Gideon Spanier: Ad giants forced into U-turn as they find out too much targeting has a downside

One of the great debates taking place in advertising at the moment is whether companies should use precision targeting or mass marketing to reach consumers.

The logic of precision marketing has become seductive. We live in an online era where it’s possible for an advertiser to target customers in almost unlimited ways — by age, sex, location, personal interests, type of device, past behaviour and so on.

It means that, at last, there is a solution to American department store mogul John Wanamaker’s notorious refrain that “half the money I spend on advertising is wasted; the trouble is I don’t know which half”.

Except advertisers are discovering that targeting too much carries its own risks and that “wasting money” on advertising beyond a brand’s target audience might actually be a good idea.

The U-turn has been led by the world’s biggest advertiser, Procter & Gamble, maker of Tide washing powder, Fairy washing-up liquid and Pampers nappies, which has found that moving a lot of its marketing budget into targeted Facebook ads has backfired.

“We targeted too much, and we went too narrow,” P&G chief brand officer Marc Pritchard confessed last month. The danger of targeting too much is that a brand loses fame and relevance. It ceases to be visible to the wider public and stops having a cultural impact.

McDonald’s has just shut its YouTube channel because it realised “we weren’t reaching enough customers”, as its chief marketing officer Alistair Macrow put it.

The lesson is that smartphones and laptops may be a great way to generate “direct response” — getting a loyal customer to purchase something — but they are far less effective at building a brand and winning new customers. There is a reason why, for example, every time Apple launches a new iPhone, it books the best outdoor poster sites, prime-time 30-second TV spots, and full-page ads in newspapers.

Apple doesn’t just want to appeal to core fans. It wants its products to be famous and to reinforce their premium status. Last year, the iPhone maker increased its ad budget by 50% to $1.8 billion (£1.4 billion).

None of this means that online advertising and the use of digital data are ineffective. The hottest media agency to launch in London this autumn is Hearts & Science, which is making use of shopper marketing, e-commerce and customer behaviour data to inform its clients’ media plans. P&G, the advertiser that now wants to target less, was Hearts & Science’s founding client in the US.

As we look at how media consumption is changing, we know that the distinction between online and traditional media is already blurring — to the point where it could soon become irrelevant.

What we see and hear on television and cinema screens, outdoor poster sites and radio stations, is going to be delivered digitally and in real-time (in an environment where we might pay attention, rather than allow the intimate confines of our smartphone screen to be invaded).