New Ways To Target Your Customers

DANIEL PARSCALE: Give our listeners a quick history and synopsis of IP targeting. So where did it originate? What makes it different from other forms of paid advertising? And really, what excites you about it?

ERIC KAMMER: It originated in the political sector about five years ago. Different lobbyist groups would target key demographics for their voters in using their IP address to be able to sway them one way or another during a vote. Just recently, it’s become available to business and consumers, within the past six months or so. It excites me because it’s brand new. It’s a new way that’s a hyper-focused type of marketing that hasn’t really been explored much by small to medium sized businesses.

DANIEL PARSCALE: OK, so this is really fresh and really new technology. Maybe we should start talking about the implications of what this actually means now that it’s out there and available for people. So first thing that I think of when I think about marketing, especially in the political spectrum, is security and just, what information about mine is being used?

So maybe particularly if we’re talking about medical offices and HIPAA, we should talk about how this data is secure. Does it remain anonymous? What concerns or things should people know about this?

ERIC KAMMER: So there’s a couple different things that you want to take a look at. The first is that it can’t identify everyone and their IP address. There’s about a 50% match rate. So there’s about 50% of people who, through using different protocols and security settings on their browsers and things like that, you actually can identify with the software.

The other aspect of that is there’s no way to actually be able to identify and link that IP address to an individual. It’s all done through a secured system through the software. So the software itself knows. But the end user and the person who’s using the software doesn’t actually have access to that information.

DANIEL PARSCALE: OK, this sounds a little bit like– Google Analytics recently started beta testing a new view that shows the user experience from the first time that they land on a web page to when they make a conversion or they stop interacting. But all that information is anonymous.

So I can look and see what they’ve done. But I can’t look and see who they are specifically. For instance, I couldn’t identify you as the person who made whatever– whatever you clicked on. It sounds like it’s similar to that.

ERIC KAMMER: Yeah, so it’s all encrypted. So let’s say I have a list of 2,000 people I want to target. With a 50% match rate, I’m matching 1,000 of those. But there’s no way for me to actually link the individual IP addresses to any of those 1,000 people off my list. So it’s all encrypted, and no one actually has access to that.

DANIEL PARSCALE: OK, so that’s part of why it’s HIPAA compliant, then.

ERIC KAMMER: Exactly, yeah. There’s no HIPAA violation or anything like that. Because the data is all encrypted. And there’s no way to access that.

DANIEL PARSCALE: OK, and then I guess just to underscore that for my own personal curiosity, too, this is safe. And it’s not going to be infringing on any particular ethical concerns about data privacy.

ERIC KAMMER: It’s data that’s available. So people are currently utilizing it. So it’s definitely legal. It’s above the board. It makes some people uncomfortable. But it’s information that’s out there. And people are already acting on that information.

DANIEL PARSCALE: OK. Well, because it’s already available. And basically, as a marketer, I suppose that you have access to buying potential, lists of individuals’ IP addresses that you want to be able to target based off of your demographic. I think that must be how it works.

It sounds a lot like what you might do for, for instance, a direct mail program, where you would purchase a zip list within a certain radius of people who match certain criteria. And then you’d be able to mail them directly. It doesn’t sound too far from what is traditional marketing, is what I’m getting at. It’s just kind of a different frontier.

ERIC KAMMER: For years, people have been doing their direct mail drops and things like that and actually purchasing consumer lists that they’re going to send that mail out to. This is doing essentially the same thing but in a digital format and online.

DANIEL PARSCALE: OK, well that sounds familiar. So it makes sense that we can start to think about this in terms of a cohesive strategy. Who is going to be using this, first of all? Who’s it going to benefit the most? And then what kind of digital strategies would they be using with this technology?

ERIC KAMMER: One of the key people that’s going to be using this is anyone who’s B to C, particularly people who are doing direct mail drops. The majority of businesses are still doing traditional marketing. They’re still paying for direct mail drops. And what we’re seeing is that, as time goes on, the actual effectiveness of that is dropping.

