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Marketers are faced with a brand-building dilemma. They are being advised that the only way to build brands is by achieving the broadest media reach possible, striving to maximize brand penetration.  However, here is the dilemma…solving for reach is also ad waste by design!

In this blog, I will show you how a brand with a mid-sized ad budget might be able to achieve $100MM more in revenues while building a stronger brand by REDUCING, NOT INCREASING reach.

For most brands, less than 20% of consumers buy your brand… so 80% or more of ad impressions in a reach-based plan will go to non-buyers who are mostly unresponsive to advertising…delivering less than dollar for dollar on your advertising.  (The Persuadables).

 Is ad waste really the only way to build your brand?

Here is another path forward…use targeting to drive efficient brand building!  Wait a minute, you thought targeting was only for driving performance?  Think again.

Why targeting existing brand buyers leads to stronger brands

A brand grows by building penetration but it sustains higher penetration and share via increased repeat rates among buyers.

Build share of wallet. You must increase brand loyalty by “shifting the whole buyer curve to the right,” increasing share of wallet. It is mathematically proven that there is no other way to grow in a sustainable fashion (the Beta probability distribution, for you fellow techies.)

Improve buyer retention. Evidence (Baldinger and Rubinson, Catalina marketing) shows that only about 50% of loyal brand buyers are loyal to the same brand one year later. In fact, those who study household shopper data know that only about 50-60% of brand buyers make a second purchase in the year.  That’s a lot of lapsed buyers waiting to happen! The easiest way to increase annual penetration is to improve retention of existing buyers. The higher the retention rate, the lower the required win rate of previous non-buyers.

Increase brand devotion among existing buyers.  Turn switchers into loyal buyers by going beyond standing for a certain benefit to “owning that benefit” (the best/only brand that delivers on this benefit). This conclusion comes from over 90 brands studied via BrandBuilder, the brand equity model I built at NPD. If you achieve this, loyal buyer retention can increase to 70% (Baldinger and Rubinson).

With this backdrop, here are 4 ways that targeting can, in fact, be a great part of your brand-building strategy…

Target loyal buyers to retain them. Reward and reinforce their loyalty to you by showing loyalty to them. Don’t take those buyers for granted as other brands are knocking on the door.

Target heavy and medium buyers with brand advertising. Make performance and brand marketing work together by using brand building creative in performance moments. The Persuadables white paper proved that heavy/medium buyers generate NINE TIMES more ROAS vs. light/non-buyers. And we found that relationship whether the campaign used display, video, or a mix.  The conclusion? Brand building creative in performance advertising moments works about as well AND it will provide brand building value at the same time.  Why does targeting heavy and medium buyers have brand building potential? Aren’t they already loyal?  No…actually most are switchers, so you still have headroom to build more loyalty.

Target non-buyers selectively. Within the 80%+ who do not buy your brand, there is a sub-segment of prime prospects and lapsed buyers. Targeting prime prospects will bring in new buyers without too much performance penalty.

Targeting via traditional marketing.  Linear TV does not have to be used in a gen pop way.  Find programs that are target-rich environments for heavy/medium buyers and for prime prospects.  Use spot TV to buy markets with high BDIs.

Putting targeting principles into action, what if you targeted heavy and medium buyers with 3 times the media weight and light buyers or prime prospects with, say, 1½ times the media weight, funded by a reduction in media weight against non-buyers/non-prospects? I have conducted simulations of this approach and for a brand with a $50MM ad budget, you could generate an incremental $50-100MM in revenues, while still leaving $20MM (40%) of ad dollars for mass marketing.  Less reach leads to much more revenue!

What is the right balance of brand vs. performance marketing? What is the right balance between reach and targeted media? Can targeting drive both performance and brand building? These questions are central to the MMA learning agenda for its “brand as performance” initiative that I am deeply involved with. Please contact me (joel@rubinsonpartners.com) to learn more.

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