Behavioural studies

Behaviourial targeting is the flavour du jour, the latest research and planning approach to displace lifestage, psychographics, econometrics, and the now moribund demographics as the magic bullet in the fight for competitive edge.

Behaviourial targeting is the flavour du jour, the latest research and planning approach to displace lifestage, psychographics, econometrics, and the now moribund demographics as the magic bullet in the fight for competitive edge.

Simply put, behaviourial targeting is finding the consumers with the highest propensity for buying a product or brand and then tailoring messages and media to reach them effectively and efficiently.

Marketers such as P&G, HBC, Kraft, and National Bank have embraced behaviourial targeting. South of the border, P&G is generating buzz through its involvement in Project Apollo, the development of a new media planning tool that combines Arbitron’s portable people meter (PPM) television audience data with ACNielsen’s Homescan product purchase data to create a single-source database. This service could be a reality as soon as this fall.

Win Sakdinan, spokesperson for Procter & Gamble Canada, says behaviourial targeting is important for a packaged goods marketer like P&G that offers a wide range of brands and targets across the complete spectrum of consumers.

‘We range from teen boys with Pringles all the way to Olay and women who age gracefully. We have a consumer research department that will very specifically find out the exact consumer and ensure we are buying efficient media. If one product is better communicated by the Internet, would it make sense to invest in magazines or TV if our consumer doesn’t watch TV?’

Sakdinan says it’s all about digging deeper to find out how specific consumers want to be reached, a question that’s asked directly as part of in-house and agency research surveys and focus groups.

‘We ask them how they want to be communicated to. We ask if they’d rather see their favourite celebrity using the product. Would that impact their decision or would they rather see a commercial, have a sample, or Internet advertising?’

Similarly, Gord Sonnenberg, SVP marketing for Toronto-based The Bay, believes behaviourial targeting is a far more cost-effective way to deliver messages to customers. He says not all messages are ideal for mass media especially with a diverse customer base.

‘I could advertise cribs and market them through mass media but not everybody is interested in them. You’re wasting your time and money. Targeting allows us to deliver messages that are relevant and meaningful to customers.’

Sonnenberg says The Bay has always

done a lot of tracking of customer behaviour through its credit and purchase files but an even greater source of information for the company is its loyalty program. The programs give a snapshot of what customers are

buying, where they shop, when they

shop, and whether they are full price or discount shoppers.

Those insights recently encouraged HBC to enter the realm of publishing with two magazines for its best and most loyal customers: Living Spree and Belle.

Belle is a lifestyle magazine targeted to The Bay’s fashion-conscious customers – women who like to live well and with style. It features HBC Rewards coupons and promotional offers and covers the latest trends in fashion, beauty, accessories, and home décor. It is sent to a targeted list of about 300,000 including select HBC Rewards and credit card holders in major markets and to some key neighbourhoods chosen geodemographically.

Living Spree is designed to provide inspiration and acts as a shopping guide for The Bay, Zellers, Home Outfitters, and Hbc.com. It is targeted to busy moms (who are more likely to fall in Canada’s middle class) and is being distributed across the country to about 500,000 during the three biggest retail seasons: holiday, spring, and back-to-school.

While ultimately these types of programs will hopefully increase sales, Sonnenberg says they are primarily to provide added value and to build stronger relationships with customers.

Joanna vonFelkerzam, director of SMG Insights, the research hub of Starcom MediaVest Group, says it’s sophisticated clients like HBC that have really pioneered behaviourial targeting by gathering customer information, creating their own CRM databases, and then exploring how to best

use the data.

VonFelkerzam says the primary benefit of behaviourial targeting is that it allows advertisers to correlate sources of increased consumption with volume gain and identify the highest-value consumers. If done right, behaviourial targeting is a significantly sharper targeting instrument than traditional demographics because it is based on consumer-brand interaction – resulting in greater effectiveness and minimal wastage.

But it is not a one-size-fits-all tactic; rather it is an approach vonFelkerzam believes is usually most effective when used for niche products rather than for brands with wider appeal.

With advertisers that have very high market penetration of perhaps 70% or more, the product user definition doesn’t necessarily narrow down who should be targeted. In that type of scenario, so much is driven by lifestyle, such as whether they have kids or don’t have kids.

It’s also important to move beyond behaviourial targets and start to overlay the commonalities, she says. That involves cross-tabulating product purchase information with various other layers of research about a household’s media habits, leisure activities, psychographics, life stage, and even location. With today’s geo-targeting capabilities, vonFelkerzam says the door is opened to heightened precision communications via the Internet, local media, or grassroots events, sponsorships, and promotions.

