Although marketers still do use demographic data, the weaknesses of this type of information for personalised campaigns have now been more apparent. A recent report from ExchangeWire Research in association with xAd revealed that media planners are relying less and less on demographic data. When it comes to defining campaign strategies and optimising performance, they favour contextual data and insights instead.

In an interview with PerformanceIN, Imran Khan, head of programmatic and strategic partnerships at xAd, reveals the challenges and opportunities behind contextual data.

The key result from the study run by xAd and ExchangeWire Research is that marketers now prefer contextual data over demographics. Why do you think that is?

Imran Khan: 51% of digital planners said they find demographics of little use when it comes to the ability to segment and deliver personalised experiences to consumers, which when you think about it makes sense! Demographics have been used previously, as they were the best way for marketers to be able to ‘level’ an audience to target. While this is incredibly useful when you have bigger groups – such as gender and age etc – it doesn’t account for individual behaviour.

For example, I can be demographically categorised as a family man. So can my neighbour. We are a similar age and at a similar life stage so it would be suitable for targeting family activities. What it doesn’t account for is the fact my family loves to go to farmers’ markets to search for incredible ingredients to cook while my neighbour loves Pizza Express and carvery restaurants. I like to participate in sporting activities and take my kids swimming or climbing most weekends, while he is an Arsenal ticket season holder who goes to the football games with his eldest daughter. I am more likely to respond to something spontaneous, while he would rather plan six months ahead.

Although we are both targets for family activities, our interests and the way to talk to us is very different. But because our real-world location behaviours can be captured and grouped into contextual audience buckets, marketers have a better understanding of what experience we are more likely to respond to. And that’s why marketers are starting to turn to contextual.

In what ways is contextual targeting working out better for marketers?

IK: Marketers are looking to implement a contextual strategy for lots of different reasons.

The study found 43% of digital marketers used a contextual strategy to boost ad relevance and 42% to improve brand perception. And they are already seeing performance benefits in the results, with 47% saying contextual results in more efficient planning, and 33% say there is an uplift in brand metrics.

What is rather interesting is the online/offline story, where 41% of marketers uses contextual targeting to drive people into a store or specific location, and 34% say they see real-time campaign activation as a major benefit of their investment in contextual targeting. It highlights how marketers are looking to provide consumers with more relevant, in-the-moment experiences. With consumer behaviour more erratic than ever before, it seems unwise and outdated to spend months crafting overarching targeting for campaigns when technology such as location allows you can reach them in a way that reflects their environment and impacts their behaviour.

How is this technology helping marketers predict consumer behaviour?

IK: Using technology and multiple data signals to understand context means marketers can interpret behaviours that are happening in the real world, and predict what actions they are likely to take next.

Let’s take mobile location technology as an example. By understanding the past or habitual location visitation behaviours, we are able to build audiences who regularly visit specific places and the relationship between one place and the likelihood of visiting another. For instance, our technology has seen a high correlation between airports and pharmacies, with around 70% of people who visit the airport and pharmacies doing so within three days of one another. Therefore we are able to tailor messages to consumers and predict their behaviour.

Thinking about location contextual insights, they show intent and reveal patterns in behaviour among audience segments. Being able to make predictions about future behaviour can be powerful as a visit to a store or specific place is often a larger commitment to purchasing, compared to an online search or social share. This opens prime opportunities for brands to target audiences at the right moment based on where they are.

What are the challenges companies and marketers face in contextual targeting implementation?

IK: 40% of digital marketers say that a shortage of skills is the main barrier for contextual targeting, followed by data availability (29%), technology (21%) and metrics (13%). These findings highlight that while tech and measurement aren’t considered major obstacles in preventing implementation, there is a need for education and training around the integration of contextual data. Once the challenge of education has been tackled, we expect to see contextual targeting to play an even bigger role.

In your opinion, what other trends in the space will dominate the scene in 2017?

IK: In the times we are in, CMOs are looking for marketing solutions that provide solid, measurable business results, which are robust and independently verified. As a result, we’re likely to see CMOs move marketing budgets into channels that make proving results easier for them. They want to be able to stand up in meetings and say “This is how much business was driven as a result of this campaign.”

This means a move away from traditional media metrics such as reach and frequency towards sales or proxies, for example, store visits. Location technology is providing these measurable data points that can be actioned and fed into the wider business strategy, allowing CMOs to prove which campaigns and strategies are impacting the business.