Tune Up Your Targeting

Hi, I'm Chas Edwards, vice president of sales and marketing for CNET Networks Business to Business portfolio. Today, we're talking about the brave new world of targeting.

Let me first start with some definitions and some historical perspective. Here is the world. The old way of marketing was no targeting at all. You advertised to millions of people in hopes of finding a couple of people within that universe that care about buying your product. So, if you look at sort of the efficiency, let's say you reach one person out of every million that see your ad. We can do better than that.

So what I want to try now is the concept of targeted advertising. Now, we're dealing with a smaller world here. We're dealing with fewer people all around, but we're seeing a much higher concentration of these red people who are folks who'll buy your products. So let's say we get it from one in a million to say 1 out of 25. Vast improvement as we move from the old way to the new-targeted way.

The other thing that we're starting to see is moving from targeted to what I'll call micro-targeted and micro-targeted is saying, "Jeez, if the people we want to reach are the red ones, can't we just spend all of our money to only send our message to the red prospects here," and then maybe we can go from 1 out of 25 to 2 out of 3, care about my message and perhaps respond to it. So, you can see that as you move from targeting to micro-targeting, if you measure success based on marketing efficiency and conversion, 1 to 25 to 2, 2 out of every 3 is another vast improvement.

But we also have to step back a little bit and say, as you go from targeting to micro-targeting, the universe of people that you're talking to shrinks. So let's say we have 400 people in this targeted scenario. 1 out of 25 of them, say you get 16 new customers out of this, times 100 bucks we sell our product for $1600 hits the top line. Now, 2 out of 3 people over here, we end up with 4 people and we made only $400.

So the first thing to think about is, if the goal is driving larger revenue numbers and bigger dollars, there's a value in targeting a broader audience rather than just micro targeting people that are predisposed to your product. Which leads me to the second reason.

Let's take a scenario of server consolidation. If you think of the ZDNet Web site, we have pages in news stories and form groups that are all about server consolidation, and so a company that sells servers in the server consolidation market would love to put their ads only in front of people that are actively discussing server consolidation. What is being missed in the scenario is that there are people here who don't yet know that server consolidation is going to be something that they do. So there are a lot of blue folks in this scenario who, with a little bit of coaxing can be convinced that server consolidation is a solution for them. So we have a scenario over here where you have a choice, you can just harvest existing demand, people who already know that server consolidation is for them, or you can move over into this scenario and say, "We're going to use a little persuasion, the art rather than the science of advertising to convince people that in fact they need your solution. Over here, we're creating new demand.

So as you think about your marketing spend, I want to remind you don't forget the big picture, which is about total revenue sold and about the persuasive art of advertising rather than the science of harvesting demand.