10/02/2012 11:20 am ET Updated Dec 02, 2012

How Big Data Is Transforming Media Targeting... And What That Actually Means

In preparing for Advertising Week, I've been doing a lot of thinking around a topic that Catalina is focusing on at the show -- how big data is transforming media targeting. What does this actually mean? And why does media targeting need to be transformed?

According to a recent study by Catalina, just 36 percent of television ad exposures are delivered to the households that account for 98 percent of CPG purchases. The same Catalina study discovered that consumers outside of a target demographic are responsible for as much as 60 percent of all purchases. This is because most marketers are still relying solely on demographic targeting, and not yet factoring in the importance of purchase-behavior.

With the amount of shopper data available today, we have an unprecedented opportunity to get the right ads in front of the right people... based on their purchase-behavior. Not based on their age, sex, income or marital status, but based on what they bought last week, last month or last year. Purchase-behavior, gathered by every retailer or brand with a loyalty program, is more abundant than ever before, and it provides marketers with new, relevant data points with which to target shoppers.So what does this actually mean?

Well, if we were all to target ads based on purchase-behavior rather than traditional demographics, our ads would be seen by relevant shoppers who are part of our purchasing group, not necessarily our "purchasing demographic." By gathering data points from loyalty programs, we know exactly what shopper has #3876 purchased during every shopping trip. We know that shopper #3876 has a young child because s/he bought Pampers, a cat because s/he bought Meow Mix and likes Coke (not Pepsi). If we put this knowledge to use in our media targeting, we won't be sending Pepsi ads to Coke lovers, or discounts for Meow Mix to dog owners. Providing an instant, mobile discount for 50 cents off of Almond Milk to a shopper who just self-scanned Organic cereal makes sense. Providing the Almond Milk discount to every 30-year old woman who lives in Cambridge, MA starts to seem wasteful.

By leveraging new technologies -- like mobile self-scanning and media targeting or the ability to connect online and in-store purchase-behavior -- we can now make sure media is seen by only the most relevant shoppers, and stop wasting up to 80 percent of ad budgets. Just because I'm a 40-year-old guy, does it mean I want to order a travel toiletry bag from Skymall? Not even close. Because I bought a new leash and collar last week is it likely that I'll buy dog food in the near future? Absolutely.

In order to make the most impact for their brands, marketers need to discover how targeting is evolving, and apply this to the way they purchase media -- today. I welcome your comments or questions, and look forward to diving further into this over the next week.