February 01, 2012

Does Targeting Work?

In 2004, a guy named Jim Nail, Principle Analyst for Forrester Research, had this to say to The New York Times...
“You’re seeing the end of the era of mass marketing."
In the intervening eight years, it has become an article of faith among the marketing and advertising lemmingocracy that mass marketing as we know it is moribund.

According to this hypothesis, the holy grail of advertising is now targeting. Technology has provided marketers with the ability to deliver  advertising messages targeted to individual consumer profiles and needs. This is typified by web advertising served to us based on a stunning amount of personal information which is collected about us. Soon, the theory goes, cable TV will also be able to find us down to the level of the node that carries our signal and likewise deliver personalized advertising messages. This, according to Mr. Nail and his cohort, has reduced mass marketing to irrelevancy.

The facts, however, tell a very different story.

It is certainly true that we know a lot more about people as individuals then ever before. In fact, we know a frightening amount. It is also true that we have the ability to serve ads based on what we know about individual behaviors, attitudes, demographics, and finances. Yes, we have the technology.

There's only one problem. It ain't working.

As we have developed the ability to target people more and more precisely, click-through rates of these hyper-targeted ads have dropped like a pearl onion in a dry martini. According to Google, click-through rates, on average, have fallen below one in a thousand. And the poster child of personal information gathering and targeting, Facebook, has click-through rates about 5 in ten thousand.

These rates are remarkably -- one is tempted to say -- astoundingly low.

In fact, since the infancy of the web, in the mid-to-late 90's -- when the web had far less detailed personal data on us -- click-through rates have declined by over 95%. Not a fabulous record of success.

There seems to be little convincing data that the new age of hyper-targeted advertising is having the miraculous effect promised to us. In fact, there is plenty of evidence to the contrary.

Maybe advertising success isn't as much about targeting as our newly-anointed media geniuses would have us believe.  Maybe it's about having something interesting to say and somewhere intrusive to say it.

Maybe it doesn't matter how good our aim is if all we are shooting is marshmallows with slingshots.

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