Saturday Thought: Targeting & Inventory

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Onto to today’s thought…

Saturday Thought

The other night, my 35 week pregnant wife and I were watching Hulu.

We recently were downgraded to Hulu with ads.

I’ve never felt more shame in my life.

But it’s been…OK. The ads have actually been, pretty good, and the ad breaks not too long.

We have experienced a little bit of Hulu’s infamous frequency non-caps.

For example, I get it Hulu.

I’m going to lose my hair soon.

You can stop serving me Hims ads now.

But the most striking ad we’ve gotten so far has been one for a dating app.

Yes, that’s right.

A dating app ad, served to a married couple expecting a child in 3 weeks.

The app is called The League.

I thought about harassing them on LinkedIn.

“Just so you know, you’re serving ads to married pregnant women who don’t need your services, thank you very much.”

It’s my wife’s account, so surely, I had questions.

“Anything you want to tell me?”

“Should I be concerned?”

“Who’s the father?”

And then I thought - what a genius move.

Maybe this was intentionally bad targeting, with the hopes of getting a little funny social chatter.

Or maybe it was strategic, trying to break up existing couples, so these newly broken-hearted people could use their app more.

But then I came back to reality.

There was nothing intentional about this. Nothing strategic.

Why?

Because targeting sucks.

1. It’s usually inaccurate

2. It limits the types of media you can buy

Targeting, in general, has its pros and cons.

On one hand, studies show its the least effective driver of advertising profitability.

See below.

But on the other hand, I am a believer in standing for something, to someone.

Especially as a young brand, trying to stand out in older categories.

And especially when budgets are challenged - projected to only grow 5% annually - it’s hard to reach everyone, let alone be for them.

Regardless, targeting often falls down because it’s inaccurate in execution.

Cookies? They track what your spouse has been searching on your computer.

First-party data? 1 in 4 Brits gave false data about themselves to brands.

Match rates? Can be 50% or worse.

Pixels? Apple corrupted purchase signals on all types of sites and apps.

Ultimately, you pay a premium for shoddy targeting.

We’re scared of waste in mass channels, yet get it in “precise” ones.

In fact, Meta, one of the biggest platforms in the world for media buying, no longer advises advertisers to apply targeting in their platform.

Go as broad as possible, and the platform will figure out for you who likes your product.

But beyond targeting inaccuracies, there’s a bigger problem.

Targeting is often prioritized over what you’re actually buying.

Because even if you reach the right people, what’s the point if they don’t notice?

Every media plan is a struggle between targeting and inventory.

You want to limit waste and reach the right people…

…in formats that are actually premium and will capture their attention.

But contrary to Lindsay Lohan in Mean Girls, limits do exist.

Many limits.

The companies with precise targeting, target with small display banners that people ignore.

The companies with the best inventory, target too broadly, and are thus, deemed too expensive to risk.

Ultimately, media companies and platforms rarely offer both great targeting and great inventory.

Take Meta for example. Their superpower is really targeting.

When they lost that superpower via Apple, their business started to collapse.

Their inventory itself is not powerful enough to drive results or attention.

Stories are full-screen, sure, but Meta’s inventory is in low-attention news feeds, with people quickly scrolling by.

Their whole business model relies on the ads being so relevant, they stop your thumb instantly amidst your zoning out and flipping through friend’s picturesque vacations.

So they’ve spent the last two years trying to claw that superpower back, leveraging AI to improve their targeting capabilities and win ad dollars.

And then there is Disney. Their superpower is really inventory.

They have extremely premium content - both owned, like Marvel and Star Wars, and rented, like NFL, NBA, and other sports rights.

Any disruption to that inventory would be catastrophic to their business.

Which is why the Charter stand-off posed a real threat.

It would have limited the reach, and therefore, their inventory.

And any limits on that inventory wouldn’t be able to be made up by their targeting.

It’s also why they prioritized including Disney+’s ad tier in the Charter bundle.

They need as much inventory as possible to capitalize around their content.

When businesses have both, they dominate the ad market.

Meta, especially pre-2021. Great targeting, and good enough inventory supplied by their flywheel of UGC.

YouTube. They combine Google’s insane datasets, with the most impactful media format, video. They also guarantee attention by allowing you to pay at the 30 second mark, and they’re diving more into sports rights, the highest attention media property.

Amazon. They obviously have incredible shopping data and ad real estate for sale in digital supermarkets. But they’re also introducing ads in Amazon Prime Video, which has stand-out originals, NFL programming, and potentially NBA programming the future. They have Twitch to reach younger people. They have Freevee, which had a hit show this year. They also lowkey own Wondery, the podcast company and home to Smartless and How I Built This.

Amazon is about to be as legit in upper funnel as they are in lower funnel budgets.

There are others to keep an eye on.

Roku is one. They are in 70 million homes, and their data is very crisp - credit card data, viewership data, etc. Their problem is inventory - they get scraps from the other CTV apps and have Roku Channel, not exactly premium content. If they can figure out the inventory piece, watch out.

NCM too. They are introducing programmatic to cinema for the first time. Cost of entry was the barrier for cinema advertisers, and audiences being too mass. If there are no minimums, and you can target based on ticket data matched to other data points - for example, this theater is full of men who overindex for gambling, or moms who overindex for shopping - watch out.

There are likely others. I’m not as well versed in programmatic OOH as I should be, and it’s been a while since I did addressable TV.

But ultimately, there are only a few places that nail both targeting and inventory.

There are many on the horizon, but that future might not be here for a bit.

And what’s left are plenty of companies with subpar inventory and supposedly “great” targeting that often falls short.

So if you’re planning a campaign in 2023 or 2024, what should you prioritize:

Targeting or inventory?

Well, want my advice? I would hope so if you’ve kept reading this long.

It’s obvious what places have the best data for targeting.

Meta, YouTube, and Amazon.

Fund those first.

Then, prioritize inventory over targeting.

There are only so many places that capture attention.

You want to be front and center in those, and block out the competition as much as possible.

And, don’t force targeting in these channels that are not built for it.

You’ll be paying a premium for bad targeting (see: story of my pregnant wife above being served a dating app ad).

And, if you’ve done your planning job right, you’ve already likely identified a place that will resonate with the audience you’re trying to reach anyway.

No need to pay an upcharge for that.

Especially if it risks breaking up a perfectly happy pregnant couple.

Stay thinkin,

Danny