Lookalike Targeting on Others' Journeys: Brand Versus Performance Marketing

Cowles Foundation Discussion Paper No. 2302

47 Pages Posted: 22 Sep 2021 Last revised: 1 Oct 2021

See all articles by K. Sudhir

K. Sudhir

Yale School of Management; Yale University-Department of Economics; Yale University - Cowles Foundation

Seung Yoon Lee

Yale Univeristy

Subroto Roy

University of New Haven - Department of Marketing and Quantitative Analysis

Date Written: September 21, 2021

Abstract

Lookalike Targeting is a widely used model-based ad targeting approach that uses a seed database of individuals to identify matching "lookalikes" for targeted customer acquisition. An advertiser has to make two key choices: (1) who to seed on and (2) seed-match rank range. First, we assess if and how seeding by others' journey stages impact clickthrough (upstream behavior desirable for brand marketing) and donation (downstream behavior desirable in performance marketing). Overall, we find that lookalike targeting using other's journeys can be effective-third parties can indeed identify factors unobserved to the advertiser merely from others' journey stage to improve targeting. Further, while it is sufficient to seed on upstream journey stages for brand marketing, seeding on more downstream stages improves performance marketing outcomes. Second, we assess the effectiveness of expanding the target audience with lower match ranks between seed and lookalikes. The drop in effectiveness with lower match rank range is much greater for performance marketing (donation) than for brand marketing (click-through). However, performance marketers can alleviate the reduction in ad effectiveness for low match ranks by making targeting more salient; but increasing salience has little impact for high match rank. Overall, by increasing salience, performance marketers can make acquisition cost comparable for high and low match ranks.

Keywords: Digital advertising, Targeting, Algorithmic targeting, Lookalike targeting, Nonprofit marketing

Suggested Citation

Sudhir, K. and Lee, Seung Yoon and Roy, Subroto, Lookalike Targeting on Others' Journeys: Brand Versus Performance Marketing (September 21, 2021). Cowles Foundation Discussion Paper No. 2302, Available at SSRN: https://ssrn.com/abstract=3927976 or http://dx.doi.org/10.2139/ssrn.3927976

K. Sudhir (Contact Author)

Yale School of Management ( email )

135 Prospect Street
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203-432-3003 (Fax)

Yale University-Department of Economics ( email )

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Yale University - Cowles Foundation ( email )

Box 208281
New Haven, CT 06520-8281
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Seung Yoon Lee

Yale Univeristy ( email )

New Haven, CT 06511
United States
06511 (Fax)

Subroto Roy

University of New Haven - Department of Marketing and Quantitative Analysis ( email )

West Haven, CT
United States

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