So what this does is it essentially allows us to pair digital ads with a direct mail drop. So we can take the list of people who we’re sending our direct mail to. We can upload that into our system. At that 50% match rate, we can find half of that list’s personal IP addresses.

What we do then is about a week prior to the direct mail reaching their house, we’re actually priming them with ads that match that direct mail. So it’s got the same messaging. It’s got the same imaging. It’s the same business.

So when that direct mail piece comes into their mailbox, it’s not just a cold contact. It’s actually a warm contact. Because they’ve been familiar with the business for the previous week.

The other thing that it does is then a week after they receive that mail piece, they end up seeing ads to remind them to actually act on that. Especially people are on the go nowadays. It’s really hard to get someone to actually act on something the first time that they see it.

They get sidetracked. People have a short attention span. So it’s easier to continually kind of nudge them towards actually doing whatever type of conversion you want them to by doing that for a week afterwards.

So what we’re seeing– different case studies are showing an average direct mail drop sees about a 1.5% response rate. When you’re pairing it with these IP targeting, you’re actually seeing that response rate increase to anywhere from 3% to 5% just because it’s a little bit warmer. And rather than just having one point of contact, they’re having multiple points of contacts over a few weeks.

DANIEL PARSCALE: I’m not sure if you know this, but I’m curious. Do you know if you can track the actual conversion back to specific points on that timeline? For instance, if they’re warmed up, and then they get the direct mail, are they that much more likely to convert off of the direct mail? Or are they more likely at the end, after they’ve gotten the follow-up ads that you’re talking about?

ERIC KAMMER: So it’s going to be a little bit of both. You’re going to see an increase in the people who are responding the first time they get that actual direct mail drop. But you’re also going to see that a week, two weeks afterwards.

The nice thing is that we can track all of this. So we can see, how many times have they seen the ad? When did they actually do the call to action that we wanted, whether it’s a phone call or off of these online ads maybe it’s a form submission or something like that?

So we’re actually able to track that and see, which message was it? Was it the digital ad? Was it the direct mail piece? Was it a combination of the both? What actually made them convert.

DANIEL PARSCALE: This is so cool. I am really excited about this. But I have lots of questions about the strategy behind it. So so far, you’ve talked about how this could be used as a supplement to current strategies. I can’t imagine that something this advance would happen as the only marketing tactic that a company would use. But is this something that would make sense to use as a standalone for its own campaign, for instance? Or is it really designed and is it only effective if it’s used in tandem with a direct mail or some other kind of advertising?

ERIC KAMMER: For the most part, it’s going to be used in tandem with other marketing. Essentially, it’s an aid to the existing marketing campaigns that you’re doing. It makes it a little bit more targeted. It’s going to see a better response rate. But you still need the other marketing to kind of drive the initial message.

DANIEL PARSCALE: So it’s interesting. Because when we think about preparing who we’re actually going to submit a certain campaign to, we’ve got our target demographic. And we decide on all the factors that are going to go into the creative for that. And then we launch it.

And then we kind of just spread it out and see what comes back to us. In this case, we’re talking about being able to be much more specific. But it’s kind of interesting to me that it wouldn’t work as a standalone in that way. Because you’re more specific than your standard demographic information.

ERIC KAMMER: Sure, and you can do it as a standalone. What we find is doing a nice cohesive campaign that has multiple steps to it is always going to see the best response. There is different possibilities where you can use this as a standalone option. One big area where we see it done as a standalone option is if we’re doing business to business.

For example, if we’re trying to target only dental practices, we can actually do IP targeting to just a dental conference. So the people who are attending this conference, they’re all dental. They’re all in the dental side of things. So we can push them messages while they’re in attendance to that conference by targeting wherever that conference is being held.

DANIEL PARSCALE: So if they’re at the conference, and they’re pulling out their phones, and they’re seeing an ad for your business then, does that mean that as soon as they are off of the Wi-Fi, the IP address for that conference building, that they’re no longer going to receive the ads? Or is it based off of– as the marketer, are you broadcasting this ad for a certain period of time? Or how long are you tethered to your advertisee?

