Every marketer faces this constant challenge of finding new prospects and further converting them into customers. Also, marketers are unremittingly working towards new advertising strategies which would increase their reach to a larger set of audiences. Sadly, their marketing spend doesn’t pay back, and still, there is this increasing need to focus their ad spend on reaching the right audiences with the most relevant advertising. This is exactly where this outstanding weapon comes into play – Behold “Look Alike Modeling”.
Look alike modeling isn’t a new entrant in the advertising industry; it has been around for years helping advertisers and marketers expand their digital audience’s base and at the same time maintain the relevancy of targeting with very little risk.
So, why marketers are still hesitant to increase their marketing spend towards lookalike modeling if it’s so efficient at converting? Guess they are simply unaware. Let’s learn all about look alike modeling and how it can be used to reach more of your right customers.
What Is Look Alike Modeling?
Lookalike modeling is an approach used by marketers to define customers who are most likely to engage with their marketing messages. This model analyzes and considers common behaviors or traits among the current customers, and seeks customers who share similar characteristics. While the strategies involved in achieving lookalike modeling might differ but the end results for all the tactics are always same, i.e. drive conversion by serving relevant marketing messages to a much more targeted set of audiences.
Look alike modeling, for long has proven out to be a great tool for extending reach, as it finds new targets which look like a marketer’s best customers, also helps them get a Return on Investment (ROI) which is double or triple as compared to using standard targeting methods.
How Does It Works?
Similar to most of the other things in digital marketing and advertising ecosystem, look alike modeling also works by employing data and algorithms. Let’s break it up to understand the process better:
- Data Collection
The first step in the process of conducting look alike modeling is gathering lots of data. To ensure higher accuracy in look alike models, different types of data needs to be collected from a number of online and offline sources. Each business sources their first, second, and third-party data from different places. On the other hand, digital marketers would get their data from sources, like CRM systems, marketing automation platforms, third-party data providers and web-analytics tools.
- Define The Attributes And Behaviors For Most Valuable Customers
Once the data is loaded, attributes and behaviors of the best customers are defined. Note having strict look alike models ((i.e. define more attributes and behaviors) increases the chance of finding the right audience and also help in improving campaign performance. However, lesser strict look alike model could be used where the focus is more on reach and awareness instead of higher conversion rates.
- Identify Customers Sharing Similar Characteristics
The third step involves analysis of the enriched seed data to find patterns of similarity with the overall data of the total audience. The larger audiences who share similar characteristics/traits are spotted based on this enriched data which in the end “look like” the seed audience. These data points are ingested into a centralized platform (like DMP) and analyzed by using algorithms. DMP analyzes the seed audience and then applies proprietary algorithms to the collected data to find user profiles which match the seed audience.
Advantages Of Look Alike Models
Some benefits of working with look alike models include:
- Lower Acquisition Costs
By relying on look alike modeling businesses can find users who look-like and are expected to behave like their best customers, leading to a reduced cost per acquisition. This would not be possible with other ad-hoc tactics.
- More Efficient Ad Spending
Targeting prospects who share similar traits with the existing customers allows marketers to focus their budget only on those who are most likely to convert.
- Smarter Data Usage
Marketers can efficiently utilize all of their data, from email campaigns, business website and digital ads for more accurate audience understandings and targeting.
How Are Marketers Leveraging The Power Of Look Alike Models
Look alike modeling is one of the trustiest tools in the digital media store; also it is quickly becoming an indispensable part for the other channels as well. Smart marketers are making it a part of their tool kit and here are few excellent examples on how look alike are being leveraged:
- Social Media– Social media, yes it had to be first. Facebook Look alike Audiences empowers the marketers to construct a seed list established on pixel users (i.e. those audience who have recently visited or browsed a site or a particular page) or a custom list of users.
- Optimize For Search – It is every marketers dream to get in front of highly potential prospects when they are in the market. Google Customer Match’s “Similar Audiences” allows the marketer to automatically enhance bidding tactics around key lookalike audiences. Marketers simply upload their consumer’s lists to Google and configure “Similar Audiences” to enhance for search, shopping, Gmail ads, YouTube and much more.
- Direct Mail –Borrowed/rented lists have been a favored form of direct mail prospecting for long. But now several vendors offer the competence to run look alike’s based on the marketer’s identified customers against a larger mailable populace. This helps in identifying which contacts are most likely to respond to an ad campaign, magazine or catalog.
What Role Does DMP Play In Look Alike Modeling
Data Management Platforms (DMP) is a fusing technology which combines data from any source. And from these unrelated data sources, marketers can simply centralize what they know the most of their best customers to identify the seed audience. Once the seed audience is identified, DMP role begins to analyze it. It applies proprietary algorithms and discovers more customer profiles which are similar to the original audience.
Now That You Know
Look alike modeling not only helps in saving money but also empowers the marketers to better allocate their marketing spend. It also helps the marketers better understand their customers and the actions which drive conversion. Digital marketers and advertisers who have access to a DMP can easily bootstrap their own look alike model capabilities with simple index based tactics. To know more book a demo with Cuberoot.