AUDIENCE TARGETING ROUNDUP

June 2015 AUDIENCE TARGETING ROUNDUP Audience targeting is among digital marketers highest priorities, as they try to get their messages in front of the right people. From demographic to psychographic to interest-based targeting and more, technology is helping them do it. emarketer has curated a Roundup of key articles, trends, insights and interviews around audience targeting, how marketers are using it, what it s getting them and what the obstacles are to making it even better. presented by

AUDIENCE TARGETING ROUNDUP Overview According to research by Marin Software, audience targeting is one of the top concerns of marketers today. A Q4 2014 survey of US and UK digital marketers found that creating campaigns based on understanding audiences was the No. 1 priority for this year, ahead of cross-channel digital marketing or integrating digital marketing with offline efforts. Targeting and personalization also topped the list of digital marketing areas that client-side marketers worldwide planned to prioritize this year in a survey from Econsultancy. The widespread desire to target audiences is a key reason marketers are getting more data-driven. According to the Interactive Advertising Bureau (IAB) and the Winterberry Group, audience analytics to support segmentation and targeting were the top reason North American marketers were using technology and data to drive their efforts. Nearly 83% chose this response. Audience targeting was also behind 86% of marketers decisions to move away from direct buys and toward programmatic, according to March 2015 research from Digiday. Audience data--namely demographics--was the most common attribute used for targeting by US email marketers, according to December 2014 data from The Relevancy Group. Geographic data was the No. 2 way to target and segment audiences. For the largest companies, demographic targeting was most common, with 75% using it. On the other end of the spectrum, firms with revenues under $1 billion were more likely to target audiences based on psychographic characteristics (78%). Psychographics were also the most popular form of audience targeting among marketers in Asia-Pacific (86%), while those in EMEA preferred demographic targeting (74%). North American marketers were also most likely to target audiences based on psychographics, but less dramatically so than their APAC counterparts. Key Factors in Their Decision to Move More Ad Spending from Direct to Programmatic According to US Media Buyers, March 2015 Audience targeting Placement transparency Ability to forecast inventory availability 44% First-look impressions 35% Abundance of rich media 24% Page-level share of voice 23% 73% 86% Source: Digiday, "Premium Programmatic: Turning What If Into What Is" in association with Sonobi, March 26, 2015 187709 www.emarketer.com Research from Forbes Insights suggests marketers in different regions and at companies of different sizes have different priorities around audience targeting. Overall, 73% of senior marketing executives worldwide said they worked with publishers to target audiences, while 64% worked with ad networks for the same purpose, and 45% used programmatic exchanges to target audiences. Audience Targeting Roundup Copyright 2015 emarketer, Inc. All rights reserved. 2

Despite Concerns, Interest in Mobile Audience Targeting Rises Both interest and investment in mobile audience targeting rose year over year Marketers interest in targeting people not devices is on the rise, despite doubts about the veracity of the data used for mobile audience targeting. To ease marketers concerns, the advertising industry has made several advancements in audience targeting on mobile devices. Advertisers are generally pleased with the progress that s been made, but they re far from satisfied, according to a new emarketer report, Mobile Audience Targeting: Have Industry Advances Raised Advertisers Confidence Levels? Last year, marketers studied by emarketer gave mobile ad targeting average grades for effectiveness, and research showed that many advertisers were skeptical of the data used to target mobile display ads to specific audience segments on smartphones and tablets. Still, the percentage of US digital marketing and media professionals targeting audiences via smartphones and tablets increased significantly last year. In 2014, 75.0% of the digital media and marketing professionals polled by exelate, a data management platform provider since acquired by Nielsen, said they targeted ads to specific audience segments on smartphones, and 73.1% did so on tablets. These shares were up significantly compared with the prior year and were not far below the percentage that used audience targeting tactics for desktop campaigns. A study conducted by Opera Mediaworks also showed mobile audience targeting tactics were being more widely used by advertisers. In fact, an analysis of mobile ad campaigns served through the Opera Mediaworks ad platform in Q1 2015 showed that in some regions of the world, 85% of advertisers targeted ads to unique audiences, meaning segments that were created specifically for the campaign. Platforms Used by US Digital Media and Marketing Professionals for Audience Targeting, 2013 & 2014 PC/Mac Smartphone Tablet We don't target by platform 16.7% 5.8% 2013 2014 57.5% 61.7% 75.0% 84.6% 75.0% 73.1% Source: exelate, "Audience Targeting State of the Industry Survey" in conjunction with Digiday, April 29, 2014 173082 www.emarketer.com Digital Marketing Areas that Client-Side Marketers Worldwide Will Prioritize in 2015 Targeting and personalization 30% Content optimization 29% Social media engagement 27% Brand building/viral marketing 24% Multichannel campaign management 22% Conversion rate optimization 20% Search engine marketing 17% Mobile optimization 16% Video content 15% Marketing automation 15% Mobile app engagement 13% Joining up online and offline data 12% Social media analytics 9% Real-time marketing 9% Customer scoring/predictive marketing 9% Ad targeting optimization 8% Video advertising 7% Mobile app analytics 6% Note: n=2,748 Source: Econsultancy, "Quarterly Digital Intelligence Briefing: Digital Trends 2015" in association with Adobe, Jan 28, 2015 184994 www.emarketer.com Audience Targeting Roundup Copyright 2015 emarketer, Inc. All rights reserved. 3

