Geo-Targeting For Local Placement: Just How Narrow Is OK?

Advertising exists to help merchants sell products and services to people who need those same products and services. Bringing the merchant together with the consumer is the objective. In the online sector how those two are brought together requires a combination of money, targeting, and compelling or persuasive ad copy. How are those elements joined? How do businesses make sure that ads for their products and services are viewed by a needy consumer?

PPC advertising is part science, part art, and part prayer. A foundation for serving ads to the most desirable demographic comes through the use of geo-targeting; that is, making sure the ad gets seen where the business is found. To some extent, geo-targeting is a given. You have to put the ad in front of the eyes of the target consumer. The scope of geo-targeting may vary based on how niche your business is or how densely populated your locale is. It serves no purpose to market a local shoe store one thousand miles from its location. But how broadly or narrowly you geo-target is only the first step in making the most of your ad placement.

The critical objective of all targeting is ensuring that an ad is seen by that most desirable demographic. Branding is a bonus, but buyers are better. With that being said, the other question regarding geo-targeting is this: even though options exist to target very narrowly, is there value in doing so? Just because we can target narrowly, does it mean that we should? Is targeting to a zip code, for example, really the most cost-effective means of getting paying customers?

Targeting to zip codes: is anybody there?

Currently, ads may be served locally using state, DMA (Designated Marketing Area), city, radius, or zip code targeting, depending on search provider used. As the online ad industry matures, the effectiveness and value of targeting has become more and more important. Serving ads to viewers outside of the service area is useless. But we must have some knowledge of how searches are conducted. Are searchers using zip codes to find a nearby car wash? Are they using neighborhood or housing development names to locate a business geographically? Can a business rely on very close targeting of this type (zip, neighborhood) and ensure enough impressions to get the customers it needs to succeed?

Before a business can confidently target ads using narrow targeting, it must be confident the search will be conducted using zips or neighborhood names, for example. So the ability to target effectively is critical for greater value. Tied to the geo-target is the need for inventory for that placement. Are users searching for your product or service in that targeted area? If so, how many search queries are run for that item that you want to sell? Added to all of those worthwhile questions is how confident are you that the search engine employed can truly target to such a finite area? Have you run any test campaigns to see results produced using narrow geo-targeting?

For local small business owners, confidence that their ad is viewed by the most likely customers is essential for return on investment (ROI). While traffic volume may be diminished by closer targeting, the likelihood of conversion to spending customers is much greater if the location of those customers is the focus of ad, along with the demographic elements that the desirable customer contains. If I sell luxury automobiles, it is in my interest to put my ads in front of buyers with income required to afford a vehicle. High income searchers, located in exclusive communities that match an age demographic likely to purchase a Lexus or Mercedes, are going to provide the best sale opportunity for me.

However, fashioning a search campaign to a limited geography must be decided based on a cost-benefit analysis. While I may sell one of my luxury autos to someone in the targeted area, the cost of that campaign may be greater than the return if I’m jockeying for position in a highly competitive vertical in a high cost market. Whenever considering where – or how broadly or narrowly – to target a campaign, the cost of the campaign and how its results may differ depending on the targeting employed must be studied. What are the consequences of choosing a very specific geo-target that is so restricted that the ad is only seen by a select group, none of whom are in the market for what I’m selling? Might it be wiser to broaden the targeting to increase the number of viewers and raise the chances of gaining potential buyers? And might the greater geographic scope of the campaign mean lower cost for traffic and greater chance of viewers who are shopping for just what I’m selling?

It stands to reason that an assessment of when to choose a large rather than small geo-market depends on what is for sale and how many units have to be moved in order to generate appreciable profits. But one should not assume that if potential buyers exist in a given area that that is the only likely targeting option that will produce desired results. For this type of narrow targeting, tools like Google Maps business listings or Yahoo! Local Maps can be the foundation for your online advertising.

More elements to consider

While geographic targeting is a fundamental piece of search placement, as the industry matures other sorts of targeting that will be equally important will emerge. Increasingly, demographic information will be used to fine tune targeting. Age range, income level, relationship status, sex/gender, race/ethnicity, family size, and political persuasion may all play a greater role in focusing online advertising, just as it already does in more traditional advertising. We’re already seeing this sort of demographic use in ads found on Facebook. I can’t tell you how many items are now being directed at me as a woman . . . of a certain age!

The future for medium and large businesses is much the same. Branding opportunities may be more important for large regional or national businesses, ensuring retention of existing customers and expanding the customer base with new buyers. Ultimately, finding the viewers who are the most eligible spenders – those who are looking for a particular product – is the most essential determinant of how ads are placed. Budgets may be larger, resources for managing paid placement campaigns may be greater, but the ultimate goal is the same. With that in mind, moving beyond the big online search engines – Google, Yahoo, Bing – and on to social networking sites and mobile services with online ad placement is as important for big businesses as it is for small ones.

As social networks draw more users of varied demographics (see increase in “older” users joining Facebook), social networks will grow in value for placement. By using geographic targeting in conjunction with demographic narrowing of ad placement, the chances of finding those very customers you’ve been waiting for become much greater.

Recognizing that each campaign requires careful examination of the components likely to contribute to making sales is essential. Narrow or broad geo-targeting must be employed based on the unique aspects of the product promoted, the budget available for the campaign, and the return required by the merchant to make his/her business a success. The more sophisticated the analysis is, the greater our chances of finding just the right mix for online success.