With the rise of digital media, retailers have learned to understand and target specific audiences (e.g., based on interest). However, research has shown that wider reach–or continuous marketing for all potential buyers of a certain category–is one of the key drivers of brand growth for the consumer packaged goods (CPG) industry.
So should CPG advertisers pursue targeting strategies based on demography or interests? For the first time, in order to help resolve this debate, the Marketing Science team from Facebook conducted an analysis of Facebook campaigns which compared the impact of demographic and interest targeting strategies on the results of Facebook campaigns for CPG advertisers.
The analysis showed that there is no silver bullet that would work perfectly in all cases. However, the data showed that there are three key factors that marketers should consider when looking for an optimal strategy:
- Focus on broad qualified reach and avoid narrowing of the target audience
- Both interest and demographic targeting strategies can provide wider reach
- The optimal targeting strategy depends on your campaign goals
The analysis included 50 CPG campaigns from the EMEA region, which were measured through Facebook Brand Lift, a proprietary measurement system that helps companies understand how Facebook advertising works independently of other marketing activities.
The studies tested the impact of the ad targeting strategy on brand results through a multi-cell randomized control experiment (i.e., all variables other than the targeting strategy, such as creative and campaign duration, remain the same).
Focus on broad, qualified reach, and avoid narrowing your target audience
Analysis showed that in about half of all campaigns, the selected interest groups were too narrow, therefore their reach was significantly reduced compared with the demographic audience. In this case (when the selected interest audiences were too narrow), demographic audiences had twice as much reach (+ 99%) compared with interest audiences using the same budget.
Whenever there is a difference in reach, the campaign with lower reach must compensate for it with higher efficiency. And based on the results of the analysis among campaigns with significantly reduced reach due to interest targeting, the effectiveness was slightly higher compared to the demographic audience (+ 22%). However, this increase was somewhat below expectations and was unlikely to sufficiently compensate for the lower reach. As a result, the demographic strategy was 1.6 times more likely to be a winning strategy and yielded more cost-effective brand results compared to the interest strategy in these campaigns.
This statistic highlights how effectiveness is affected when reach is severely limited, and it underscores the importance of broad but qualified reach for CPG advertisers. It is also consistent with existing findings across the industry. For example, Nielsen found that reach and creative together accounted for the majority of sales share, while targeting strategy had a significantly lower contribution.
Both interest-based and demographic targeting strategies can provide broader reach
In the other half of the analyzed campaigns, both demographic and interest-based targeting strategies were able to achieve comparable reach on the same budget because the target groups selected were broad enough to provide sufficient reach. Across these campaigns, the demographic and interest-based strategies delivered brand results with similar cost-effectiveness—the selected interest audiences could deliver with wider reach. When both demographic and interest-based audiences could deliver comparable reach (within 20% of the difference between them) on the same budget, the analysis showed that they were equally likely to be a winning strategy and lead to cost-effective brand outcomes. This finding suggests that some broader interest audiences can generate a range of reach comparable to demographic audiences, and marketers can choose either strategy while maximizing alignment with the buyer category.
Optimal targeting strategy depends on the goal of your campaign
The analysis also showed that interest-based audiences may perform better at driving purchase intent and purchase consideration, while demographic audiences may be more likely to drive higher brand metrics such as brand awareness, familiarity, and message association.
As a result, the choice of the optimal strategy should be based on the objective of a particular campaign and should not be uniform across all campaigns. As previous findings from the industry suggest, it is important to find a healthy balance between investing in campaigns aimed at driving top-of-funnel results (e.g., generating future demand and defining potential buyers) as well as campaigns aimed at activating the bottom of the funnel (e.g., influencing immediate sales).
In summary, this analysis showed that both demographic targeting and interest targeting strategies worked well when they had comparable reach. However, when the interest strategy was narrow to the point of severely limiting reach, demographic audiences were more likely to deliver cost-effective results. The analysis also found that interest targeting and demographic targeting may perform better at different levels of the funnel, highlighting that the optimal strategy will depend on the goals of the specific campaign.