“First-party data tends to be very strong, but third-party data is very questionable in many cases,” said Menkes, “especially as it relates to behaviors and demographics, given multiple devices, multiple individuals living in a household accessing the same devices and cookie deletion.”
But even when targeting is based on more accurate first- or second-party (from social, retail or other media), results are often disappointing, Menkes said. That’s because the underlying strategy is often flawed, focused narrowly on re-targeting past customers and missing others who could bring incremental sales, he said.
An Analytic Partners study for one automotive brand found that even though it was using its own, reliable first-party data, its hyper-targeting efforts actually delivered the lowest ROI of any ad placement tactic, including contextual, broad reach, programmatic and even third-party data targeting.
Contextual targeting gets around many problems because it’s based on putting ads in places potential customers likely frequent. And while the audience may extend well beyond brands’ core buyers, that may them reach people who aren’t current customers but have similar profiles (i.e. “lookalikes”).
Menkes said there remains a “widespread belief that personalization and hyper-targeting are more impactful, but what often isn’t talked about is the cost.”