With ad dollars quickly shifting from desktop to mobile, interest in ad targeting is rising. Marketers focus on this particular discipline was apparent in the results of a threemonth survey conducted by Econsultancy in partnership with Adobe between November 2014 and January 2015. When the research firm asked a group of digital marketing and ecommerce professionals worldwide to name the digital marketing disciplines they were prioritizing in 2015, targeting and personalization topped the list, up from third place in 2014. More specifically, audience targeting topped the priority list for marketers polled by Marin Software in Q4 2014. When the cross-channel ad provider asked digital marketers in the US and UK to name their top priorities for 2015, creating campaigns based on a deeper understanding of audiences came in at No. 1, cited by more than half of the respondents (51%). In addition, investing in more sophisticated technology to gain and act on insights about customers was chosen by one-third of the marketers polled, earning it fifth place on the list. Top 5 Priorities for 2015 According to Digital Marketers in the UK and US 1. Creating campaigns based on deeper understanding of audiences 51% 2. Cross-channel digital marketing 50% 3. Better integration of online and offline marketing efforts 46% 4. Better integration of digital marketing disciplines 44% 5. Investing in more sophisticated technology to gain and act on insights about customers 33% Source: Marin Software, "2015 Digital Marketers Census," Dec 16, 2014 187977 www.emarketer.com Email Targeting Isn t All that Advanced Yet Simple metrics such as demographics, geography most common for segmentation Despite plans to increase personalization efforts, email marketers still struggle when it comes to using consumer data to successfully segment and target their audiences. A December 2014 study by The Relevancy Group found that US marketers relied on less advanced customer data attributes to segment audiences for email marketing campaigns. General demographic and geographic data were the most common metrics used for segmentation, and the only ones used by more than 35. Meanwhile, other easily measured data points such as email clicks and open rates were used less frequently especially the latter and most marketers were unable to leverage metrics beyond the email realm such as past purchases and spending habits. One look at how marketers managed or didn t manage customer data, and low usage of sophisticated metrics made all the more sense. Fewer than four in 10 respondents had a centralized data repository for their client data. Even worse, just 28% centralized customer data from across channels to create a single record for the customer, despite their desire for a 360-degree view of customer-brand interaction. Predictive analytics one of the most important parts of marketing automation, which drives better targeting and personalization was among the least-used methods, while keeping data clean ranked lowest. Issues with data tracking prevent marketers from leveraging customer data across channels. In a November 2014 study by Adobe for the Direct Marketing Association (DMA), less than half (46%) of digital marketers in North Audience Targeting Roundup Copyright 2015 emarketer, Inc. All rights reserved. 4