ERIC KAMMER: So those ads are only showing up as long as they’re at that IP address. Because that IP address is what we’re targeting. The nice thing is if they’ve interacted with that ad, you can also pair it with a re-marketing campaign. So the ads kind of follow them home, follow them back to the office. And then you can continue to deliver your message after they’ve left the venue.

DANIEL PARSCALE: That’s really cool. So let’s say that I’m a dentist at this conference that we’re talking about, and I pull out my phone, and I’ve been targeted for one of these ads. Where am I going to see that, and how is it going to look the same or different than other ads that I might already be aware of?

ERIC KAMMER: It’s going to just be your standard online display ad. And it’s going to be eligible to show in any of those same places. So if you’re looking at blog articles, news articles, anything like that that’s supported by advertising content, those are going to be the areas where that ad is eligible to display.

DANIEL PARSCALE: So I won’t even be able to tell that there’s any difference between this and a standard advertisement.

ERIC KAMMER: You won’t know unless there’s a specific call to action in it. So for example, one thing that you can do if you are targeting a certain convention, and let’s say you have a booth there, and your call to action is actually to drive foot traffic to your booth, then your ad might say something like, hey, come to booth 51-B. We’re giving this away. We’re doing a free assessment, or something like that.

In that case, they would know that you’re specifically targeting them because they’re at that conference. But you could also have more of a generic ad where it’s just your typical online ad, and you just want it to be seen by those people, in which case there was no way to differentiate the fact that you’re targeting to them that way versus any other way online.

DANIEL PARSCALE: What do you think are the differences between the way that we think about prospects when we’re talking about traditional or just regular digital marketing versus IP targeting?

ERIC KAMMER: I don’t think there’s much of a difference between the prospect. I think it’s just a little bit more fine-tuned, a little bit higher level of targeting. With traditional internet marketing, maybe you’re doing a specific geotarget, because you know this neighborhood is an affluent neighborhood, and it’s got your ideal prospect inside of it.

So we’re geotargeting that entire neighborhood. Where with the IP targeting, we can actually go through, and we can pick out individual households that really fit into that key mold that we want, exactly what we want. And we can cut out the rest of the stuff that we don’t want.

DANIEL PARSCALE: Thinking about this, then, and trying to find a hole in the benefit of this– because this sounds like about as close to a silver bullet as I’ve heard of. I’m not going to say it is. But the only thing that I can think of is that you have the potential to be so direct and so– you could potentially come off as an aggressive advertiser and maybe have a call to action that’s so direct that they know they’re being advertised to. And then they’re turned off from it.

Apart from that, I can’t really see how there’s anything to worry about here. But maybe there’s something I’m missing. Are there any dangers to using this technology?

ERIC KAMMER: Sure, the first is going back to your point about being very direct. If all of a sudden, you turn on your computer, and you see an ad that says, hey, Dan, you need to click here, I’m talking directly to you–

DANIEL PARSCALE: I usually do, though.

ERIC KAMMER: Yeah, then it makes people very uncomfortable. The other thing is you can get a little bit too hyper-focused. And you can actually kind of miss some of the people that would be a prospect for you. Because you have this ideal vision of who you actually want to target. And it may be accurate. But there could be people in surrounding areas that don’t quite fit into that mold that are still qualified prospects for your business.

The other big downside is, again, there’s only a 50% match rate. So if there’s only 100 people who fit into this mold that I want to target, and I had a 50% match rate, now I’m only able to target 50 people. At a 10% response rate, I’m not getting that many new prospects in the door.

DANIEL PARSCALE: On the other hand, though, you’re also talking about using this, again, as a supplement to your existing marketing. So while you might only be hitting 50% of your batch, you’re really only augmenting 50% of your batch’s success rate.

ERIC KAMMER: Exactly.

DANIEL PARSCALE: So you’re still hitting all of those people. It’s just not in the same way, perhaps.

