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1. Deconstructing Demographics How Demo-based TV Media Plans Perform Within Key CPG Buyer Groups Brand Demographic volume target 53% of the brands volume is 47% of the brands volume is outside the demographic target reached by the demographic target© 2012 Catalina Marketing Corporation
2 PG / 1 about the study Deconstructing Demographics is a new study by Catalina We believe the results will surprise many of you. We also that looks at the effectiveness of demographic targeting believe they compel our industry to consider making in finding consumers who are truly valuable to brands. significant changes in the way advertisers plan and deliver For years our industry has relied on demographics to media. There is a clear need to transition from demographic define target audiences. Today, however, new data sources targeting to purchase-based audience buying. and media types give us the opportunity to look beyond demographics for the first time. We hope this report sparks further reflection among brand advertisers, media planners, media buyers, and media owners. The findings show that demo-based media plans are inefficient in reaching consumers who buy more. In fact, study highlights they reach all buyer segments at virtually the same rate. As a result, demo-based media plans waste a large portion • Demo-based media plans treat all buyer groups of ad exposures on buyer audiences that have little or equally, no matter what their value to a brand is. no value to brands. In our study, just 15 percent of ad Across every brand and category in our study, ad exposures were delivered to households that accounted exposures were delivered to buyer groups almost for 80 percent of sales for the average brand. Meanwhile, exactly in proportion to their population size. No brand advertisers delivered 64 percent of ad exposures to deviation was greater than 4 percent. households that accounted for just 2 percent of sales. • Demo-based media plans deliver a large portion of ad exposures to low-value households. Demographics are, in fact, a poor surrogate for purchasing The average brand in this study delivered 64 behavior. More than half of all sales for the average brand percent of television media exposures to households fell outside of the largest demographic groups typically that accounted for 2 percent of sales. used by advertisers for targeting. • Higher-value households are undervalued. The findings show that demo-based Only 36 percent of exposures reached households that accounted for 98 percent of brand sales. media plans are inefficient in reaching the consumers who buy more. • Common demographic targets miss a majority of sales volume. Our new research is based on a single-source data Households headed by women ages 25-54 view of the demographics, media exposure, and in- represented 41 percent of all households, store purchasing behavior of American households. This but provided just 47 percent of sales for the aggregated and anonymized view, powered by Nielsen average brand. Catalina Solutions, combines Catalina’s shopper database— • Brand advertisers now have delivery alternatives the world’s largest data warehouse of consumer purchasing that reach households based on purchasing behavior—and data generated by Nielsen’s U.S. National behavior, not demographics. People Meter (NPM) television panel. The study tracks 3,800 NPM households. It looks at 10 leading CPG food • Shopper ID-driven media networks can brands which, together, spent more than $415 million on reach exactly the right buyers based on their measured TV media in 2011. For each brand, we reviewed purchase behavior to address any brand strategy. TV advertising exposures and brand and category • Purchase-based targeting is now dramatically spend across groups of households, segmented by their improving the efficiency of online and television demographic make-up, level of category engagement, and advertising. level of brand loyalty. The result is a new, in-depth look at the way demographic-based media plans perform against various buyer segments.© 2012 Catalina Marketing Corporation
3 PG / 2 MISSING THE OPPORTUNITY The result is significant media inefficiency. On average, brands wasted 30 percent of their exposures on If a media plan were truly efficient, one would expect advertising households that did not participate in their categories, to reach higher-volume category buyers with greater frequency meaning they had either never bought or bought just than those who contributed little or nothing to a category. once during the 12-month study period. By comparison, Advertisers would weight media exposures toward the greatest households that accounted for 80 percent of the average selling opportunities—those households that could sustain and brands sales volume received just 15 percent of media grow the brand. Heavy spenders would be exposed more often exposures. Only 36 percent of exposures reached than households not actively shopping in the category. households that accounted for 98 percent of sales. Demo-based media plans reach all Just 15 percent of media exposures buyer groups only as much as they were delivered to households that occur in the general population. accounted for 80 percent of sales. One might argue that these brands had strategies for Demographic targeting, however, typically reaches all buyer winning new customers rather than growing volume among groups for brands only as much as they occur in the general existing buyers. However, the obvious place to look for population. The result is significant waste and inefficiency in new buyers would be among active category consumers. delivering to a brand’s