by: David Wigder
An Interview with Dave Morgan, Founder and Chairman of Tacoda
With diverse demographics and evolving attitudes toward eco-friendly products, green consumers are an elusive segment to characterize, let alone target.
Specifically, demographics are shifting for green consumers: a once niche market now attracts a broader consumer set that identifies with issues such as global warming and votes with its wallets. Moreover, purchase patterns are inconsistent within and across product categories. For example, one might buy a hybrid car but not purchase renewable energy for the home.
Given these complexities, marketers are turning to behavioral targeting in order to effectively identify and message to this emerging segment. Quite simply, behavioral targeting enables advertisers to serve relevant ads to consumers based on past-demonstrated behavior online (eg, frequent or recent visits to relevant content). Additionally, behavioral targeting can be used to influence consumers across the purchase funnel: at the top to build brand awareness and affinity and near the bottom to drive purchase intent and sales. Jupiter Research identifies three different types of publishers and service providers that offer behavioral targeting:
- Pure play networks (eg, Tacoda, Revenue Science): Focus on driving brand awareness through purchase intent, provides high-quality partner sites and advanced targeting technology
- Performance networks (eg, Advertising.com, Claria): Focus on driving purchase with cost-per acquisition (CPA) pricing, provides broad reach yet has less sophisticated technology relative to the pure plays
- Individual Web properties including portals (eg, Yahoo, MSN) and content sites (eg, WSJ.com, iVillage): Ability to target limited by breadth and depth of relevant content on property.
I recently had the opportunity to speak with Dave Morgan, Founder, Former CEO and now Chairman of Tacoda, a market leader in behavioral targeting. We spoke about the emerging green consumer, Tacoda’s advantages in the market and how its behavioral targeting approach is an effective way to identify and influence green consumers. Here is what he had to say:
MG: Behavioral targeting is an effective tool for both branding and acquisition. Targeting based on online behavior can be facilitated by providers such as Tacoda, as well as via portals, individual web sites or even performance networks such as Advertising.com or Claria. What is Tacoda’s approach for behavioral targeting and how does it stand out from its competitors?
DM: We make sure that messages get to the appropriate people with significant scale and without the typical waste. To do so, we focus exclusively on the needs of brand advertisers and those whose objectives are what we call ‘branded response’.
MG: Does that include building brand awareness and affinity and moving customers through purchase or does it stop short at purchase intent?
DM: Typically through purchase intent. We will certainly be used to drive purchase but only if its part of a full funnel approach. We tend to focus a little higher up in the funnel than others.
We operate an ad network that is exclusively focused on behavioral targeting. While there are advantages sometimes of mixing and matching different techniques, we really focus on being the best in breed in a number of different behavioral areas. For example, we have a full product suite where we do everything from targeting audiences according to pre-set, standardized segments or customized segments that we develop with the advertisers and agencies.
We do cluster targeting in which we optimize segments as the campaign develops, and we also do retargeting.We also deliver across a pretty substantially scaled network now. We have 4,500 web sites in the network. Sites like The New York Times, Wall Street Journal, MSMBC, Orbitz, premium branded sites. And we now see about 140-150MM unique visitors in the US each month so we are at about 80% penetration [of the online population].
MG: It sounds like you are able to evolve your segments based upon a customized targeting criteria or feedback in the market.
DM: Exactly. Being able to evolve them is critical because what we have learned is that many of behavioral indicators that are most powerful are non-intuitive and counter-intuitive.
MG: How can companies as diverse as Toyota or the Body Shop use behavioral targeting to market to eco-friendly consumers?
DM: We have a lot of data on US web browser behaviors that we leverage. In fact, we collect more data each day than Wal-Mart. Moreover, we recently mapped this data against comScore data so we can associate certain people that browse certain kinds of content with their e-commerce purchases and visitation to advertiser web sites.
For us, there is a pretty critical implication here. We have always been able to target advertising to people that have been looking at content about, say, hybrid cars. And, by analyzing the data, we can tell our network of publishers if they attract a similar audience, regardless of whether [that publisher] is a political blog, news site or automotive site.
The data also helps us find these people for advertisers because, as you can imagine, there is very little green auto content out there [to place ads on]. But if you want to deliver meaningful campaigns – not just experimental campaigns – you need scale. There is simply not enough scale today for advertisers to target online users only looking at the hybrid sections of the car sites. For the people that review this green content, we are able to identify what their other characteristics are and then message to them on other sites and blogs in our network.
One interesting insight is that we found that this [eco-friendly] segment goes to auto manufacturing sites more than any other group. The one behavior we find that indicates an interest in going to auto manufacturer sites is an interest in hybrid cars - even when they do not have hybrid cars at that site. In fact, it’s the number one indexing behavior for several auto manufacturer sites. I find this incredible.
What this is telling us is that in many ways [prospective hybrid buyers] are manufacturer agnostic but looking for companies with [hybrid] cars. This shows us that high up the funnel, hybrid is really important. It is different on car configurator sites where consumers are [lower in the purchase funnel, closer to making a purchase decision] looking for price and features.