ERIC KAMMER: Exactly. So it’s not a standalone. Again, that’s kind of why you want to blend it with other marketing. Because it’s not a standalone. Because it is too hyper-focused. It’s great to supplement current campaigns. It really lends into recency and just kind of helped push people along through the buying cycle. But at the same point, it’s not something that you could just rely on as, this is the only way I’m going to drive business in.

DANIEL PARSCALE: You were talking about the buying process. And I’m thinking about conversion pathways. Is there any additional information that’s cool that you don’t get because you’re using this? Are there special dashboards? Or does it filter into GA, for instance, I guess is a good question. Can you view it through standard data software?

ERIC KAMMER: One of the great things about online is everything is highly measurable when it comes to online campaigns. So there is a dashboard that you would go in, you’d log into, to launch your actual campaign. It’s where you upload your ads. It’s where you throw in the list of people you want to try to target.

But again, you’re also going to be doing things with– those online ads are going to drive people to landing pages. Those landing pages are going to have your own tracking codes on them. They’re going to be linked to your analytics. Hopefully they’re linked to a re-marketing campaign or something like that. So you actually have access to all of that information.

If they’re just responding to just a call to action that’s, pick up the phone and call us, then you have a tracking line on there. So you’re able to see exactly how many phone calls you push and things like that. So the data is there. And it really depends on what you want to do with that data once you’ve accumulated it.

DANIEL PARSCALE: Is this something that could potentially be used in other measures? Could this affect SEO for organic reach at all?

ERIC KAMMER: It’s going to bring traffic to your website. It’s not going to directly influence the SEO and the overall ranking. But any traffic to a website is good traffic.

DANIEL PARSCALE: I’m just thinking about how, as a marketer, I might want to divide my budget and where this is going to fall. It doesn’t sound like it falls anywhere into just the organic presence at all. It’s part of your advertising.

ERIC KAMMER: Yeah, it’s direct response. It could kind of lean over into branding depending on how you’re delivering the ads. But it’s definitely more of the paid marketing as opposed to the earned marketing.

DANIEL PARSCALE: So what would be an example of– let’s say that you’ve got a widget. How might you set up your campaign with this? Would you set up with– you said maybe a week or two of branding for this widget before they get the direct mail in their house. And then what does this actually look like? Could you tell us a campaign?

ERIC KAMMER: Sure, so what we’ve seen works the best is one week prior to the direct mail piece getting at the person’s house and one week post. So that first week, you want to have five to 10 touch points throughout the week. That’s going to depend on A, how much are they on the internet? What type of internet user are they? Is that ad inventory even available?

So that’s kind of why we have that sliding scale of five to 10 touch points. You don’t want to hammer them. Because then when they get that direct mail piece, they’re like, it’s all I’ve been seeing is these people. I’m sick of them. And then you’ve kind of gone too far at that point. So we find five to 10 is really the healthy medium for that first week.

Then they get that direct mail piece. And then again, the same kind of thing happens with the second week, which is the week post receiving that direct mail piece, which is you want to hit them five to 10 times. Maybe at the end of that week, you might want to go with a little bit more aggressive of an offer just to really kind of hammer in the point that you want them to act on that. But for the most part, you want to hit 20 to maybe 30 touch points throughout the two week period.

DANIEL PARSCALE: Let me think about this for long term kind of conversions. Because this is based off of IP addresses, what do you do when a person changes IP addresses? Is there any way to continue to track them? Maybe they’ve moved, and it’s six months down the line, but you want to target them again specifically. Are they outside of your spectrum then? Are they lost? Or are you able to retarget them again? Or how does that work?

ERIC KAMMER: So the biggest way that’s going to benefit you, especially if you have a long sales cycle, is pairing this with some sort or a re-marketing campaign. So essentially what you can do is re-marketing is typically good for about 30 days.

So you can have them interact with that initial IP targeted ad. And they fall into a re-marketing bucket in which they continue to see your ads over a course of time. And then you can give them different messages and see what they interact with.

Each message has its own landing page. And every time they interact with one of those landing pages, your 30 day clock starts over. So for something that has a six month to a year sales cycle, you can actually slowly push them through these different re-marketing buckets and help push them along the sales cycle until they’re ready to make that purchase just by giving them different re-marketing sessions as they go through.

