Targeting And Technology Change The Ad Game

If you’re reading and viewing habits have changed over the past few years, you’re not alone. More and more of us are online, watching cable, and spending less time with magazines and newspapers. The result is that advertisers are re-evaluating the traditional mix of outlets they use to showcase products and services.

At the center of America’s new media habits is a basic conflict between time and numbers. As a nation, we work longer and vacation less then most other countries. The result for many of us is less time to read, watch or listen.

But although we have less time for the media, the number of media outlets that compete for our attention is growing.

The three major TV networks that dominated television for the past 40 years must now compete with a fourth network as well as huge numbers of cable channels.

The number of magazine titles has greatly increased in the past decade while total industry circulation has grown slowly.

Major big-city dailies now face strong competition from specialized publications such as shoppers, city magazines, suburban papers, entertainment guides and local real estate advertisers.

Consumers are spending more time online — time that in the past might have been spent with traditional media.

What we’re seeing today is a wholesale shift in media preferences. Major metropolitan dailies are not getting the market penetration that used to make them so strong. The result is that they are less and less effective as advertising platforms. Daily newspaper circulation, as one example, has plummeted. According to the Newspaper Association of America morning and evening circulation in 2006 stood at 52.329 million copies — down from 63.340 million in 1984.

The alternative to broad-based, shotgun promotions is targeting, a strategy often represented by advertising mail marketing.

Why? When you use advertising mail there’s a sense of individual contact. There is also a feeling of immediacy, that here is something of value which should be considered now.

And while radio and TV are powerful mediums, even if you have the world’s best commercial it doesn’t count for much if a listener or viewer is out of the room. And once radio and TV ads are finished, they’re finished forever because few people tape even a tiny portion of the many programs broadcast each week — and some recording systems are programmed to ignore ads.

The need for targeting is largely behind the move to make individual media outlets reach more precisely-defined audiences. As an example, instead of a large daily paper with a single editorial package for every area in a major city, a newspaper may instead publish zoned editions and specialized sections.

In similar fashion, generalized radio programming has given way to stations that feature only one type of fare. Stations that offer top-40 music compete for a different audience then those which offer religious programming or all-talk formats.

Magazines, too, are becoming increasingly specialized as new publications spring up to serve individual market niches. As for television, segmentation is responsible for the growth of all sports, all news and all music cable outlets as well as specialized channels for children, investors and movie watchers.

To make matters more complex, we not only have papers fighting papers and TV channels battling with other TV channels, we also have across-the-board competition.

Consider the dilemma of a company that produces a two-seat sports car. Does it advertise in local newspapers, magazines that cover the auto industry, or does it use advertising mail to reach individuals who currently own sports cars and live in high-income residential neighborhoods?

Advertisers today want to reach specific publics. The availability of consumer and business data, useful software, computers and market segmentation allow advertisers to target their messages with great precision. And when messages are carefully targeted, it becomes possible to obtain higher response rates and lower costs per sale.

Targeting offers other benefits as well.

• First, with careful targeting consumers are likely to receive fewer irrelevant ads. They will increasingly receive only those ads which most closely relate to their buying patterns and demographics.

• Second, in an age of heightened environmental awareness, it’s often wasteful to broadly advertise when targeting can lower costs and yet produce the same number of sales. More efficiency translates into less need for paper, energy and landfill space, benefits that help everyone.

• Third, advertising mail is the most democratic medium of all. You don’t need a $10 million campaign to start an advertising mail program. Individuals, small businesses, charities and growing companies can all find advertising mail programs that fit their budgets.

The new emphasis on targeting can be seen in advertising sales. For example, between fiscal 1997 and 2007, ad mail volume increased from 77.3 billion pieces to 103.5 billion pieces — a huge increase, and one that is especially interesting because it parallels the growth of online communication.

What the future will bring is an open question. Tough economic times in the late 1980s and early 1990s slowed retail, employment and real estate advertising — the traditional mainstays of big-city newspapers. Conversely, as the economy improves newspaper advertising volume should rise.

As for advertising mail, it is increasingly popular both with advertisers and the public. According to Robert Coen, Senior Vice President, Director of Forecasting at Universal McCann, advertisers will spend almost $64 billion on direct mail in 2008. That’s more than advertisers will spend on newspapers and about one out of every five advertising dollars spent for all media.

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