Here is another thing. If you flip it, and say “let’s not look at what are the kinds of people that look at an auto manufacturer site” but you say, “Of the people that consume hybrid car content the most online, what other car content do they go to, what kinds of cars are they most interested in?” What do you think that may be?
DM: Actually, no, just the opposite.
DM: Yeah, they are looking at sports cars, high-end sports cars. And the people that we see that look at hybrid cars the most appear to be multi-vehicle households with high incomes. So they are buying the hybrid to feel good about themselves. They are buying it for balance.
And these are not just average sports cars. They are really high-end sports cars that they tend to look at. [Hybrid customers] are not granolas or tree huggers which is a really important marketing insight. And because they index so high against manufacturer brands, [hybrid cars] are clearly becoming the differentiator that these [automotive] brands are known for. While the manufacturers may only be selling one tenth of one percent of their cars as hybrid, the hybrid association is affecting a lot more customers.
When I talk to people in the [auto] business, they confirm that [a hybrid] tends to be a second or third car purchase. It is not purchased as a first car, as they are expensive. It tends, rather, to be paired along with a gas-guzzler, either a large SUV or a high performance sports car or both.
MG: Jupiter Research notes that behavioral targeting is increasingly favored by companies marketing products with long purchase cycles – such as automobiles, financial services and travel. How does this play to Tacoda’s strengths in promoting to green consumers?
DM: The reason that behavioral targeting works very well with auto, financial services, and travel, and also things like home purchases, is that long purchase cycle products are high consideration products. So, it is top of mind all the time. As a result, you tend to be very, very aware of ads for those kinds of products and services no matter where you are surfing.
Also, it is very hard to find those people early in their [purchase] cycle. Search, as everyone knows, is extraordinarily effective at handing over the lead at the last moment. But, most likely they have made their brand decision by then. At that point, it is just about price and location. If an auto manufacturer or travel destination wants to make an impact, they cannot wait for search.
MG: What are those indicators that identify consumers with an affinity for green products?
DM: We analyze the data with no preconceived notions. We start first with who is looking at hybrid car content or green content on news sites or blog sites. Then we say, ‘what else do we know about them?’ And then, we back into their socio-demographic profiles. After that, we say, ‘Who else looks like them?’ to find look-alikes in the market.
Today, we know several million browsers in the US indicate a preference for green-oriented products or services or content. We have found that they had higher incomes that you might have thought and that they are older than you might have thought. We have also found that they purchase a lot of not-green things, too.
It is a parlor game [at Tacoda] to talk about motivation [for green purchases] and why. We love doing it. Perhaps consumers have kids in school and [the kids] are asking these questions and that is why they are [purchasing hybrids], or they’re still flower children of the sixties or seventies and are feeling guilty.
Whatever the underlying motivation is, here is a huge insight for brand marketers: some of the highest spending population groups now have an indicated preference for green and it is untapped. Regardless of whether only a small percentage of what they buy is green, they seem to care. And so it makes me believe that if brands can authentically wrap themselves in more green-focused products and services and business strategies, there are willing consumers that will reward them.
MG: And potentially conversely shift spend away from companies who don’t?
DM: Yes. If it is not authentic, it could backfire on companies that do not use it correctly.
It is also important to note that [being green] may do nothing more than to generate consumer attention. The hybrid issue can energize people more than any other issue in automotive than we’ve seen, even though it represents only a tiny fraction of cars that are sold.
This says that while people are going to manufacturer sites, most of them are not finding appropriate hybrid cars. But they are finding a lot of car content and probably viewing the other content through a bit of a green lens. What it also says is that you do not need a whole line of green, probably, to be able to benefit from a legitimate association with green products and services.
MG: How do you measure whether you have been successful at moving the consumer along the purchase funnel – from brand affinity to purchase intent?
DM: In most cases we use classic pre- and post-campaign brand awareness surveys or purchase intent surveys from vendors like Insight Express or Dynamic Logic. However, as I mentioned, we are now starting to match our data against comScore data so we can see how the browsing patterns of our target segments change over time.
The beauty of what we are doing is that we are looking at not what they say that they do but what they actually do. And we know that there is a big difference there simply because a lot of the things we are finding that are most insightful are non-intuitive or counter intuitive.
MG: You have identified some of the typical attributes of a green consumer: higher income, older. How else would you profile this segment?
DM: To be very clear, there is not just one segment. One that I have described to you is somewhat non-intuitive. We are also certainly seeing high indices in a younger audience, as well. There isn’t an average green consumer. In fact, I would argue that green is what makes populations with different incomes, age and other characteristics the same. For example, there is a big cluster in younger and lower-income populations, but they are not buying hybrid cars because they cannot afford them.
Today, I think companies still see green as an attribute. They don’t see it as relationship enhancer yet. They say, ‘got to have green, check the box, everyone wants a little green’, rather than realizing that there is a group of people for which green is huge and focus on that.
MG: How do you then market non-green product and services to green consumers?
DM: If you know this is an important issue, you can change creative messaging or the kinds of products that push out. What it says is that green is an issue that people will pay a premium for; that alone should get every marketer’s attention.