America said they utilized information from other channels when running email campaigns. The good news is that marketers polled by The Relevancy Group planned to focus more on segmentation and targeting, ranking it the top email marketing priority for 2015. In line with this, greater use of analytics in order to optimize communications as well as centralizing customer data and making it actionable also landed among the top five priorities. However, responses for all three were still relatively low, at 35%, 30% and 29%, respectively, suggesting the need for improvement won t die down all that soon. Customer Data Attributes/Metrics Used by US Marketers to Segment Audiences for Email Marketing Campaigns, Dec 2014 Demographic data 41% Geographic data 39% Customer satisfaction survey data 34% Clickthroughs on email marketing offers 33% Customer spending 31% Frequency of purchase, conversion rate 29% Customer profitability (customer lifetime value) 28% Frequency of customer service contacts 28% Transaction activity/purchase behavior 27% Open rate on email marketing offers 27% Acquisition source 27% Website clickstream analysis 27% Methods Used by US Marketers to Manage Customer Data, Dec 2014 Use email address as a unique customer identifier 36% Have a centralized data repository for our client data 36% Measure lifetime customer value 32% Store our client data in the same schema for all marketing channels 29% Know the value of our email subscribers/value of an email address 28% Centralized customer data from across channels to recognize the customer in a single record 28% Practice data householding to understand multiple customers/accounts within a single household 28% Track acquisition costs by channel 28% Use multiple channel-specific databases to store our customer data 28% Utilize predictive customer analytics 27% Use robust data hygiene and deduplication processes for data management 26% Note: n=353 Source: The Relevancy Group, "The Relevancy Ring: ESP Buyer's Guide 2015," Feb 23, 2015 186506 www.emarketer.com Note: n=353; in the past 6 months Source: The Relevancy Group, "The Relevancy Ring: ESP Buyer's Guide 2015," Feb 23, 2015 186505 www.emarketer.com Audience Targeting Roundup Copyright 2015 emarketer, Inc. All rights reserved. 5

Can Marketers Overcome Cross-Device Targeting Barriers? Cross-device targeting is in demand but fragmented Cross-device targeting is still in its early days, even as growing numbers of advertisers, publishers and ad platforms participate in the practice. Today, there s no shortage of people promising cross-device targeting solutions, but the incompatibility of those solutions across publishers, platforms and devices can leave advertisers frustrated and their efforts fragmented, according to a new emarketer report, Cross-Device Targeting: Success Hinges on Device Identification Methods. For years, the cookie served as the universal online advertising identifier, enabling buyers, sellers and thirdparty go-betweens to effectively recognize and reach individuals. But today, as non-web-based digital activities on mobile phones and apps, connected TVs, wearables, connected cars and other IP-enabled devices continue to compose an increasing portion of consumers digital media footprints, the cookie s utility is waning. Yet the need for a universal identifier has never been greater. Marketers interest in cross-device ad targeting is clear. In a January 2014 survey of US agency media professionals conducted by research firm Bovitz on behalf of digital marketing personalization firm Conversant, the greatest number of respondents (70%) cited cross-device advertising as the digital advertising topic they wanted to know more about. An April 2014 survey, conducted by Forrester Consulting and commissioned by demand-side platform (DSP) Simpli.fi, found 53% of US advertising and publishing decision-makers were already selling full cross-platform integrated programs. Significant numbers of respondents also said they sold cross-device advertising capabilities between pairs of screens, such as phones and tablets or desktop and video. Inarguably, the biggest shift that both buyers and sellers must first undergo before making cross-device targeting a reality is to move from sole reliance on the cookie to some other identification tag capable of recognizing an individual across all digital screens, operating systems Cross-Platform Packages Sold by US Advertising and Publishing Decision-Makers, April 2014 Full cross-platform integrated programs 53% Phone and tablet 42% Phone and desktop 38% Desktop and video 36% Tablet and desktop 36% Phone and video 32% Tablet and video 29% Desktop and print 27% Print and video 26% Tablet and print 26% Phone and print 24% 7% We don't sell cross-platform programs Note: n=100 Source: Forrester Consulting, "Local Programmatic Creates a World of Opportunity: When Digital Advertisers and Publishers Alike Overcome Barriers" commissioned by Simpli.fi, July 2014 178219 www.emarketer.com Biggest Challenge of Multiscreen Campaigns According to US Agency Professionals, Q2 2014 Targeting 21% Common metrics 22% Audience tracking 33% Creative production 24% Source: Jivox, "The New Era of Multi-Screen Advertising," July 28, 2014 177647 www.emarketer.com and browsers. In the absence of such technology, crossdevice ad targeting just won t work. But accessing and applying that technology at scale can prove challenging, further complicating advertisers ability to track and target audiences across screens. In a Q2 2014 survey of US agency professionals conducted by digital display ad platform Jivox, more than half of respondents (54%) cited audience tracking and targeting as the biggest impediments to multiscreen advertising. Audience Targeting Roundup Copyright 2015 emarketer, Inc. All rights reserved. 6

