Automotive Marketing

Anytime you do a direct marketing campaign, whether it's a mail or email campaign or some other kind of direct contact, quality of the targeting is a concern. This is especially true for automotive marketing campaigns that target people that own competitive vehicles – targeting Toyota owners for a Honda sales campaign for example. In this case you are likely relying on an external list provider instead of your own owner database. Inevitably you will find some people on your list who don't own a Toyota. That's bad. But there's another source of list error that might be just as bad.

In the example of targeting Toyota owners, there are two things that can go wrong:

1. You can contact someone who doesn't own a Toyota (a waste of marketing resources)
2. You can miss someone who does own a Toyota (a missed opportunity)

The science of statistics has fancy terms for these "things that can go wrong" – Type I error and Type II error. I prefer the simpler terms of accuracy and coverage.

• Accuracy:  If the greatest majority of people on the list really do own a Toyota, then the list is accurate.
• Coverage:  If a high proportion of Toyota owners can be found on the list, then this list has high coverage.

Unfortunately, accuracy and coverage are competing goals – increasing one will decrease the other. You can increase the accuracy of your list by tightening the selection criteria, but that will mean that some people who do own Toyota will drop off the list (drop in coverage). Conversely, you can increase coverage by loosening the selection criteria. This will include more Toyota owners but will also include more people who don’t own Toyota, dropping accuracy.

List selection tends to "err" on the side of accuracy, counting it worse to contact someone that doesn't own than to miss someone that does. Where that can sometimes backfire is when someone connected with the campaign owns a Toyota and wants to know why they aren’t on the list.

One situation where it might be desirable to increase coverage at the expense of accuracy is when the marketing cost is small (a postcard mailing, for example).

To err is human, but it still has a cost. How do you balance these competing goals when developing a direct marketing campaign?

Posted by Barbara Keys, Analytic Consultant, Polk (07.20.2010)