most valuable consumers. On average, active category buyers equaled 70 percent of households for brands and received only 70.5 percent of Our study segments households across a variety of buyer exposures. They received exposures at virtually the same groups based on category spend and brand loyalty. These rate as inactive category buyers (see Fig. 2, p. 3). buyer groups range from non-category buyers and heavy category spenders who are brand loyals to heavy category Across all 10 brands, only one, a soft drink brand, managed spenders who are switchers and the pivotal consumers to reach heavy category buyers with a significantly greater who together make up 80 percent of brand sales. Across frequency than those households existed in the population. every brand and category in our study, ad exposures Several brands in the study from the yogurt, frozen dinner, were delivered to different buyer groups almost exactly in packaged cheese, and canned soup categories reached proportion to their population size. No deviation was greater heavy category buyers with less frequency than those than 4 percent (see Fig. 1, p. 2). Treating Every Household As Equal households occurred in the population. Treating Every Percent FIG. 1 Household EqualLY 100% A Demo-targeted advertising reaches all buyer groups equally, no matter 80% A what their value is to a brand. For the average brand in our study, ad exposures reached every buyer 60% group in nearly direct proportion to their size of population. Despite 40% demo-based planning, no group experienced a deviation of more than 4 percent. 20% 0% rs s e s y d y d d d al er iv or or an an he an n oy t m ra eg g Ac Br Br itc Br te su tL B at Sw n- al Ca m y y on Ca C or av t No iu n- To lC 1x ry g He ed y No te av go ta M Ca vo Avg. % of HHs Avg. % of Exposures He te Pi Ca y av He© 2012 Catalina Marketing Corporation
4 PG / 3 All Women 25–54 Are Not households headed by men and older women are major buyers in these and other CPG categories. Some 60 percent Created Equal of all sales came from outside of the W25-54 target for the Demographics do provide some level of targeting. Across frozen dinner brand, 58 percent for the cereal brand, and 50 the 10 brands we studied, households headed by women percent for the yogurt brand (see Fig. 4, p. 4). between the ages of 25 and 54, on average, accounted for 47 percent of sales. While this is a significant opportunity, These findings demonstrate that demographics are, in fact, this demographic group is far too large and diverse to be an insufficient surrogate for purchasing behavior, creating considered an efficient target. inefficiencies for media planners who have been forced to rely on them for lack of better tools or metrics. When is a group just too big to be called a target group? There are approximately 64 million women in the United States between the ages of 25 and 54, representing 21 More Precision in the Buying percent of the population. Decision Historically, marketers have had little choice but to rely More than half of all volume fell on demographics as the best means of determining when outside of this huge target of and where advertising should be placed to achieve better households headed by women 25-54. results. It was really the only data available, and the only way media were measured, scored, and guaranteed. Yet more than half (53 percent) of all volume fell outside this huge target (see Fig. 3, p. 4). On average across the brands The world, however, is changing rapidly. In the era of studied, 29 percent of households headed by women ages big data, marketers now have new tools and new media 25–54 were inactive in the category. Only 22 percent of types that can improve targeting techniques and drive households headed by this group were heavy buyers. far greater efficiency of delivery. For example, new technologies are enabling more precise ad targeting based Consider a low-calorie frozen dinner brand, a low-fat cereal on purchasing profiles, not demographics. To be effective brand, and a popular yogurt brand. Among the three, none for brands, these new approaches must have the scale to had more than half of sales coming from within the reach millions of buyer-relevant consumers. Importantly, demographic target of households headed by women while these solutions may appear expensive from a CPM between ages 25 and 54. The findings show that perspective, they can be far more efficient in ROI. heavy buyers are underserved FIG. 2 by demo-based targeting Heavy category buyers are worth almost five times more, but they receive TV ad exposures at virtually the same rate 483 as the average household. Brand Value to HH Index 8 (% of Average) Brand Exposures to HH Index 95 103 (% of Average) Non/One-time Heavy Buyers Category Buyers© 2012 Catalina Marketing Corporation
PG / 5 4 Targeting a buyer audience using actual purchasing behavior data ensures delivery to households with higher Is Your Target Hitting FIG. 3 value to specific brands and their categories. It also the Target? allows advertisers to target the buyer segments that are For the average brand in our most relevant to their brand objectives. For example, a penetration/trial strategy might index toward households study, more than half of all that are heavy category buyers, but have not yet tried your sales volume fell outside of brand. A share of requirements strategy might target heavy the demographic target of category buyers who are switchers. households headed by women ages 25–54. This demographic Targeting based on purchasing behavior represents 41 percent of all ensures delivery to households with households. higher value to brands. Furthermore, in online media, this heightened level of targeting allows advertisers to segment their creative to ensure the delivery of personalized messaging. Rather than the old demographic method of creating a single piece of copy for all women between the ages of 25 and 54, a brand Brand Demographic can now tailor messages and offers toward specific buying volume target behaviors. For example, non-buyers would receive a very different message from consumers who have bought the brand. Environmentally-conscious consumers would receive a different message relevant to that purchasing behavior than savers. This kind of relevance enhances your ability to engage consumers with your messaging. 