Marketers Focus on Making Attribution Data Actionable Industry experts discuss real-time optimization of cross-platform attribution findings No one would argue the importance of crossplatform attribution defined as a method of assigning credit to a particular marketing-driven interaction or other brand touchpoint. But when it comes to pursuing and implementing attribution, the majority of marketers still fall short, according to a new emarketer report, Cross-Platform Attribution 2015: Device Identification, Big Data Pose Continued Challenges. As marketers increasingly look to attribution to better understand customers, not just build their media plans and justify budgets, figuring out how to act on cross-platform attribution findings as quickly as possible is on the minds of many. Though blending top-down marketing-mix models with bottom-up path analysis is a popular method of gaining a true holistic view of all paid, owned and earned advertising efforts across digital and traditional media, most find that real-time optimization of intel gained from this approach is still mostly limited to those channels and formats belonging to the digital, bottom-up bucket where impression-level tracking and real-time reporting allows for more realtime optimization. The more sophisticated attribution solutions from a media-mix modeling perspective are helping with channel allocation and budget planning, but the adjustments and optimizations are still largely coming from the microattribution that we re doing on the digital side, said Allegra Kadet, managing director at Neo@Ogilvy. Though we re making progress on making all channels actionable, there s always going to be some outliers where you can t connect one channel to another chain of events. I think it s unrealistic to expect that 100% of all channels will be optimized in real time. That s not to say that some marketers aren t looking to instill a more real-time optimization approach to some of their traditional media. According to Harpreet Singh, CEO of Kvantum, one of the biggest trends he is seeing among clients is to make traditional offline media more actionable, particularly television. Singh said more and more marketers hope to identify the effects of TV ad efforts two or three weeks into the campaign, with backup, alternative media plans on deck to optimize and adjust efforts as needed. Singh said most of those optimizations are happening through spot buys, whether to dial back on future television investment in favor of digital channels or augment current TV performance with additional coverage. In using attribution to tie actual in-store sales back to TV and other advertising exposures, clients can then determine which designated market areas (DMAs) are best suited for further TV investment based on the performance of the stores located in the same region. The importance of attributing and optimizing all actions against actual revenue data such as in-store purchase data is notable. Historically, most digital channel optimization is centered on digital-specific measures such as clicks and conversions, with traditional media modified based on brand-based metrics. Though such metrics might be important indicators of channel-specific success, by and large, they are not the determinants of cross-platform attribution success. Attribution Models Used by US B2B and B2C Marketers to Measure ROI, Nov 2014 Multichannel (all influencing touchpoints) 21% Last touch (conversion) 19% First and last touch (lead source & conversion) 18% First touch (lead source) 15% Other 9% Don't have an attribution model in place 38% Source: Webmarketing123, "2015 State of Digital Marketing," Feb 10, 2015 185695 www.emarketer.com Audience Targeting Roundup Copyright 2015 emarketer, Inc. All rights reserved. 7

Publishers Reach for Audience Extension Audience extensions increases reach, impressions Audience extension has gained popularity among publishers, based on September 2014 research by Rocket Fuel s Audience Accelerator and Digiday, those using the tactic are happy with the results. Though the percentage of US digital media and marketing execs offering audience extension as an option rose just slightly year over year, to 52%, those doing so were leveraging it more frequently. One-third said they included audience extension in most or all of their campaign proposals an increase of 31%. Publishers were most likely to include audience extension in campaign proposals to extend reach and add impressions, with the percentage of respondents citing this rising from 47% to 73% year over year. When asked for a request for proposal (RFP), publishers had shifted efforts, Ways in Which US Digital Media and Marketing Executives Include Audience Extension* in Campaign Proposals, 2013 & 2014 Include it when it addresses an objective specifically asked for in an RFP 50% 58% Include it when an RFP asks for data-driven, audience-based buys 50% 42% Include it when we need additional reach or impressions to deliver a campaign 47% 73% Created a unique product and rolled it out to our top advertisers 30% 39% Include it when an RFP asks for channels that we don't have (e.g., mobile, video, social) 23% 30% Other 6% 9% 2013 2014 Note: *defined as the practice where advertisers can purchase ad inventory that is targeted to a particular publisher's premium site audience elsewhere on the internet Source: Audience Accelerator and Digiday, "The Value of Digital Publishers' Audiences," Oct 22, 2014 181219 www.emarketer.com increasing audience extension when it addressed a specific demand in an RFP, while decreasing it when asked for datadriven, audience-based buys. Looking at platforms used, third-party ad networks saw a huge drop in their popularity, from 57% to 38% year over year. Meanwhile, demand-side platforms experienced a massive leap in usage, increasing from 25% to 44% to tie with three other options for first place. Programs integrated with publishers ad servers saw their response rate rise 9 percentage points, as did data management platforms (DMPs). Audience extension appears to be driving DMP usage among publishers. In an April 2014 study by Forrester Consulting for Simpli.fi, 68% of US publishing decisionmakers said they used such tools to create data-driven advertising programs such as audience extension the top response. Platforms Used for Audience Extension* by US Digital Media and Marketing Executives, 2013 & 2014 Third-party ad network In-house network Integration with my ad server Data management platform (DMP) Demand-side platform (DSP) 25% Seat on an exchange 24% 25% Supply-side platform (SSP) 24% 2013 2014 35% 35% 34% 38% 39% 44% 44% 44% 44% 57% Note: *defined as the practice where advertisers can purchase ad inventory that is targeted to a particular publisher's premium site audience elsewhere on the internet Source: Audience Accelerator and Digiday, "The Value of Digital Publishers' Audiences," Oct 22, 2014 181220 www.emarketer.com Audience Targeting Roundup Copyright 2015 emarketer, Inc. All rights reserved. 8

