As a marketer, you may be exploring what types of campaigns perform best for your brand. Newer brands typically start with run-of-site (ROS) advertising to boost brand awareness. Once you better understand your demographic audience, you’ll want to tip your toe into targeted campaigns. Although ROS is a cost-effective solution, targeted campaigns have their time and place.
Apply targeting when you want to narrow your focus and show your ad to selected audiences. You can target your audience by demographic, geographic location, behaviors, or interest segments. Consider also using predictive audience targeting, an emerging way to target an audience.
What Is Predictive Audience Targeting?
As the name implies, predictive audience targeting is a marketing strategy that predicts consumer behavior. It uses artificial intelligence (AI) and machine learning to anticipate when a consumer will engage in certain activities. Examples of activities include making a purchase, subscribing or unsubscribing to an email newsletter, and engaging on a website.
Predictive audience targeting provides insight into consumers’ tendencies and needs, allowing brands to improve their overall marketing. This type of targeting teaches you more about your audience’s preferences, habits, and behaviors. With this information, you can better tailor your campaigns to reach your key market at the right time. Doing so may increase your return on investment (ROI) and save money on advertising spending.
The Benefits of Using Predictive Audience Targeting
Given that predictive audience targeting relies on AI intelligence and first-party data, it’s another way to avoid using cookies. When Google announced its intent to stop supporting cookies, many businesses began searching for newer targeting methods. Since then, Google has announced it would abandon this plan. However, finding alternative solutions lends to a privacy-safe methodology and can lead to deeper insights.
Predictive audience targeting is a major element of another innovative, privacy-safe strategy called commerce media. This strategy relies on consumer data to create personalized, relevant ads for each customer. Based on your past purchases and browsing behaviors, the advertisements that you see will be different from other shoppers. This means consumers see the products they are most likely to buy, increasing engagement and conversion. A personalized ad experience can increase sales and boost brand retention and loyalty.
For example, ridesharing apps Uber and Lyft could show their ads to users who are booking a vacation. Someone buying cold and flu medicine from CVS might also be interested in Kleenex or Lysol ads. Advertisers can directly impact shopping behaviors with relevant ads strategically placed at specific moments in a customer’s shopping journey.
How Predictive Audience Targeting Can Increase Your ROI
Predictive audience targeting helps identify the most promising customer segments. You’re anticipating when they’ll make a purchase and tailoring your messaging to them. Using this knowledge, you can ensure your ad copy, banner imagery, and overall advertising efforts best appeal to them. You know what they are looking for and delivering it to them. In turn, your ROI will increase because you’re reducing ad waste.
Another way that predictive audience targeting increases ROI is through anticipating customer lifetime value (CLV). This metric measures how much revenue a business should expect from an individual customer over time. Calculating CLV is important because it helps you understand how much a customer is worth to your company. This allows you to identify high-value customers, improve customer experience, and build customer loyalty.
Once you know a customer’s CLV, you can spend more or less ad dollars on them. Customers who subscribe to several of your health supplements may be more receptive to future targeted advertising. Include messaging on the benefits of a consistent supplement routine and recommend related products to boost overall health. Send a friendly reminder when their subscription is due and invite them to your loyalty program after a second purchase.
You can confidently nurture this customer relationship because you’ve predicted that they will be a returning customer. In this specific example, you’ll spend more ad dollars on this particular individual. However, since you predicted their CLV, the investment should improve your ROI in the long term.
How To Measure the Success of Predictive Audience Targeting
To optimize your ROI, you’ll need to measure the success of your predictive audience targeting strategy regularly. Tracking certain metrics and analyzing the data will enhance future campaigns. There are a few key metrics to consider.
The conversion rate is the percentage of individuals who took action based on advertising. Somewhere between 2% to 5% is generally regarded as a “good” conversion rate. Another metric, the CTR or click-through rate, measures the percentage of individuals who clicked on a banner ad. Even if the user didn’t make a purchase, they were intrigued enough to at least click on the advertisement. CTR will vary based on industry, so take the time to research what is considered standard for your field.
Two other metrics to evaluate are CPA or cost per acquisition, and ROAS, return on ad spend. CPA is how much it takes to acquire a customer. ROAS is a ratio calculated by dividing total revenue by ad spend. Calculating these metrics may take some time, but it will greatly inform the success of your predictive audience targeting strategy.
Conclusion
As a revolutionary, privacy-safe targeting option, predictive audience targeting is changing advertising for the better. Successfully using this newer methodology can scale your business and increase your ROI.