But like any other targeting approach, she says, behaviourial targeting is only as good as the quality of the targets that are identified, which in an ideal world would be culled from single-source research.

Single source means that the consumer behaviour and media consumption information has been collected from the same set of respondents. A fused panel is one that merges data from at least two different sets of respondents who are matched according to similarities.

In Canada, Nielsen Media Research already offers a single-source product usage, and media habits study product developed from the Toronto/Hamilton television people meter panel. PMB and BBM’s RTS, a return-to-sample study involving its radio diary panel, are also single source.

As these increasingly sophisticated, data-rich – and widely available – syndicated studies come into the market, advertisers and their agencies are trying to gain additional edge by putting more money into proprietary custom research and developing new ways of examining and plucking the nuggets they need from copious amounts of data.

That’s where companies such as Generation5 come in. Toronto-based Generation5 develops data mining and analytical CRM systems. It has three lines of business: consumer databases, custom solutions, and analytic software. Its data is at the postal code level in Canada narrowly targeted down to 10 to 15 specific households, and the zip code level in the U.S.

Michael Elliott, business consultant and marketing director for Generation5, says G5 Mosaic, the company’s off-the-shelf segmentation system, works with the client’s consumer insights data and G5 data to divide consumers into distinct clusters and groups. It segments the Canadian population into 20 groups and 150 types, and every one of the 700,000 postal codes in Canada has a group and type associated with it.

Elliott cites G5 client Kraft’s CRM initiative what’s cooking as an excellent example of how behaviourial targeting can be used effectively. Kraft picked up five awards

for the custom pub including the

Directors Choice nod at the Canadian Marketing Association Awards in

November. Published in both Canada and the United States, the direct-to-consumer magazines vie with Reader’s Digest

as the largest-circulation publications

in each country.

‘Kraft realizes that there are households out there that are high-value for certain portfolios of goods,’ says Elliott.

‘If a company can take $2 out of the $10 per household they spend on mass media and redirect it to efforts targeting high-value households that have demonstrated behaviour of buying their products, they’re so far ahead of the game. Not all companies have figured out how to do that – or launched into it in as wholehearted a manner as Kraft has.’

Elliott says the most specific, powerful and interactive ways to target high-value households are through direct contact. Direct mail or e-mail campaigns are obvious examples but others include creating your own media vehicle and, in businesses with consumer-staff interaction, training staff to recognize consumer types.

For example, he says, Generation5′s consumer segmentation work with upscale retailer Holt Renfrew has made the company’s direct marketing efforts more efficient and has allowed sales personnel to service customers better by understanding shopping behaviours and motivations common to different groups of people.

Elliott says marketers can also use behaviourial research for developing new products. He says National Bank used a three-tiered custom segmentation system from G5 to look at credit card expenditures and financial behaviour to garner the insights it needed to create unique new credit card offerings.

Elliott adds: ‘That’s taking the power of the data and using it in ways your competitors aren’t.’

It’s good to be single

Talk about chutzpah! Nielsen Media Research Canada did what no other TV audience research company in the world has done when it created its Single Source research product. It not only went back to its people meter panel with a product usage/behaviour/lifestyle survey but it also got response rates in excess of 95%.

Mike Leahy, NMR president, credits the NMR recruiters who visited each home personally to enlist the panel homes and deliver the survey.

‘We believe advertisers and agencies will use it to select which programs best suit their consumer and therefore what programs they should be in. Bell Globemedia, for example, with Internet, newspaper, and TV properties, can identify someone watching a program, reading their paper or in the reverse, not watching or reading them. There is opportunity for cross-promotion.’

Rob Dilworth, VP of research for CTV, is an enthusiastic single-source client, and uses this tool to profile CTV programs and help advertisers better target their ad buys.

When CTV is promoting special events, Dilworth uses single-source to enable the network to better target its efforts. It’s a tool he uses to create a snapshot of viewing audiences as part of the sales support materials created to attract sponsors for programs such as Canadian Idol.

He has helped network clients in a wide range of categories from beverage – beer, juice, and soft drinks – to financial services, credit cards, and sports, to name a few, be more target specific with their CTV buys.

For example, he says an advertiser that broadly targets women 18 to 49 is perhaps not being as effective as one which digs deeper to analyze this group that’s made up of a wide range of women – everyone from high school students to mothers with a college-age children.

‘But that’s secondary,’ says Dillworth. ‘The real value is to compare TV viewing of widget users to TV viewing of all women 18 to 49. If an agency were simply buying women 18 to 49, they might buy these 10 programs. However, if they were to target certain product users, they’d buy maybe just half and five others from a totally different bucket of programs.’