ConnectWithCauseway, Segmented Marketing
October 16, 2023
The World Federation of Advertising says 30% of major advertisers are cutting their ad budgets this year. Tune in as guest, Tim Duer, spotlights market segmentation as the superpower for making ad dollars work harder. Hear lively discussions about new regulations impacting healthcare marketing, travel bouncing back, and more! Listen to the full episode:
Thérèse Mulvey, Vice President of Strategy: Welcome to Connect with Causeway. I'm your host, Thérèse Mulvey, Vice President of Strategy at Causeway Solutions. We're happy to welcome back our VP of Insight, Tim Duer. Hello, Tim.
Tim Duer, VP Healthcare & Enterprise Insights: Hello. Great to be with you again.
Thérèse: I'm also joined by our Manager of Strategic Partnerships, Lauren Kornick. Welcome back, Lauren.
Lauren Kornick, Manager, Strategic Partnerships: Hi, Therese.
Thérèse: As always, our goal is to simplify the sometimes intimidating world of data and discuss how you can use it to positively impact your business goals. Today we're going to look at the future of marketing segmentation, how segmentation drives smarter marketing and what you need to be aware of. I recently saw a World Federation of Advertisers study that talked about 30% of major advertisers saying that they're cutting their ad budgets this year. Ultimately everybody's trying to figure out how to make their ad dollars work better and how to make marketing smarter. I don't think anyone's ever really answered that question fully, but we continue to try to make it more and more effective for you. Over the last 50 years, there's been many different ways of looking at this. But what keeps changing currently and most quickly is the toolbox that we have to effectively make our marketing better. We're going to talk about segmentation today and how that piece of the toolbox is so important. And I know, Tim, you're working on some new stuff. Why don't you tell us a little bit about what you're doing with segmentation right now?
Tim: Sure. I love the idea that we need to make things sound really simple. The key for me is segmentation has historically been the way advertisers have moved towards saving some dollars by not trying to reach the entire planet with every message, but instead recognizing if you can identify your core audience, you really can get a lot more for your dollar. Not only do clients and customers expect more personalized messaging that's really driving towards a core audience, but they really just don't have the dollars. In many cases right now, some of these industries, the dollars are drying up when it comes to marketing and communications, and they've got to do more with less. But the key is, prior to where we're at right now, most segmentation was limited to something like geographics or demographics only. You could choose to pick an older audience, a younger audience, maybe by the geography, things like that. And you're really left at surface level interpretations only age, gender income, education, things like that. That’s what really excites me about what we've been doing lately is trying to take the next step and consider more about the consumer themselves as a person, as a recipient of these messages, rather than just what they look like on the surface.
Lauren: We keep saying for the last couple of months now that “segmented marketing is smarter marketing.” And we have a client example I think, Tim, that you're going to go into more detail later, but it's about targeting more surefire potential customers instead of that billboard marketing we talked about last time, where you're just throwing everything at the wall and seeing who sticks.
Tim: Absolutely Lauren. My background really is unique because I came from the healthcare world as a practicing clinician in a pediatric health system. It was easy to segment to one level where we could find people that have children and maybe we would include an income bracket if we were looking for a commercial product versus Medicaid products. But really, if you had children, that was our segmentation. Billboards could work, but that's all they would be able to do is pick an area that can reach potential parents, et cetera. But we're doing so much more with the audiences we're working with now in healthcare. Figuring out what is their motivator, what's their driver to make a healthcare choice. And these things have little to nothing to do with their actual known demographics. Those are the types of segmentation we do. And that's really exciting to me.
Thérèse: You make a really good point, Tim. One thing that I want to pull into this conversation is the idea about push and pull marketing as the representative baby boomer on this call. I remember the world before digital when there was more focus on push marketing. Now that we have pull marketing, I sometimes feel like we've gotten a little bit lazy because we have all this information about the people who are there and we tend to lean on that. But what about the people that don't know that they want whatever it is that we have to sell? How do you get more specifically targeted and communicate effectively with them?
Tim: Yeah, I wasn't going to play the okay boomer card too, but you're right. Yes.
Thérèse: Well, I did it. You're okay. We're a great generation.