DANIEL PARSCALE: Can I use this as your typical small business owner? Who’s got access to this?

ERIC KAMMER: A typical small business owner doesn’t currently have access to it on their own. The company that offers the IP targeting only deals with large scale campaigns, typically $20,000 a month or more. There are agencies where you can actually partner with the agency. And they’re able to provide that for you. You get the full agency support of any general ad campaign. And you have it as an add-on feature as well.

In the next year to two years, it’ll be more readily available to small mom and pops where they can just kind of go out and buy one small campaign for $1,000 and run it and see what happens. But as of right now, because it is so new, it’s all kind of skewed on the higher end, unless you’re working with an agency.

DANIEL PARSCALE: OK, OK. So one of the things you tossed out there– I think you said $20,000 is the minimum, did you say, per month?

ERIC KAMMER: Yeah, per month. So we’re looking at really large campaigns. We’re looking at your Coke and Pepsis and things like that, the really big campaigns. Where when you actually work through the agency, of course the agency has multiple clients, things like that. So that fee is kind of dispersed. So then you’re actually looking at something that’s quite cost effective if you’re going through an agency channel.

DANIEL PARSCALE: OK, so maybe we can talk about cost effectiveness with this. Because once you put a dollar sign on something, everything changes. So what is the effectiveness of this? We’ve talked about using this in tandem with– for instance, we’ve talked about direct mail campaigns a lot. The numbers you gave, I think you were talking about there’s 1% to 2% conversion on direct mail usually. And this bumps it up to maybe 3% to 5% or something like that, which is noticeable and sounds like it’s worthwhile. But is it worth the amount of money that you’re going to pump into that? Should you be instead considering using that same budget and putting it into PPC, for instance?

ERIC KAMMER: So this is kind of bridging the gap a bit. It’s kind of taking the traditional marketing that they’re going to be doing anyways, they’re going to be spending a lot of money on. It’s making it more effective. And it’s also showing them the power of digital so that as things become more and more digital, digital becomes more prevalent, traditional media drops off, you can kind of convince them to start sliding their budget more towards the digital. Because that’s what works.

DANIEL PARSCALE: That sounds like a long term goal. But obviously, there is still benefit to using this in the short term. Is that what you’re saying?

ERIC KAMMER: Yeah, so if you’re looking at taking a 1% to 2% response rate and bringing it to 3% to 5%, that’s bringing more people to your door. So it’s definitely effective. The other nice thing is to add on the digital section of this with the IP targeting, you’re looking at a 15% to 20% additional cost versus some huge upfront cost.

So if you’re already spending a couple thousand dollars on a direct mail drop, then adding a few hundred to $1,000 more to double or triple your response isn’t really that unheard of. And it’s not something that most people are going to argue about.

DANIEL PARSCALE: All right, so we’re coming up to the point where we’re going to wrap up the show. And as usual, I’m going to ask you to give us three main takeaways. So what are the most important things from today’s conversation that you want people to remember?

ERIC KAMMER: The first big takeaway is that it’s great working together with your other marketing. It helps increase the response rate for your direct mail and get more people in the door through those traditional means of marketing. The second is that it helps bridge the divide between traditional marketing and digital marketing. The people that you’ve only been targeting traditionally with direct mail and things like that, it gets them into a digital marketing rotation where you’re able to actually do re-marketing and things like that and push them along the sales funnel digitally.

The third point is that it’s brand new. It’s exciting. It’s a new way to target people. It is a little bit cost-prohibitive for a small or medium sized business to start. If you’re listening to this, you’re probably an Audigy member or a Stratus member. You can actually do this type of marketing through us as an agency. The easiest way to get started or learn more information is to reach out to the Paid Search Team or your marketing manager.

DANIEL PARSCALE: Right on, well we covered a lot of ground. And I think I learned a ton here. So thank you again, Eric, for joining us on “Reach.” And enjoy the sunshine today.

ERIC KAMMER: Thanks for having me.