The problem with micro-targeting…

“The race to the bottom”. Every performance marketeer has heard this argument. As more and more budget is funnelled towards communications strategies that target the lowest hanging fruit, they become less and less efficient.

In competitive markets, this efficiency depreciation is accelerated by users being hit with multiple, micro-targeted campaigns by a catalogue of brands. The knock-on impact is that inventory costs (cost per click or targeted CPMs etc) for these users skyrockets.

Les Binet and Peter Field have documented this in numerous papers and books including The Long and the Short of It.

The duo has studied how brands that focus on purely short-term activation messaging effectively over-optimise themselves and end up in a sub-optimal position. Whereas brands that think bigger by investing in emotionally engaging brand advertising alongside tactical activation activity, thrive.

In light of this work, marketeers are starting to adjust their strategies. In December, Arcadia joined Adidas, Booking Holding, and Old Navy as brands who “have spent too much on short-term digital activation at the expense of longer-term brand building.

When thinking about the falling efficiency at the core of performance campaigns we can pinpoint one key trend. Data.

The data used to power these campaigns is becoming more and more widely available, with Google and Facebook breaking down a lot of the cost barriers for smaller brands. However, as this data becomes ever more ubiquitous, its capacity to provide a competitive advantage diminishes.

Jonas Ridderstråle and Julian Birkinshaw explore this concept from a broader business strategy and decision-making perspective in their book Fast/Forward: Make Your Company Fit for the Future. They argue that data can often slow down business decisions, giving a competitive advantage to more agile competitors.

All of the above is difficult to accept for someone who has built their career working in performance media channels such as paid search, social and programmatic. In a previous role at a solely direct response agency, talk like this would have you ostracised from the team. Fortunately, I am now embraced by the more rounded marketeers here at HOME who have always understood the value of brand and demand generation.

The socio-political landscape.

What worries me more than the marketing effectiveness concerns, are the broader social issues that micro-targeted campaigns are having on society.

It is well documented that as advertisers become more and more aggressive with their capture and use of data, user privacy has been exploited. Facebook has been at the forefront of this issue for a number of years, but the whole ecosystem of marketing data capture and profiling is rightly under scrutiny.

To add to this, I recently came across an eye-opening article from Richard Waters in the Financial Times that explored the concept of targeted marketing campaigns fuelling political divides. Although the focus of this piece is political, it stretches far beyond the ecosystem of political campaigning, bleeding into broader social inclusivity.

It is fairly standard practice for advertisers to develop pen portraits of their ideal audience, using these to direct targeting decisions. It is also standard practice within performance channels to segment and optimise towards the most valuable audience segments. During this process it is possible that marketeers are introducing a type of unconscious bias into their campaigns.

If brands exclusively target a specific audience, and ignore others, theoretically racial, gender and age divides are being widened through advertising.

So, what is being done about these issues?

Brands now have a juggling act between efficiency, privacy, and diversity. However, the boards of these brands will always be under pressure to focus on efficiency above all else. As a result, governments are stepping in and legislating against the exploitation of users’ personal data with GDPR & PECR in Europe and CCPA in the US.

The World Federation of Advertisers (WFA) has setup a cross-industry working group called the “Global Alliance for Responsible Media”. One of the working groups members, Luis Di Como, the EVP Global Media at Unilever, said “When industry challenges spill into society, creating division and putting our children at risk, it’s on all of us to act. We’ve achieved a lot through Unilever’s Responsibility Framework but to do more, we must do it together.”

Media strategies will have to adapt. Either shifting focus toward gathering consent for data driven tactics or turning inward to understand the psychology of their customers purchasing process. Developing creative tactics that can be activated through the context of media consumption rather than inferred demographic or behavioural data would also be necessary.

The default benefit of moving away from micro-segmentation is campaigns become more demographically inclusive. The optimisation focus is no longer on characteristics that divide society, but on the shared behaviours that connect it.

Written by:

Will Hughes


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