you 4 immediate advantages:

1. You can quickly match targeted content to respondents, even if the traffic source was relatively unsegmented.
2. Making segmentation transparent to respondents increases accuracy while avoiding the creepiness of a site knowing more about you than you thought you revealed.
3. You can run controlled A|B tests on different types of segmentation choices to see what resonates best with your audience. Breathing respondent affinity into your worldview of market segmentation can unearth entirely new ways of engaging your audience.
4. By looking at the correlation of segmentation choices and the traffic sources from which those respondents originated, you can learn which pre-click vehicles resonate with which audience niches.

It’s not just coincidence that our clients who have been using directed behavioral segmentation in their post-click marketing are converting at an average rate of 11.1% — 4X greater than the overall industry rate of 2.5%.

Comments

[SMG]

What about segmenting users pre-click by creating landing pages for each ad group created by search? Isn't that the same idea as post-click segmentation?

If I know a certain group of keywords targets a user with a certain intent, I can craft my landing pages prior to launching the campaign. By doing this, I avoid requiring the user to click through several pages before getting the final result

[Scott Brinker]

Hi, SMG. Certainly if you can narrow the intent of your respondents to a singular pitch pre-click, you're in a great starting position for whatever post-click experience you deliver them.

That's obviously easier for some businesses than others. For example, people who search for "marketing automation" could have a fairly wide spectrum of intention, as compared to someone searching for "Sony Cybershot H9 best price".

Still, even if you know exactly what someone wants when they click on your ad -- how much do you know about them? Are all customers equal in your business, or are there certain traits that separate great customers from the pack? Post-click segmentation lets you glimpse some insight into those characteristics before conversion. This can both be helpful to improving conversion, as well as learning about the ones who bounce -- which helps you learn even more about which keyword phrases pull which respondents, converting or not.