In marketing, it goes without saying that it is better to focus resources on high-value target segments than build broad, reach-everybody campaigns. But the truth is that most digital marketing dollars do not go to person-based (addressable) campaigns. Instead, we pour more resources than we’d like to admit into black-box lead generation models or broad "spray-and-pray" initiatives.
While change is happening, most advertisers are just getting started, searching for the vocabulary to describe what addressable marketing might mean for their business.
Addressable Hierarchy
Early adopters are thinking in terms of a hierarchy. They are finding that the more granular their targeting, the higher their ROI. For example, many find that individually targeted campaigns perform at a 2-3x multiple better than broad-reach campaigns. Individual-look-alike, segment, and even segment-look-alike approaches form additional layers in this hierarchy, often outperforming broad reach by a smaller, but still powerful, 1.5-2x multiple.
This hierarchy is especially important to insurance companies which, with the exception of a few established giants, tend to specialize around protected niches. Examples include auto clubs, professional associations, affinity groups, credit unions, and other membership organizations. These companies are expanding addressable marketing into digital to better reach their eligible or preferred populations.Addressable Multiplier
Many early adopters are finding that their addressable multiplier — the lift that addressable campaigns receive over broad reach — can be influenced. These companies are investing in understanding the drivers of value within their specific business models and increasing the precision of their targeting models. They are moving measures of value downstream in their value chain — from leads to applications to conversions and premium retained over time. This in turn is increasing the value, or multiplier, of addressable marketing.
Additionally, these companies are improving multipliers by building multi-touch sales and service experiences. These experiences feature increasing levels of personalization, multi-channel remarketing, and increasing test-and-learn approaches to drive higher conversion and value.
Addressable Percent
Given the advantages of addressable marketing, early adopters are looking hard at the percent of their portfolio that is truly addressable. In a digital context, addressable percentages are usually low, maybe just 5-10 percent when advertisers are getting started. Understanding this metric is key because it frames a major path for growth. Increasing the addressable percent from, say, 10 to 30 percent of a marketing portfolio has the potential to lift overall portfolio performance by 30% or more. A good way to get started increasing addressable percentage is to begin testing into multi-channel remarketing and testing ways to find current and former customers on some of the larger platforms.
As with many evolutions, the key is to simply get started. Whether addressable marketing is a major part of your strategy today or not, in the future it will be. In this environment, the companies that move quickly to establish expertise and who invest in improving their multiplier, will open new paths to competitive advantage.
