Common sense says that you should market to as many people as possible. I’d like to suggest marketing to as few people as possible. This is called nanocasting- the opposite of broadcasting.
Think about a TV commercial for any product. The commercial is a broadcast because it’s going out to everyone viewing that station with no regard for individual viewers. What percentage of the many people watching that commercial are in the market for that product? Yes, many people might respond to the commercial and the campaign might seem a smashing success. But is it really?
Divide the broadcast cost by the number of responses and you may discover that the cost per response is very high. This is because the people who respond typically represent a very low percentage of everyone who viewed the commercial. How low? Depending on various factors, the response rate could be 1/10th of one percent or even less. It’s like putting drops of food coloring in a bathtub; you won’t see any change in the color of the water because the bathtub is very large compared to the few droplets of coloring. In this analogy, the bathtub represents the total viewing population while the food coloring represents the response to that ad.
Say you spend $10,000 marketing to 1,000,000 people and get 1,000 responses, or 1/10%. This ad cost 1 cent per viewer. Not bad, except that you just paid $10 per new customer. Still sound good? That all depends on your net profit per sale. If your product retails for $100, it’s entirely possible that you are only making $5-8 after paying all of your expenses (wholesale cost, employees, utilities, rent, etc.). If you just spent $10 to make each sale, then you’ve just lost $2-5 per sale. Oops. Cheaper product? Double oops.
What if your product is designed for dogs? Restricting your ads to venues that cater to dog owners shrinks your target audience to about 390,000 people (about 39% of households have dogs). If your product appeals to male dog owners, your target audience is now around 195,000 people (assuming that equal numbers of men and women own dogs). What if your product appeals to male dog owners between 35 and 44 years old? About 8% of people fall into this age range, meaning that your target audience is down to about 15,600 people, or just over 1.5% of the total population. Your marketing can therefore ignore 984,400 people. In other words, the bathtub is now the size of a Dixie cup. Throw in a few drops of coloring and you’ll notice a huge difference.
How huge? Assume that all variables remain equal and that you perfectly target your audience. Your costs shrink from $10,000 to $150 and the same 1,000 people respond to your ad- a 6.4% response rate. Nanocasting drops your cost per customer from $10 to about 15 cents. If your profit was $5 per sale before the ad, then you’re clearing $4.85 per sale post-ad. Multiply that by your 1,000 responses and you’ve just earned $48,500. Beats losing $2,000-5,000, doesn’t it?
This example assumes a level of perfection that is impossible under real world conditions. Does this lessen the impact or importance of nanocasting? Not at all. Play with any number you want (cost of ad, percentage of target audience in the general population, percentage of response, cost per customer) and you’ll find that nanocasting beats its bigger cousin in most cases.
Tapping the tremendous power of nanocasting is very easy. Each successive label or qualifier you place on your ideal customer shrinks the number of people you’re trying to reach because fewer and fewer people will match all of your specified criteria. However, each drop in overall population increases the percentage of people who will want your specific product. Having identified your target audience, the next step is to find out exactly how to reach them. What specific magazines, newspapers, etc. cater to these people? Combine a highly targeted audience with equally targeted marketing venues, and you’re nanocasting. It’s that easy.
Nanocasting gives you a much greater bang for your marketing bucks because you’ll be spending far less to attract each new customer. Combine this savings with strong follow-up and a solid referral plan and you should start to see some fantastic results for your efforts.
I am not saying that TV and other broadcast media aren’t very useful marketing tools, nor am I advocating any one marketing tool over another. Every business is unique and has unique needs. No matter how you market, however, always try to reach the fewest number of people and the highest percentage of people interested in what you have to offer.