Database marketing is a proven technique that has been employed for years in direct marketing. It is not by chance that consumers do or do not receive numerous credit card offers each week, or that they suddenly start receiving catalogs from merchants from whom they have never made purchases.
Sophisticated database marketers use statistically based predictive models to gauge a consumer's likelihood to respond to offers based on variables such as product category, price point and the creative presentation of the offer itself.
EFFECTIVE ADVERTISING VEHICLE
When used in conjunction with online ad-serving technology, database marketing has the power to make the Internet possibly the most effective and cost-efficient advertising vehicle. Online database marketing will help advertisers improve their online advertising return on investment by reaching consumers most likely to have an interest in their products or services. It will also save consumers from having to view ads that are of no interest to them.
In the online world, advertisers need to realize that serving ads to the masses and hoping for the best is not strategic advertising. Following the masses is a tactic often employed through advertising on portals, one in which advertisers are putting too much faith.
It may be surprising to learn that 59% percent of all online advertising dollars go to the major portals, even though they only deliver 15% of all ad impressions, according to Forrester Research. That leaves 3 million other sites generating 85% of all impressions and capturing only 41% of the ad dollars, according to Forrester.
Yes, portals do attract large audiences, but users don't stay long--they head off quickly to other sites, according to a recent Media Metrix ranking of sites. Despite their mass audiences, advertising on portals often results in reaching the same users again and again.
Demographic targeting is poised to change all this.
LEVEL PLAYING FIELD
The ability to serve ads based on specific demographic information is going to create a level playing field. The Web's promise is to deliver something much greater than just a broad demographic. It provides the power to emulate a direct mail or direct marketing model with greater specificity, less cost and more engaging content.
That's the true promise of the Web, and that's the way advertisers have to think as they strive to improve the results of their online campaigns.
Advertisers shouldn't write fat checks to serve ads to the masses on large portal sites. They should save money by delivering directly to target audiences. There is a host of demographic information available from third-party data providers such as IntelliQuest, MetroMail and First Data, generated from years of tracking consumer activity in traditional channels.
Once a consumer has registered on a particular site and has been matched to one of these databases from a third-party data provider the consumer's identity (name and address) is removed from the record, resulting in an anonymous profile (age, gender, income, purchasing habits, lifestyle attributes, etc.) that is of real value to advertisers.
The benefits don't apply only to marketers and what targeting can offer them. Consumers, too, will benefit by receiving more relevant advertising and more product and service offers that reflect their interests and add value to their lifestyles.
David J. Moore is CEO of 24/7 Media, New York.
Copyright February 1999, Crain Communications Inc.