Digital Advertisers Focus on Holistic Customer Experience Mobile trumps desktop in ad spending The much-anticipated shift toward mobile will occur this year in the two largest digital advertising categories: search and display. For the first time, US advertisers will spend more in these areas to reach consumers on mobile devices than desktop computers, according to a new emarketer report, The State of US Digital Advertising 2015: Mobile Trumps Desktop, People Trump Devices. emarketer estimates US advertisers will spend $52.71 billion on search and display advertising in 2015, up 16.6% from the prior year. In an effort to catch up with consumers toting smartphones and tablets, more than half (52.2%) of this expenditure is expected to go toward mobile campaigns. Devices take center stage at the budgetary and tactical level, but strategically, marketers are focusing less on devices and more on people, specifically connecting with consumers wherever and whenever they access the web. The biggest change we re seeing is the move towards people-centric marketing, said Chad Gallagher, global director of mobile for AOL. Both brand and performance advertisers are saying, We don t necessarily care about the device, we care about driving results against people. That s a fundamental change. Marketers are keenly aware that the average person relies on multiple devices to access the internet, so the device itself is no longer a strong indicator of the type of person using it. According to Forrester Research, US consumers across all demographic groups used an average of 3.3 devices last year. Millennials used more four devices on average. Armed with such knowledge, marketers are thinking more holistically about the customer experience they deliver across multiple screens instead of focusing on each device and channel as a silo. The vast majority (86%) of marketers worldwide polled by Salesforce.com in November 2014 said US Display and Search Ad Spending, by Device, 2015 billions Desktop* $25.66 $12.85 $12.82 Search ad spending Mobile** $27.05 $14.67 $12.38 Display ad spending Note: numbers may not add up to total due to rounding; *includes spending primarily on desktop-based ads; **ad spending on tablets is included Source: emarketer, March 2015 186591 www.emarketer.com Average Number of Connected Devices Used by US Internet Users, by Generation, 2014 Gen Z (ages 18-24) 3.6 Millennials (ages 25-34) 4.0 Gen X (ages 35-44) 3.6 Younger baby boomers (ages 45-54) 2.9 Older baby boomers (ages 55-64) 2.6 Seniors (ages 65+) 2.0 Total 3.3 Source: Forrester Research, "The State of Consumers and Technology Benchmark 2014 US" as cited in company blog, Jan 16, 2015 184904 www.emarketer.com delivering a cohesive customer journey across devices was very important or critical to the success of their business. Marketers surveyed worldwide in January 2015 by Econsultancy on behalf of Adobe held similar views. Nearly six in 10 said cross-channel marketing would be a key focus for them this year. Indeed, most agree that identifying target audiences across devices and delivering a cohesive brand message to each Audience Targeting Roundup Copyright 2015 emarketer, Inc. All rights reserved. 9

