Hot Tip
The Index, explained
When consulting your consumer profiles, you can't help but notice the two or three digit number that is the index (or, plural, indices). The index is a measurement of the target's likelihood to be or behave or think a certain way, as compared to the average person or household.
We use 100 as the center point to calculate "more" or "less" likely. An index of 111 (11 percentage points above 100 Average) means the target is 11% more likely than the average person to do the behavior that is indexed, such as "watch CNN"; indices 110 or above are considered "above average." An index of 89 means the target is 11% less likely to do the behavior that's indexed; indices 89 or below are considered "below average". The 90-109 range (taking into account a margin of error) means the target is just as likely as the average person to do the behavior.
The index for any given dataset/behavior is calculated by dividing the percent of the target that's doing a specific behavior by the percent of all households who are doing a behavior. For example: 20% of target households watch CNN divided by 15%
of all U.S. households watch CNN = an Index of 133, which
means the target is 33% more likely to watch CNN.
Use the index to determine whether or not your target is more or less likely than average to "do or think or be" something, for example watch a network such as CNN or feel confident about their future or own a vacation home. The index doesn't tell you how many are doing a particular behavior; it only speaks to whether they're likely/not likely to do it, compared to the average consumer. The percentage that the index is based from, however, will answer "how many"--and "how many", as you will see, is just as important to know as "how likely".
To illustrate, let's say only 1% of all consumers own video-enabled cell phones but 3% of your target owns this type of cell phone, meaning, with a 300 Index, that your target is 200% more likely than average to own a video-enabled cell phone. Based on the index alone, you can conclude that the future is great regarding near-term adoption of this technology with your targets, but the audience may not be large enough now to warrant a cell phone download advertising campaign.
It works the in the reverse too. You can have an average or below average index but the percentage of your target doing the behavior is too high to dismiss. For example, 65% of your target may have high speed online access versus 60% of all households; the index would be 108 in this case, meaning (because of the margin of error) that your target is just as likely as anybody to have high speed data. But if 65% of your target has high speed, then streaming online ad content may make sense to consider.
The sweet spot is when you get a high index with a high percent, or high likelihood combined with high volumes, or high efficiency combined with high volumes. One of our client's "key" targets had a 600 (500% more likely) index for "shopping at Lowes", and a shocking 80% of their target customers shopped there. It was not difficult to agree that a marketing partnership with Lowes would be worthwhile.
The index and percent measurements for your target can help guide
all types of strategic decisions (creative, media, promotions,
channels, positioning, partnerships, offers, and other decisions).
The result should be an increase in efficiency while boosting
"result volumes" from all types of efforts.
Learn more about our targeting approach at: http://www.handshakemarketing.com/services/approach.php
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