Leveraging the Influence of Neighbors

Neighbors-family-guy-15674073-638-483Christopher Skinner sold a search marketing company called Performics to Google as part of its Doubleclick acquisition. He now runs a software company called MakeBuzz that is on track to spend almost $100 million in media this year. Clients include Google, Target, and Oreck.

Its premise is simple: People buy the stuff their neighbors buy. By starting wide with media that builds a brand halo and then, optimizing into specific geographic areas where buyers are found, MakeBuzz optimizes against profit only.

Most marketers are obsessed with reaching individuals, but Skinner’s concept is almost contrarian: Spend more media up front, target by neighborhood and city, and be completely media-agnostic. The MakeBuzz code guides the optimization process until profitability KPIs are met. I recently sat down with Skinner to learn more.

The CMO Site: What’s the big idea here?

Christopher Skinner: Most people online today can measure a brand, but they can’t grow it. The methods to measure are not the same as those used to grow. You need a different framework and nobody is talking about that online.

Digital media agencies today are being handed money — money from traditional budgets — and asked to perform and hit the business targets but they don’t know how because they’ve lived inside the efficiency world for so long. It relates to neo-classic economic thinking: What you can’t measure, just ignore it.

On average we increase media spend by six times or more because we install a framework and technology that justifies the complete customer journey. We tie marketing to the economics of the business.

The CMO Site: Is profit optimization real, or are you just adding some process to what should be the CMO’s primary KPI?

Skinner: Both. It’s real and it is a formalized process. The software shows you how to tip the scales in favor of revenue by spending the right amount on media directed to the right group of customers. It helps you achieve maximum profitability on a market-by-market basis.

The CMO Site: You take a rather contrarian view. Most folks are buying audience by the impression, but you carpet-bomb geo-targeted areas with impressions. Which method is right? Can they be used together?

Skinner: Hyper-audience targeting based on cookies will deliver incredibly efficient sales, but you’re not going to see massive volume from this. You’re not going to move the needle on the business. I wouldn’t call what we do “carpet-bombing.” We’re delivering a large volume of impressions to areas that have a reasonable volume and high density of the target customer. We are looking at real social circles and matching media to these audiences, down to small pockets when needed. This is going to get you a little less efficiency but a lot more sales — a lot more profit volume. And isn’t that what matters?

The CMO Site: So, if I find the right neighborhood for a certain type of vehicle, I should just buy lookalike neighborhoods. How does that scale?

Skinner: Instead of drawing circles around virtual groups online, we draw the circle around concentrated groups of people that we know are likely to be interested in what we help market. And the fact that they are influenced by each other — they see what their neighbors wear and drive and what kinds of phones they use — means they are more likely to be influenced by media that reinforces and re-suggests those choices.

Scalability is about testing your way in. Identifying high-value areas, testing media to discover your profitability, then scaling to similar areas.

The CMO Site: What kind of media works best? It would seem that the more granular the geo-target, the better the performance.

Skinner: You need media that addresses the entire customer journey, from early awareness branding media to direct response purchase phase media. Most businesses are fine with the direct response online media, but they are missing brand-creating media. Our methods do a really good job of justifying media that helps drive direct response. The earlier phase media tends be display, mobile, and video, but can also be search (SEM).

As far as geo-targeting granularity, as long as the density of our target segment is good in each area and we’re hitting them with the right media plan, it works great. Think of each step as a filter: 1) Choose the right segment, filtering out all the less valuable potential customers; 2) Choose an area they live in high in density and volume, filtering out the neighborhoods they don’t live in; and 3) Pick the media they’re likely to be engaged with, filtering out wasted impressions. You can’t pull this off without a platform and it will not work unless the manager has a fast and simple way to buy in.

[This post was originally publisher in The CMO Site, on 4/11/13]

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