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Interest Versus Demographic Targeting: 3 Surprising Factors for Consumer Packaged Goods Brands to Create Breakthrough Digital Ad Campaigns
Discover three data-driven factors to consider to help choose between interest and demographic targeting strategies
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CONTENTS
With the rise of digital media, the ability to understand and target specific audiences (e.g., based on interest) has gained favor with marketers. However, for the consumer packaged goods (CPG) industry, research has shown that broader reach, or continuous marketing to all potential category buyers, is one of the key drivers of brand growth.1
So, should CPG advertisers pursue demographic or interest targeting strategies? To help address this debate, for the first time the Marketing Science team at Facebook conducted an analysis of Facebook campaigns that compared the impact of demographic versus interest targeting strategies on brand outcomes of Facebook campaigns for CPG advertisers.
The analysis found that there was no single approach that worked best in all cases. However, the data showed there were three key factors that marketers should consider when looking to develop the optimal strategy:
- Aim for a broad qualified reach and avoid overnarrowing your target audience;
- Both interest and demographic target strategies can deliver scalable reach; and
- The optimal targeting strategy depends on your campaign objective.
The analysis covered 50 CPG campaigns in EMEA that were measured via Facebook Brand Lift, a proprietary measurement system that helps companies understand how Facebook advertising performs independent of other marketing efforts.
The studies tested the impact of ad targeting strategy on brand outcomes via a multi-cell randomized control experiment (i.e., all other variables apart from the targeting strategy such as creative and campaign duration remain the same).2
Here are the details of the findings.
Aim for a broad qualified reach and avoid overnarrowing your target audience
The analysis found that in approximately half of the campaigns, the selected interest audiences were too narrow and therefore significantly restricted reach compared to the demographic audience. In this case (when selected interest audiences were too narrow), demographic audiences delivered almost double the reach (+99%) over interest audiences for equal budget.3
Whenever there is a disparity in reach, the campaign with lower reach needs to compensate with higher effectiveness. And based on the results of the analysis, among the campaigns with significantly reduced reach due to interest targeting, the effectiveness was slightly higher compared to the demographic audiences (+22%).3 However, this increase was slightly below the required threshold and was unlikely to sufficiently compensate for the lower reach. As a result, demographic strategy was 1.6 times more likely to be the winning strategy and drove more cost-efficient brand outcomes compared to the interest strategy in these campaigns.3
This insight highlights how efficiency is impacted when reach is significantly restricted and underscores the importance of broad but qualified reach for CPG advertisers. It is also in line with existing industry-wide findings. For example, Nielsen found that reach and creative collectively account for most of the sales contribution, while targeting strategy had a significantly lower contribution.4
Both interest and demographic target strategies can deliver scalable reach
In the other half of the analyzed campaigns, both demographic and interest targeting were able to achieve comparable reach for the same budget because the selected interest audiences were broad enough to provide sufficient reach. Among these campaigns, demographic and interest strategies delivered brand outcomes with similar cost efficiency—as long as the selected interest audiences could provide broader reach. When both demographic and interest audiences could deliver comparable reach (within 20% difference from each other) for the same budget, the analysis showed that they were equally likely to be the winning strategy and drive cost-efficient brand outcomes.5 This finding implies that some broader interest audiences can generate scale of reach comparable to demographic audiences and marketers can select either of the strategies while maximizing the alignment to the category buyers.
The optimal targeting strategy depends on your campaign objective
The analysis also showed that interest audiences may perform better at driving purchase intent and consideration, while demographic audiences may be more likely to drive upper brand metrics, such as brand awareness, familiarity and message association.
As a result, the selection of the optimal strategy should be informed by the objective of the specific campaign, rather than being uniform across all campaigns. As shown from earlier industry findings,6 it is important to find a healthy balance between investing in campaigns aimed at driving upper funnel outcomes (e.g., generating future demand and predisposing potential buyers) as well as lower funnel activation campaigns (e.g., influencing immediate sales).
In summary, this analysis showed that both demographic and interest targeting strategies performed well when they had comparable reach. However, when an interest strategy was overly narrow, to the point that it significantly restricted reach, then demographic audiences were more likely to drive cost-efficient results. The work also found that interest targeting and demographic targeting may each perform better in different parts of the funnel, highlighting that the optimal strategy will depend on the objectives of a specific campaign.
What it means for marketers
Evaluate the reach and cost trade-offs between targeting strategies.
Some interest audiences are too small to generate scale when compared with demographic audiences. These audiences have to provide significantly higher impact in order to compensate for lower reach. When selecting a targeting strategy, it is important to critically assess the ability of the interest audience to drive higher impact if it significantly reduces reach and increases CPM.
Choose either a demographic or interest strategy if they provide comparable reach.
Some interest audiences can generate scale of reach comparable to demographic audiences if they are broad enough and, as a result, can have comparable performance. In this case, consider both strategies and select the one that would align the most with your category buyers.
Adjust the targeting strategy based on the objective of your campaign.
Interest targeting can be more successful in driving purchase intent and consideration, while demographic targeting can be more likely to drive upper funnel metrics. Select the strategy based on the objective of your campaign.
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