A lack of transparency and high uncertainty in the digital advertising ecosystem has created tremendous inefficiency for advertisers, which ultimately means waste. Those at most risk are advertisers with the least data about their customers, a situation many CPG marketers know all too well.
Because of the retailer intermediary, CPG manufacturers often do not have direct access to the consumer they want to reach, or insight into how their advertising affects sales.
Two critical issues that advertisers need to determine in executing their online advertising are which audiences to target and what sources of data to use to reach those audiences.
Understanding data types and sources is the first step for building an audience. The type of data you use can impact results and ROI significantly. Knowing what you are trying to achieve will help you match data type with desired outcome.
There are a wide range of data sources available to define and identify audiences. Each of these are based on varying audience criteria and have different costs. This means there are multiple options for CPG brands that wish to target consumers.
Two common data types are deterministic and probabilistic:
- Deterministic data refers to known actions a consumer took, such as downloading a coupon, filling out a form, or making a purchase. This is also known as “action-based” data.
- Probabilistic data is based on the behavior of consumers, which allows advertisers to infer that a consumer could be a valid target.
There are other types of data that are neither deterministic or probabilistic. These include demographic or geographic data.
Case Study: Data Targeting For A Leading Beer Brand
Here’s how the data types defined above would look to a leading beer brand. Let’s call it “BeerX.”
Nielsen is the multi-touch attribution provider of choice for brands in all industries that want to measure the impact of their digital advertising on sales and learn what worked and didn’t work. In order to help address the particular challenges facing CPG companies, and support greater transparency for the ad industry overall, we conducted a meta-analysis of the multi-touch attribution results for over 30 CPG brands.
A recent whitepaper, Put Your Money Where Your Consumer Is: How Audience-Based Targeting Drives Higher ROI, shares what we learned in an effort to provide the CPG industry with greater transparency into what is working in digital media. This research helps answer whether the type of data used to target audiences matters in driving impact (it does) and what type of data should be leveraged to maximize return on investment.
Audience Data Type Is a Major Driver of ROI
Nielsen found that the type of data an advertiser uses for targeting consumers has a significant impact on ROI. The CPG advertisers in this meta analysis used nine different types of data for audience targeting.
The chart below ranks ROI by data type from highest performing (purchase-based data) to lowest performing (demographic data). Data types in green are profitable (have a Profit ROI > $1.00). Data types in red are unprofitable (have a Profit ROI < $1.00).
Focus on Digital to Improve Performance
Digital performance is substantially tied to the amount of attention advertisers pay to it. In these results, Nielsen observed a significant difference in performance between brands with focused, advertiser-led data strategies and technology initiatives versus brands without.
Advertisers who are more successful with digital channels are those that have structured their organizations to support digital goals. This kind of organization can be manifested in many ways, but requires a multi-functional operating model across analytics, media, technology, and third-party suppliers in order to deliver step-change growth in digital marketing outcomes.
The key unifying principle for these teams is a clear focus on the consumer. Advertiser’s capabilities should enable compelling communication with consumers across digital channels.
Invest in Purchase-Based Data for Higher ROI
Using audience data that is purchase-based (those who have purchased from your company or from a competitor) will have a significant positive impact on your results. While this data requires a greater investment than reach-based demographic or geographic data that is relatively easy to obtain, it delivers a much higher return. Choose a data type that aligns with your business goals.
Digital advertising can be an extremely effective and efficient way to advertise for CPG brands. The Nielsen meta-analysis of over 30 multi-touch attribution studies revealed that brands achieve better outcomes when they leverage enriched audience data creatively.
Download a copy of our report: Put Your Money Where Your Consumer Is: How Audience-Based Targeting Drives Higher ROI
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