Propensity marketing is used to reach a target market audience based on their observed propensity for engagement in a particular subject matter. When you market to consumers based on their previous patterns, you have a much greater chance of reaching the right people, and thus, increasing your return on investment (ROI). The most successful marketing campaigns are based on propensity marketing, but marketers too often seek a shotgun approach rather than a sniper approach. This is also known as database marketing, and it is the basis of companies known as database aggregators who offer database reduction services to reach consumers more effectively.
Propensity Marketing Example
A very simple example of propensity marketing is the delivery of Google’s AdSense. AdSense advertisements are either display advertisements or a series of text links that you find on Websites along with a statement “Ads by Google”. When you see an AdSense advertisement delivered by Google, it is not by accident that it is related to what you are already looking at. For example, if you perform a Google search for “racing Webcast”, you will find one of my Websites, CopMagnet.com (actually, you will see this blog first). On CopMagnet.com, I have included Google AdSense ads, which you will see on the right side of the page. Based on the content of the site, AdSense delivers related links based on the propensity of the site’s visitors to be interested in both racing and Webcasts. In my current visit to the site, the ads I was served are titled, in this order:
- Webcast
- Webcast Hosting Services
- Twin Cities Drag Racing
- Firestone – Official Site
- Tires On Sale Now 60% Off
Propensity marketing does not just mean that the ads are related, but that based on statistical data, the user would likely have a propensity to find the ads useful. In this example of Google AdSense, you find a very basic form of propensity marketing, but it really goes much deeper than that. This is why Google also logs much broader data based on many other searches that you and a broad public have made, and uses that database for a more efficient targeted approach.
Implementing Propensity Marketing
In order to implement propensity marketing, you must first have broad data that includes your target audience. Another name for propensity marketing is “database marketing”. Using a database of consumer patterns, propensity marketing uses known facts about a broad group of consumers and reduces the database to include a very specific audience.
In order to narrow the database, you may use factors such as age, gender, income, industry, etcetera. However, proper propensity targeting may go further, by selecting far more specific factors such as what kind of car they drive, whether they smoke, how many children they have, and many more factors.
Database Reduction and Unexpected Propensity
A carefully considered propensity marketing campaign will not only rely on database reduction (excluding irrelevant data), but it will also look at lateral factors of your chosen subgroup. Performed correctly, it will include seeking unexpected patterns that may not appear related on the surface. For example, it may not initially make sense to a marketer to question the propensity of a smoker to also buy running shoes. This is an unlikely example, but it goes to the point of looking at patterns in the data that are unexpected but may yield the desired results.
Database Marketing: Gathering Data vs. Purchasing Data
Database marketing starts with the data, but where do you get the database? There are two viable options for data acquisition and data reduction. You can gather the data and attempt data reduction using your own means, or you can purchase a database from a data aggregator service.
If you choose the long road, and decide to gather and reduce a database using your own means, you must consider every resource. You can aggregate the data in many ways, including your existing customer database, your Website server logs, creating and implementing polls, requesting customer feedback, and others. However, it is generally far more efficient and effective to purchase the data from a data aggregator. A data aggregator will have information that is far beyond your immediate reach. Data acquisition is their business, and they will have information at their fingertips that is often far out of your reach. A data aggregator will not only have the information about your existing market, but will also have information about the market that you have been missing.
Purchase a Database: Selecting a Database Aggregator
So now the “squillion dollar question” is how to select where to purchase your database and which database aggregator and database reduction service will have what you need. Obviously, Google is a great place to start your search for a database aggregator or database reduction provider. There is more information added to Google every day about propensity marketing and databases for sale. Finding the right aggregator should be very carefully considered. I am presently studing the database marketing industry for my own benefit, and I will update this article with my findings when my search for the right data aggregator and reduction service is complete.
