The document summarizes a study that analyzed how demographic-based TV media plans perform for key consumer packaged goods (CPG) brands. The study found that demo-based plans are inefficient, as they reach all buyer groups equally regardless of their value to brands. On average, brands wasted 30% of exposures on households that did not participate in their categories. Only 15% of exposures reached households that accounted for 80% of sales. Demographics are a poor surrogate for purchasing behavior, as over half of sales fell outside the largest demographic groups used for targeting. The findings suggest media plans should transition from demographic targeting to purchase-based audience buying to improve efficiency.

1. Deconstructing
Demographics
How Demo-based TV Media Plans
Perform Within Key CPG Buyer Groups
Brand Demographic
volume target
53% of the brand's volume is 47% of the brand's volume is
outside the demographic target reached by the demographic target
© 2012 Catalina Marketing Corporation

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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

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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
brand's 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%
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© 2012 Catalina Marketing Corporation

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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

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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 brand's volume is 47% of the brand's volume is
Catalina has long led our industry in purchase-based outside the demographic target reached by demographic target
targeting. Catalina's 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

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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