53% of the brands volume is 47% of the brands volume is Catalina has long led our industry in purchase-based outside the demographic target reached by demographic target targeting. Catalinas capacity to see the evolving purchase history of some 75 percent of American shoppers and deliver relevant advertising and offers to those consumers at the point of sale has set the standard for precise targeting missing the Target? via a shopper ID-driven network. Catalina is now expanding FIG. 4 For the 10 brands tracked in this its ability to precisely reach high-value consumers via a study, as much as 60 percent of variety of new communication channels, including online and mobile. sales volume fell outside of the demographic target of households As part of that effort, the company has just launched headed by women 25–54. Catalina BuyerVision™ to help brands and media planners leverage purchase-based segmentation to engage the right buyer audiences with digital advertising anywhere Category Group Volume Outside of the Volume Reached by on the web. Powered by Nielsen Catalina Solutions and Demographic Target the Demographic Target by Catalina’s unique insights into in-store purchasing Frozen dinner 60% 40% behavior, BuyerVision allows brands and retailers to target the right buyer audiences as defined by purchasing, not Cereal 58% 42% demographics. Rather than targeting websites and web Yogurt 50% 50% content, BuyerVision identifies the buyers who are most important to a brand strategy, finds them online, and serves Cookies 49% 51% them advertising wherever they are on the web. It allows Soft drinks 49% 51% campaign results (i.e., sales lift among your targeted buyer audience) to then be measured precisely at the point of Mayonnaise 60% 40% sale. Italian sauces 49% 51% Purchase-based targeting on the web has delivered Salty snacks 44% 56% impressive results that can be measured at the point Packaged cheese 53% 47% of sale. Nielsen Catalina Solutions 600 case study compilation, "From Clicks to Cashiers," documents an Canned soup 58% 42% average in-store sales lift of 22 percent.© 2012 Catalina Marketing Corporation
6 PG / 5 Conclusion did you know? By default, demographic targeting has been an accepted Deconstructing Demographics uncovered some best practice among brand advertisers, media planners, surprising facts about how demographic-based and media channels themselves for many years. Yet, as targeting performs against different buyer groups for this study shows, demographic profiling falls far short of actual brands: efficiently finding a brand’s most valuable consumers. • More than half of all ad exposures for a leading Media plans based on demographic targeting tend to mayonnaise brand were delivered to a group that treat every buyer audience, from non-category buyers made up less than 10 percent of brand dollars. to heavy category and brand buyers, as equals. They deliver exposures to all buying segments almost exactly • Half of exposures to an Italian sauce brand were in proportion to their share of the general population. delivered to a group that made up just 5 percent Demographic groups themselves tend to be too large of brand dollars. and too diverse to serve as effective targets. Indeed, the • Two low-calorie brands in frozen foods and cereal majority of brand sales tends to fall outside of even the are marketed primarily to women, but 20 percent largest demographic groups, such as households headed and 18 percent of sales, respectively, came from by women ages 25–54. households with no women reported. Demographic profiling falls far short • A common sex-age demographic target for CPG of efficiently finding a brand’s most brands is female ages 25–54. There are roughly valuable consumers. 64 million people in the United States who fit that demographic—almost three times more people Today, in an era of big data and more actionable than the entire population of Australia. insights into consumer purchasing, there are major new • Women ages 25–54 are the primary demographic opportunities to more efficiently target higher-value target for most CPG brands, but more than half of consumers. From shopper ID-driven media networks to all sales for the average brand fell outside of this purchase-based audience targeting, new, more precise, and demographic group. relevant targeting is available and should be integrated into • Among the 10 brands in our study, only four most brand advertising and promotional campaigns. had ad exposures hitting heavy buyers in their category with greater frequency than the general population, and only one—in the soft drink If you’re interested in learning more about purchase-based category— had exposures more than 1.2 times targeting and how you can put Catalina BuyerVision to greater. work in your next campaign, please call 1-877-210-1917. • For four other brands, ad exposures reached heavy category buyers less frequently than they did the general population.© 2012 Catalina Marketing Corporation
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