"after finding that ultra-niche targeting compromises reach and has limited effectiveness"
“The bigger your brand, the more you need broad reach and less targeted media,”
This is quite interesting. I see that other companies are cutting down on agency spending as well and some are focused on having an internal agency. The idea is to know the consumer and have a quick response to what is trending. So, apparently, the information that Facebook provides is not enough to put together a small niche group of people and say that they all would like that product. Or, at least, not worth the dollar invested. But knowing who the target consumer is, and building targeted advertising at it, but reaching a larger population has a more efficient return. Even when it reaches people who are not in the target audience of your product. Because it is a more general campaign about something that is happening, it helps in building the brand. And big companies care a lot about their brands and what people think about them.
It's not about efficiency, it's about quantity. Let's say I profit $20 for each customer my ad engages. If I reach 1000 people with amazing targeting and get a 10% response rate, I'm making on average $2/person. If I broaden the reach to 100,000 people and get only a 1% response rate, I'm making on average $1/person.
Clearly, bringing in $1/person is less efficient than bringing in $2/person, but at the end of the day you have $100,000 instead of $2,000 (ignoring the cost of the ad for simplicity).
With the broad campaign, you still get the people you would have targeted with the narrow campaign. So if you're going to do the broad campaign, you're already done.
Don't forget to factor in agency costs and in house costs. People are expensive and hurt margins. At that scale it adds up since I'm sure many of their agency partners view them as a big brand advertising cash pinata
This is quite interesting. I see that other companies are cutting down on agency spending as well and some are focused on having an internal agency. The idea is to know the consumer and have a quick response to what is trending. So, apparently, the information that Facebook provides is not enough to put together a small niche group of people and say that they all would like that product. Or, at least, not worth the dollar invested. But knowing who the target consumer is, and building targeted advertising at it, but reaching a larger population has a more efficient return. Even when it reaches people who are not in the target audience of your product. Because it is a more general campaign about something that is happening, it helps in building the brand. And big companies care a lot about their brands and what people think about them.