Tim: Okay, well, I'll play the resident Gen Xer and just say nobody understands me and it's all different.
Thérèse: Oh, I'm so sorry
Tim: Yeah, I think that's right Thérèse. It's been amazing advances in personalized messaging that's happened because of digital advertising and that's phenomenal. But I'm constantly mentally flip-flopping of how not to mess up, push and pull marketing. With Pull marketing, somebody's going to put something in Google and they're going to use search engine optimization and you're going to find them. Or they put something in their shopping cart online and now you can retarget them forever. There’ve been commercials and memes about the idea that, oh, well I look for one thing and now that's going to follow me around for the next six months. That's great and that does work, but that really crosses over a little bit more into retention that you are already in. The client is already in your bubble at that point.
I think what you're saying with the laziness is right, because really nobody's had to worry about the true top of funnel. How do I get somebody interested in my product before they've thought about it because so much time, effort and money has gone towards that retargeting piece of once somebody lands there, let's just keep going. I think the flip side of that is eventually third party data goes away. It's kind of been circling the drain, but it hasn't happened yet. But what do you do when you can't count on that information to be constantly fed to a marketing team and you have to start relying on finding your own customers more? The reality is budgets aren't going to go up to match that. The expectations are going to be the same for marketing teams, but now they've got one less tool in their toolbox and anything we can do to help them is really where we're trying to go. And that's when I get excited about the ideas of moving beyond demographics and learning more about the customer or patient's potential decision making and how we can help move things further up that funnel.
Thérèse: Exactly. So how is it that we can help our listeners and people out there in general to make sure they get to the target audience who may not be in their cookies or in any other snacks?
Tim: I think healthcare is really the market that has the most need for this right now. And I don't just say that because that's where my history is. That is a marketplace right now that really has been struggling and is going to continue to struggle from a statistic standpoint. I saw a report last month from the American Hospital Association that more than 50% of health systems had a negative profit margin in 2022. And these are systems that typically margins were only running three to 5% for most hospitals. The fact that more than half of them are negative means they just don't have much to work with. Kaufman and Hall showed that 2022, if you skip Covid and go all the way back to 2019, the performance there and profitability was 26% worse as an industry for hospitals.
That doesn't exist in healthcare world. They can't use that information. So they really are getting a double whammy right now of high expectations and even less data to work from. So that's a group that I really think we can do a lot of work with right now.
Lauren: And our segmentation offers more bang for your buck. Not to bring math into this, but to get 10% of 1 million people who may be vaguely in that group you're looking for versus 50% of 200,000 people who are genuinely interested in it. It's the same amount of people, but higher potential. But with that affordable effort of only needing to contact a smaller amount but with higher returns.
Tim: Exactly. I was going through some of the numbers with one of our larger hospital clients and basically once they use some of our models that we supply to them to find out who's the most likely to be interested in their hospital. Taking a campaign where they're aiming at people from the ages of 30 to 70 and demographically, that's a very appropriate audience to look towards. But by applying modeling for who's likely to choose their health system, they can cut that number immediately down by 40%. If you can cut a number by 40%, right away you're taking out all of that excess that potentially is wasted marketing dollars. We've saved ourselves a whole lot of money right there alone. But the key is we can also follow up with them and see that the return on that investment looks clean. They're actually getting better return, better click-through rates, better likelihood to follow up with some of that messaging because we already are getting down to the audience that we know is most likely to be responsive.
Lauren: Then it becomes a comfort that they're shrinking their budget that they can, not that they have to
Tim: I honestly think that's one of the most interesting conversations I've had. While some of these marketing teams we work with are first tasked with the idea of please shrink your budget, do more with less, and we can certainly help with that. It is challenging and uncomfortable for them to report up and say, Hey, we reached 40% of the audience we did last year. Certain service line managers might be freaking out about that. You're reaching less people. How are we going to get more patients? I think some people have gotten lazy about some of these marketing pieces. Despite very obvious metrics in front of people saying, Hey, we reached X number of people. If you divide that X by 40% and all of a sudden they get a little concerned over, we're reaching less people. So it is a challenge right now, I think as the whole marketplace shifts over in this marketing and communications world right now.
