Companies that focus on buyers who have bought your brand - even at a minimal level - are significantly more likely to shift more of their total share of consumption to you. First you must find them, and then target them effectively with incremental ad spending.
A recent study by the Mobile Marketing Association focused on a common consumer category and showed that those with a 20%-80% propensity to buy a brand are much more responsive to incremental advertising. Those living in the “tails” of the buyer distribution are either (a) basically non-responsive because they buy so little from you, or (b) are already so loyal that additional ad spending has no incremental effect. Within this middle band of buyers, the power of your incremental targeted advertising is very strong. The bonus: ad campaigns built around the moveable middle also improved reach.
So who are these buyers in the so-called “moveable middle” of your brand’s overall profile of users? Unlike promotionally-driven “brand switchers”, the moveable middle segment represents buyers at many different levels of past purchase behavior who relate to your brand story. Their responsiveness to advertising grows as their share of category needs approaches the center of this distribution. Decreasing marginal returns occur at the tails. The movable middle holds many more attitudinally receptive, persuadable buyers as defined by their mid-range probability of buying your brand.
The result of this recent research shows that the moveable middle of a company’s product user base can be 5x-10x more responsive to advertising than buyers at the tails. This makes incremental advertising and marketing spending against this middle segment of buyers an incredibly fertile area to allocate incremental ad dollars because the return on ad spend (ROAS) is so high. There are several reasons why this is true:
- Those who are already buying your company's products or services are not buying all of their category needs solely from you. This volume can be significant, but it is likely hidden from you. This implies that they have much larger volumetric needs than they are directly telling you as one manufacturer.
- There is a high probability that products in the category have not been effectively differentiated, and benefits or features that are important to buyers have not been captured by you. Additional ad spending highlights those differences and motivates additional purchases. Optimizing your messaging is clearly indicated here, too.
- Buyers who are already buying 20%-80% of their category needs from you are more receptive to your message. This forces them to exclude other alternatives once your message is received.
- The movable middle already has the advantage of familiarity with your brand or product. They know the things you can provide. Advertising doesn’t need to work as hard among people who have familiarity. It doesn’t have to generate awareness: rather it simply refreshes you in consumers' minds.
Marketing and advertising plans focused on the moveable middle almost always yield better response curves to incremental media spend than dollars spent on reach and frequency. Recent academic research has attempted to dispel this notion. They believe that marketers should target broadly (i.e., to all buyers). It is true that buyers continuously enter and exit a category, hence on its face this makes some intuitive sense. However, this thought process (a) ignores that buyer entry and exit can be quite slow, and as a result (b) the ROAS of a reach-only based plan will be low. It takes significant amounts of time and ad spend to generate even small increases in awareness-to-trial conversion. A company may not have a 3-, 5-, or 10-year window to see if their strategy was effective at bringing in new buyers. By then, the company could be out of business!
Certainly, some ad spending must focus on long-term brand building, but with increased direct and digital relationships with customers (1st party data), it makes no sense to ignore your own ability to target those we know are receptive to your product story. Focusing on the movable middle is an “outcomes” or “performance-based” marketing concept that complements your longer-term brand building initiatives. Strategic brand marketing is needed to support the core product story and promote user differentiation, but properly targeted media delivery generates much higher reach-to-conversion, and therefore longer-term retention of the customer to the business. And it has the nice side effect of increasing reach, too.
Caveat: over-targeting or over-promoting can have negative longer-term consequences that can diminish responsiveness to additional media spending: there must be a balance. Exclusively focusing on the movable middle at the expense all other initiatives to build brand equity fails to recognize that new buyers do enter the category from sources other existing buyers. But the evidence that focusing on the moveable middle of your own brand's buyer distribution is a smart and effective way to start..