screen is the path toward success. Marketers have all seen the graphs that show people are spending more and more time on mobile devices, and they know they need a strategy, said Adam Berke, president and CMO of AdRoll. However, if you ask, What s your business objective for mobile? they haven t had a great answer for that. It s difficult to extend campaigns beyond desktop, Berke added, if marketers don t know what they re aiming to achieve by serving ads to mobile devices. Client-Side Marketing and Ecommerce Professionals Worldwide for Whom Cross-Channel Marketing Will Be a Focus in 2015 Strongly disagree 3% Neutral 30% Disagree 8% Strongly agree 14% Agree 45% Source: Econsultancy, "Quarterly Digital Intelligence Briefing: Digital Trends 2015" in association with Adobe, Jan 28, 2015 187061 www.emarketer.com APAC Marketers Challenged to Find the Right Audience Psychographics are the most popular audience targeting methods in Asia-Pacific Based on December 2014 research from Forbes Insights, marketers in Asia-Pacific consider a variety of audience targeting methods more important for branding campaigns than do marketers in other regions. From psychographics to demographics to purchase data and more, senior marketing executives in Asia-Pacific were more likely to rate them key for branding campaigns than their counterparts in North America or Europe, the Middle East and Africa (EMEA). Within Asia-Pacific, psychographics were the most likely audience targeting method to be rated important, at 86% of respondents. Purchase data was just 2 percentage points behind, with demographics coming in third at 72%. Around two-thirds of respondents in Asia-Pacific also considered social and search data important. Audience Targeting Methods Most Important to Brand Campaigns According to Senior Marketing Executives Worldwide, by Region and Company Revenues, Dec 2014 Interests and lifestyle (psychographics) Demographics Purchase data Social data Search data Region Asia-Pacific North America Europe, Middle East & Africa Company revenue $500-$999 million $1-$4.9 billion $5-$9.9 billion $10+ billion Worldwide 86% 76% 61% 78% 77% 86% 54% 75% 72% 69% 74% 72% 63% 74% 75% 71% 84% 63% 53% 75% 56% 69% 48% 66% 69% 54% 42% 59% 46% 54% 56% 55% 64% 40% 42% 55% 42% 34% 38% 47% Source: Forbes Insights, "Reaching the Right Audience: How Brands Are Using Audience Targeting in Digital Advertising" in association with Quantcast, May 5, 2015 189600 www.emarketer.com Meanwhile, in EMEA, no type of audience targeting garnered even three-quarters of responses, with demographics coming in first at 74%. Marketers in North America preferred psychographic targeting, with interest- Audience Targeting Roundup Copyright 2015 emarketer, Inc. All rights reserved. 10

and lifestyle-based targeting rated important by 76% of respondents. Asia-Pacific also stood out when marketers were asked to describe the challenges they faced when using audience targeting for display ads. Worldwide, 54 said identifying proper target personas was their biggest issue, the No. 1 challenge. That was also the top challenge in EMEA and North America specifically, but not in Asia- Pacific: Instead, the availability of those target personas was the biggest problem, named by 42 in the region. According to Q1 2015 data from comscore vce Benchmarks, 39% of digital display ads served in Asia- Pacific during that time period were in-target. That was a few percentage points below in-target rates for North America (43%) and EMEA (44%), but slightly ahead of successful targeting rates in Latin America (37%). Location Data Not Only Signals Where You Are, It Signals Who You Are Tyler Bell Vice President, Product Factual Location-based targeting has evolved far beyond geofencing (serving an ad to a mobile device detected within a predetermined perimeter of a physical location) and geoconquesting (serving an ad to mobile devices within close proximity of a competitor s location) to become a method for identifying and serving ads to unique audience segments. Tyler Bell, vice president of product for Factual, a location platform and data provider, spoke with emarketer s Cathy Boyle about how advertisers are leveraging location data to better understand people through the places they visit. emarketer: Do you have to constantly track a mobile user s location to gain insight into who that person is? Tyler Bell: The way that you tend to get location in the mobile world now is through what we call intermittent location, which means that you get a blip [of data] that says this user was here at a given time. Very often that blip comes when the user opens an app or maybe when an ad is served in the app. Users are not getting tracked or traced with every step they take. Instead, there are these tiny windows into location data points. By itself, any one location data point doesn t say much. Factual looks at all the signal blips over the course of several weeks or a month because humans are creatures of habit, so a lot of interesting patterns begin to develop. Factual looks at all the signal blips over the course of several weeks or a month because humans are creatures of habit, so a lot of interesting patterns begin to develop. emarketer: How are you using geodata to better understand the person using the device? Bell: I should start out by saying that understanding the age or the gender of someone by how they move is always going to be problematic. But what Factual does is use two very strong signals [indicators of demographic traits]. For one, we can see the range of applications that a user has on their phone. Not the entirety of them, but very often a couple of apps. And these applications are strong signals that machine learning algorithms use to determine age and gender of the device user. We do the same thing with location data as well. When people are out, we look at whether they are going to Audience Targeting Roundup Copyright 2015 emarketer, Inc. All rights reserved. 11

