Sometimes It Pays NOT to Target

I want you all to get up out of your seats, go to the window, and throw it wide open. Now toss conventional wisdom out because that’s just what this week’s case study does.

We all know that when it comes to marketing, targeting is the way to go. As I wrote a couple months ago, email marketers know that targeting is key. After all, you would probably have more success selling Barbie dolls to mothers of little girls than you would to bachelor biker dudes.

But Health4her.com disagrees. Louis Silberman, president of the “healthy living for today’s woman” company, has built his three-year-old business around email marketing, finding email much more effective than banner ads. And he has built his email marketing strategy around the notion that untargeted ads are the most cost effective. This approach won’t work for all types of companies, but for Health4her.com, it does.

Here’s why. Silberman estimates that the average cost of reaching a thousand eyeballs on targeted email lists ranges from $50 to $200. For instance, if you want to send a message to a list rented through PostMasterDirect.com, you can expect to pay about 10 to 15 cents per name, which translates into a CPM of $100 to $150. (This is no knock of PostMasterDirect.com, for it can be a valuable tool and I’ve even written about one of its successes.)

On the other hand, Silberman estimates that untargeted lists cost about $5 to $10 CPM. Plus, Silberman has negotiated deals that average around $2 to $3 CPM for untargeted lists. OK, I’m throwing around a lot of figures, so let me phrase it another way. For example, taking a CPM on targeted lists to be around $100 and Silberman’s deals for untargeted lists to be around $3 CPM, advertising on the targeted lists costs roughly 30 times more than advertising on the untargeted lists.

So Silberman started with the premise that the sales generated from advertising on targeted lists wouldn’t be 30 times higher than those generated from advertising on the untargeted lists, and he ran with it. He began advertising on untargeted lists that reach massive amounts of individuals, such as The Humor Network and Chicken Soup for the Soul. By Silberman’s count, the ads reach about 40 million people per month, and when you take duplicates into account, the unique eyeballs are about five or six million.

The typical ad runs at the top of the message and includes a teaser line and short summary, with a link to a full page describing the product. For instance, one ad read:

    Relieve PMS Symptoms in 1 day OR YOUR MONEY BACK! Got cramps, bloating, hot flashes? All-Natural Clinically Proven Progesta-eze GUARANTEES FAST RESULTS or your money back. “I feel like a new woman after only one day of using progesta — my cramps and hot flashes have vanished!” Linda Berry. Click below at health4her.com or call 800 960 7797 for more info & receive FREE hormone-balancing book & Bottle of Ginseng Valued at $24 with no purchase necessary.

The ads received about a one percent click-through rate, and although Silberman did not have specific conversion figures at the ready, he was able to tell me that Health4her.com will take in about $3 million in sales this year while spending about $700,000 in (primarily email) advertising. That’s roughly $4 in revenue for every $1 spent on advertising.

“We tested our ads on targeted lists, but we just couldn’t make the same money,” Silberman says. “If they could show us a way to break away with targeted ads, we’d do it, but ad costs are so darn high, no one can make money.”

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