Thérèse: I also think you really have to figure out where the dollars went. If it's an acquisition campaign, you can afford to spend more to get a new patient or customer. Whereas if you’re reaching people you already know, that's a whole different story. It comes back to analytics and math, which is really paying attention to marketing and messaging.
Tim: Hopefully that can be a future episode of the podcast. The key is how do we track the attribution and start showing more about that return on investment beyond just clicks and the vanity metrics people speak of. And that's what's coming up next for people to get comfortable with smaller impressions and smaller reach. You've got to still show the results are the same or better.
Thérèse: Exactly. If the clicks don't make you any money, then that's not a good click.
Tim: And in most industry, it's not the click that's making you the dollars. There's got to be something else that follows.
Lauren: But not all industries are experiencing those poor financials, but they still need this good planning. They still need customer profiles. It's a topic that I know quite well for the last month after traveling three times. For travel specifically, ad spends actually not only bouncing back, in 2024, it's even set to increase exponentially.
Thérèse: That's a good segue, Lauren, because you know what? Nobody wants to go to the hospital, and everybody wants to travel. Both industries need this type of data and analytics, but they're really different. We like to have some comparisons and contrasts to illustrate how the same basic type of information or data can be applied in different ways or can be utilized in different ways depending on what the needs of the industry are.
Lauren: The travel industry is bouncing back, not only to just pre pandemic levels, but even higher. Based on our surveys from back in 2020, about 8% of the population felt comfortable about flying and only about a quarter of adults over 55 even wanted to drive for a vacation in 2020. But now you have twice, three times over percentages who feel the same. Now people are ready. There’s an industry term “vacationing with a vengeance.” After one or two years of being cooped up, you want to not just vacation, but vacation hard, vacation long and vacation expensively.
Thérèse: That's intense vacationing. That's exciting to hear. Lauren, I know the industry is complex and it faces a lot of challenges. Finding the perfect customer for the exact trip or vacation that you're marketing is going to be very specific. Tell us a little bit more about the research that we've done around that. I know that you've got some other information that's pretty interesting.
Lauren: With all of my travels, I went down a rabbit hole looking at all of the concerns, issues and interests with vacationing. First of all, just on a bare demographic level, millennials and Gen Z have now taken over the largest population of people who are going on vacation and millennials aren't even going by themselves. They're having kids. We're talking under 10, under five, and it's really influencing where they're going and when they're going. Then you've got behavioral observation. So the customer profile, why are they going, where are they going? Why are they booking this hotel versus this hotel? Does it have a spa? Does it have a gym? Those kinds of concerns. And then the basic concerns, just the economy of vacations are costing more, not only compared to what 2019 is, but it's just more because of economic troubles and people are expecting to pay more and they are paying more. And then you even have just normal concerns like, oh, is my plane going to be delayed? Is something going to happen? And all of those concerns that are going into when people are making a vacation or booking travel, etc.
Thérèse: All those things make me a little bit anxious about traveling, but I know it's still fun. One of my favorite things to do when I travel is food tours. Are those still popular?
Lauren: It's funny. On one of my travels, I went to a panel and they were talking about vacationing specifically, and they said one thing that's booming is the food traveling market. And I know Tim has some information about this group later as well, but half of the people who are planning vacations are planning them specifically about food. It's either they're going on food tours, tastings, or they have the local cuisine of where they're going in mind. They're not coming to Louisiana to try some Chinese or anything. They're going for the seafood. And in addition to that, you have some other categories of people who are concerned with when they're traveling with food, are they traveling with food because they're going on a friend's vacation or a family vacation, about the same amount of people who say that they're going vacationing with their children are planning a vacation with their friends and when they're going with their friends, they're also reporting that it's not just to hang out with friends, it's thrill seeking specifically. 70% of those millennials and Gen Z said that they're specifically going on a travel experience with their friends and family because they've never been there or they've never known anyone who's been there. There's a lot of these categories that are going into why a person's vacationing other than, oh, I just want a break from the monotony.