nightclubs, for example. The general patterns of behavior over time are usually indicative of age and gender, too. Ethnicity and household income are hard to get from location. But by using that data we can make a guess as to which census block group a person is located in. The US Census aggregates information in a so-called block group level, which you can think of as one or more city blocks. That information is a pretty good metric for making assumptions about ethnicity in some circumstances, as well as household income. emarketer: Can you give me an example of how location data might suggest a person is part of a specific audience segment? Bell: To understand that someone is a business traveler, we don t necessarily have to see them at airports. We might see one location data point and then a few hours later we ll see another data point from that same device thousands of miles away from the first location. So, even though we didn t necessarily see that device at an airport, the two other location points tell us that the person has taken an airplane. And if that person does that several times during the week, then they tend to fall into the business traveler category. We just process location data on behalf of our partners... The last thing that we want to do is go out there and start just creating massive audiences from amalgamated location data. emarketer: If a brand wants to understand more about its existing customers, can they come to you with their CRM data and say, Tell me where my customers go so I can better understand their behaviors in the real world? So if a brand comes to us and says, Hey Factual, do you have good location streams where we can learn about who goes to our Home Depot stores and where they go afterwards? we can have a word with MoPub or someone similar to see if they would be willing to work with this brand. If they agree, we can do an analysis of where people have gone over time and what kind of people are visiting the retailer s locations, how far stores are from their home block group, etc. emarketer: The location data sounds like it s owned by an exchange, publisher or ad network, and that you re helping them parse that data to find the audiences that are of interest to brands. Is that right? Bell: That s correct. We re a force multiplier for location data. So if we work with The Weather Channel or any of the exchanges, they pass us their location data. We create the audiences doing our location process, and then we give those audiences back to the partner who gave us the data in the first place. emarketer: Can the audience insight gleaned through location data also improve desktop ad serving and targeting as well? Bell: There s a bunch of technologies that you can use to do that, to build those cross-device profiles. Some are successful, but none of them are entirely successful. Generally what we re seeing is that a lot of our partners are trying to go from desktop onto mobile. They re trying to say, How can we take this cookie-based profile that we ve built over the last five years using desktop approaches and apply that to mobile? That s very tough, and it s one reason that Factual is starting on the other side and we re saying how can we work with mobile natively to help build the best possible audiences. Bell: Yeah, that kind of brand analysis is something that we can do. But brands would need to work with one of our partners, like MoPub, because Factual doesn t own its own location data. We just process location data on behalf of our partners. That s a really important point because location is so intimate and so private. The last thing that we want to do is go out there and start just creating massive audiences from amalgamated location data. Audience Targeting Roundup Copyright 2015 emarketer, Inc. All rights reserved. 12

Alex and Ani CMO: Insights on Mobile-Social Audience Targeting Ryan Bonifacino CMO and Senior Vice President, Digital Alex and Ani In the past year, advancements have been made in mobile targeting to help marketers better reach their audience. Ryan Bonifacino, chief marketing officer and senior vice president of digital at jewelry retailer Alex and Ani, recently spoke with emarketer s Rimma Kats about the advantages of mobile audience targeting and the pitfalls marketers should avoid. emarketer: When you re interested in reaching specific audience segments on smartphones and tablets, which mobile ad inventory source do you find to be most reliable? Ryan Bonifacino: If I were to get granular, it would have to be more of a paid social effort, like Facebook or Twitter. emarketer: What technology or capabilities make these publishers stand above the rest? Bonifacino: On Facebook you are able to use management tools. We use a tool called Kenshoo, and there s a bunch of other tools out there that are able to give brand visibility into the relationship between things like search and social specific to mobile. emarketer: What were you doing a year ago to target audiences on mobile with Facebook and Twitter that you re no longer doing? Bonifacino: We were probably doing the same things, but we have additional insights and analytics now. We have additional third-party data being [integrated] into our data management platform. That data brings a lot more insights in our strategy and what we re willing to pay for that customer specific to that device. It s really difficult to target audiences on Facebook or Twiiter the right way if you don t have your data centralized in one place. emarketer: Are there any pitfalls to avoid with audience targeting on Facebook or Twitter? Bonifacino: Tons. It s really difficult to target audiences on Facebook or Twitter the right way if you don t have your data centralized in one place. A big piece of advice is to start with a data-centralization strategy that runs in parallel to your audience targeting efforts. emarketer: Do you use a data-management platform to help target ads to specific audience segments on mobile? Bonifacino: We do. We wouldn t be close to where we are right now if we didn t have a DMP. We would have all sorts of the data sit with separate systems that don t talk to one another, and this goes back to the strategy behind centralizing data. It s absolutely critical for us to be able to get significant and measurable gain with mobile audience targeting, given the use of the DMP. emarketer: What data are you leveraging most from your DMP to target audiences? Bonifacino: Our own data. We have it all in one place and are able to do natural matching on the records that we have, and then enhanced matching based on the thirdparty data that we re bringing into the system. emarketer: Have you leveraged location data as a means of defining and targeting audience segments? Bonifacino: We have, particularly when it comes to our instore digital marketing efforts. We run campaigns that are pushing both new and existing customers to stores. Those are not necessarily the coupon-type campaigns, they re more content-driven. We re making sure that our current group of gift givers and direct purchasers have constant visibility into new products that we re launching. Like any successful digital marketing effort, you re going to have some failures. It s important to make sure you re testing the right way and providing an optimized experience. Audience Targeting Roundup Copyright 2015 emarketer, Inc. All rights reserved. 13

