Advertising futures, and ‘the power of the cohort’

For as long as many of us can remember, the holy Grail for marketeers has been ‘the market of one’ – an addressable market so tightly identified, and so accurately targeted that resistance to a value proposition focused on its needs and desires would be unthinkable.

To this end, much energy in the marketing space was focused on getting closer and closer to one-to-one marketing. And indeed, as people lived increasingly online digital lives, as cookie technology and machine learning exponentially improved, that vision started to seem less and less of a pipedream. A message and a proposition tailored to each individual prospect? Coming right up!

But as the chequered flag came into view, the brakes went on. Highly personalised marketing might be extremely desirable for the industry, but less so, it turned out, for the consumer.

People are cagy these days with their data – with the value of which they are now fully conversant – and are very wary indeed about how their identity can be documented, analysed and used. And people now have the law very firmly on their side.

Big steps

GDPR (General Data Protection Regulation), designed to protect personal data linked to individuals, was introduced in the EU in 2018, bringing consumers very substantial rights over the way in which organisations could process their personal information, and putting the onus firmly on businesses to comply, or face substantial punitive measures. Similar measures have been introduced across the globe.

Clearly seeing the writing on the wall, Google will – albeit after some delays – start phasing out third-party cookies in 2024. Firefox and Safari took similar steps long ago, but Google’s move, given that more than half of the world’s browser traffic passes through Chrome, will have far greater impact on the advertising business. Marketeers have to plan for a world in which detailed profiling of individual web behaviour will no longer be legal or viable.

The way forward

In the face of this challenge, new ways are emerging.

If marketing spend is to be optimised, then campaigns still need to be targeted; but the deprecation of personalised marketing means that only consumers who self-identify and give their consent can be directly addressed with promotions and advertising. But these may be relatively few. What’s the alternative for businesses, for whom every marketing dollar counts? Are they to fall back on ‘spray and pray’ broadcast campaigns?

Happily not. A better way forward lies in the ‘cohort concept’, which identifies groups of  individuals with similar market characteristics and addresses those groups with messages that will resonate with individual members of that group.

Close analysis of anonymised data reveals that people with similar market characteristics tend to form other kinds of cohorts, occupying similar geographic areas, with similar housing and property values, sharing similar educational backgrounds, professional classes, income and so on, and importantly, making similar life choices, at both a macro and micro level – from parenting down to supermarket shopping.

This particularly seems to apply to geography. Properties within a given postcode in the UK will tend to house people and families of markedly similar character. Much as we like to think of ourselves as distinct individuals, birds of a feather (it would appear) do like to flock together.

How does this help?

The individual consumer identity is sacrosanct. So ‘laser accuracy’ in targeting the customer is problematic, but probabilistic marketing can be a viable substitute.  This aims to maximise the chances of success by, for example, using geo-contextual information about the locations where the individual resides, works, or is frequently found. This, combined with other socio-demographic data about the cohorts associated with those locations can then be used to direct a campaign that does not rely on identifying the individual, but is likely to find and resonate with the individual all the same.

Geo-contextual indexing allows cost-optimal consumer targeting.

If even a small number of people within a tight geographic area – typically a postcode – can be analysed and categorised, then using that information to target all individuals in that area will have a strong probability of securing a high response (even with personal information eliminated or anonymised).

Probabilistic marketing depends on accurate indexing of the persona, not the person, using data that is typical of the cohorts to which the individual belongs. For example: analysis of postcodes within high-cost commuter towns in the south of England is likely to identify high-earning/ time pressured individuals. It may well identify a higher-than-average percentage of working parents. These, and more granular insights, can be used to position both digital and physical campaigns that chime with those characteristics to reach individuals within those postcodes.

Conversely, if products or services are specifically targeted at (for example) high earning/ time pressured individuals (such as childcare services) or teenage online gamers, then it is possible to identify where individuals of that type are most likely to be located, and therefore which postcodes will be worth targeting.

Everybody wins

Probabilistic marketing, using the concepts of personas within cohorts, is likely to be almost as effective as marketing to the known individual, and may even offer a more optimal strategy for marketing spend.  New ways are emerging to address the consumer, and they offer a win-win: better ROI for the business, and fewer nuisance interventions for the consumer.

For more on understanding and accessing market and location demographics, visit www.Kogenta.com, or contact Kogenta at +44 207 018 3655 or hello@kogenta.com. Turning data into competitive insight is what we do.