Tim: Yeah, I think that is interesting. And really the contrast of something like travel, which fine, I guess it's much more entertaining to talk about than healthcare, but it is really unique versus healthcare, there's sort of a level of desperation in the marketing. I think the difference right now is like you said, travel is everybody's competing for these dollars because of these, I love that term. Would you call it a vengeful tourism or vacation with
Lauren: Vacation with a vengeance?
Tim: I'm going to tell my credit card statement that now after we just came back from a family vacation, it was vacationing with a vengeance. The key for these types of audiences are how can certain travel agencies or hotels or different people tied into the tourism industry, how can they capitalize on the differentiation between audiences? And like Lauren said, one that really stood out to me was that food tourism piece and tours. That is one group where it skews a little older. We've developed some internal models and that group still is very heavily populated by the greater than 54 years old.
While they skew a little older, interestingly, the distribution of income really breaks down across the board, which surprised me. Food tourism can mean a lot of different things to a lot of different people. Really, it's everybody that has a household income of $50,000 or above. It's not this high end sort of, let me go to the fanciest restaurant. There's a bigger opportunity there. On the flip side, Lauren, you talked a little bit about the millennial traveler, and it might be easy to assume by age. You kind of know what they're looking for. But one group that we looked at specifically that I really think is pretty cool is who likes to travel alone. Because somebody, just because they are married, maybe they still want to get out and travel by themselves away from the spouse.
On the flip side, there's plenty of people that are single but would rather travel with friends than travel alone. We ran some research to develop a specific group of who likes to travel by themselves because that messaging really should look different than promoting a family vacation to everybody. Just assuming the demographics tell you that what you want solo travelers, we actually found almost 6 million people across the country that is their preference when they travel. And this one skewed across the board when it came to age. There's a mix of older travelers as well as millennial travelers both looking to make that trip by themselves. Then the part I thought was more interesting is there's really very little correlation with income across the board. There's a mixed bag of people that that's what they really enjoy. What's interesting is if you just took demographics alone and assumed it's people that aren't married are the only ones that a travel solo, people that have a higher income are the only ones that travel solo or any other assumption people make you miss the boat on this one.
You really have to be thoughtful of putting some effort into learning and using more of these national models that we've been running to figure out why does someone travel as opposed to just making assumptions based on the surface level view that you have of them.
Thérèse: What I love so much about research is especially with something like travel where it is so personal, you do assume a lot of times. It's clear from this discussion, the importance of segmentation is not only about the customer, but also about the industry.
Tim: Yeah, and I think that's the key. Healthcare needs to be smarter with their dollars. They just don't have the dollars at the moment to spend. And there's plenty of other industries we could use as an example there as well, but sometimes it is all about that efficiency with the dollars and meeting the bottom line. On the other hand, an industry like travel who was really, really struggling over the past few years now has an influx of potential. But the reality is if everybody's trying to fight for the same potential traveler, how do you differentiate yourself? How can somebody be the one that gets out ahead of the curve and really recognizing exactly what a certain traveler needs? How does somebody be the first one to send Therese the food tourism package that she's been dying to receive as opposed to just packaging it up with every other consumer getting the same message? And I think that's the key. When you recognize the benefits either from a cost savings or from an efficiency by really personalizing some messaging through modeling and understanding of somebody's beliefs, it's really a game changer to the future of marketing at this point.
Lauren: Whether you're segmenting because of a need in your budget or as a strategy to navigate your complicated consumer base, having a profile of your customer and having a plan to target them specifically is really the only way to go for the future. It's the best way, it's the only way, and like we said before, segmented marketing is smarter marketing.
Tim: I think that could be a future spring break travel tattoo I'm going to get now, Lauren, is “Segmented Marketing is Smarter Marketing.” That's the Causeway way now.
Thérèse: I think that tattoo is really going to look great, Tim! Well, thank you Tim and Lauren. It's great information and it's always so fun to talk to you both. Thank you to our audience for joining us. Just as a reminder, we really want to hear from you. We do a monthly survey, so if there's something that you feel is really important or interesting, drop us a line and we will consider including in a survey. We hope you enjoyed this episode of Connect with Causeway. Please remember to subscribe to our podcast and tune in again for our next episode.
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