Icebergs are deceptive. Their icy peaks jut out of frigid waters, revealing only a fraction of their volume. What appears to be a small, confined piece of floating ice that can easily be navigated around might very well turn out to be a massive barrier below the surface.

Perils Of Segment-Based RTB

Segment-based, real-time bidding for display advertising is sort of like an iceberg. It looks really cool, but can obscure the real picture.

The promise of better performance through programmatic marketing is a little bit of a no-brainer. It doesn’t really take a rocket scientist to figure out that optimizing campaigns one-impression-at-a-time on actual consumer behavior is better than delivering campaign impressions in bulk.

There’s just one issue. When campaigns use pre-packaged audience segments, the advertisers have to hope that the audience bundled into each segment is optimal across all inventory, creative, day parts, ad positions and the like.

They can try to chart the optimal course for the campaign — but without understanding how each element of audience data is performing, they are just seeing the tip of the iceberg.

Audience Segment Visibility

Regardless of how “micro” the segment gets, a display impression targeted against an opaque audience segment always has limited visibility “below the surface” of the water. Because advertisers aren’t able to see what specific action (such as term searched, page visited, product purchased in an offline store, etc.) caused the prospect to be put in a black box, they have no idea if the answer to “Why did that work?” is two clicks prior or two fathoms deep. All they can see is the data on the surface.

You only have to think about the RMS Titanic to see where this story is headed. Even the largest, newest, allegedly unsinkable ship can fall prey to an iceberg. And even the most technologically-advanced, algorithmically-awesome, programmatic marketing campaign built on pre-packaged audience segments can only offer as much insight as the data it has at its disposal.

If you start making strategic marketing decisions about your audience based only on what you see above the surface, you’re likely not getting the most out of your media budget. The data above the surface might be dead on. Or it could be misleading. And if you’re using look-alike targeting based on fixed audience segments to extend reach, you might be creating a high-performing campaign or you might be rearranging the deck chairs. If you don’t have visibility into your segments, you’ll really never know.

Read the full article here