Reaching Segmented Audiences Through Facebook and Twitter Jeremy Lockhorn Vice President, Emerging Media and Mobile Lead, North America Razorfish Marketers confidence in mobile audience targeting is fairly low, but that is beginning to change, according to Jeremy Lockhorn, vice president of emerging media and mobile lead for North America at digital agency Razorfish. Lockhorn recently spoke with emarketer s Rimma Kats about reaching specific audience segments and how Facebook and Twitter are helping achieve that. emarketer: Survey data suggests marketers confidence in mobile audience targeting is low. Would you agree with that? Jeremy Lockhorn: Generally speaking, that sounds fair to me. It is increasing, though. There are a lot of players out there coming at it from different angles, and they try to keep their approaches almost in a box. They don t provide a lot of detail on how they are layering on data and developing audience targeting profiles. That lack of transparency leads to a lower level of confidence. But, again, that is starting to change. emarketer: When you re interested in reaching specific audience segments on smartphones and tablets, which inventory source or method of buying mobile ad inventory do you find to be the most reliable in terms of reaching your intended audience? On the flip side, we ve got a lot of teams that are using audience targeting. They are using technologies that are unique to mobile. Both Facebook and Twitter can be pretty effective, especially when you think about user acquisition for mobile applications. emarketer: What about Facebook and Twitter, are they reliable sources for audience targeting? Lockhorn: Yes Facebook in particular. You ve got a really good sense of what the interest level is. Both Facebook and Twitter can be pretty effective, especially when you think about user acquisition for mobile applications. Part of what drives that is the level of the audience targeting that you can get to with those guys. emarketer: Have you ever used location data as a means of defining and targeting audience segments? Lockhorn: Yes, we work with Citibank on an ongoing program. It launched almost a year and a half ago. If you have the Citi ThankYou Preferred Card, you earn points based on the spending level. In certain types of spending categories like dining and entertainment, you can earn twice the points for purchases. We ve developed audience segments targeting people that dine out frequently, or that go to entertainment venues regularly. We buy messages and promote the ThankYou card against those segments. Lockhorn: We come at it from a couple of different approaches. Some of our teams are taking a consumer-first approach as opposed to a mobile-first perspective. They don t care whether they re reaching the audience in terms of what the device is. They re working with a premium cross-channel publisher, and some of the inventory is hitting on mobile. They are just leveraging either the contextual adjacency or what that publisher may know about the audience based on login data. They re not really thinking about which device this is happening on. Audience Targeting Roundup Copyright 2015 emarketer, Inc. All rights reserved. 14

SHE S INTO DUMBBELLS AND DORITOS. NOT ALWAYS IN THAT ORDER. ALISHA WAGNER // UBER-MOM If you re trying to reach this busy mom and high-value consumer, it pays to understand her instead of guessing. For example, her family indexes low for buying frozen food and high for preferring dishes presented as an art form. And besides strength training, she s also big-time into Pinterest. Learn more about Neustar s identity, targeting, and measurement solutions at www.neustar.biz/wagners. This information is compiled at the household level using Neustar s products and services and is not based on actual online behavioral data. Doritos is a registered trademark and has no direct association with Neustar. 2015 Neustar, Inc.

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