What Is Propensity Marketing?

Propensity marketing is an approach to marketing that focuses on engaging consumers with the greatest propensity to take a desired action. By targeting consumers who are most likely to convert, propensity marketing has the potential to reduce media spend, boost conversion rates and improve campaign ROI.

How Does Propensity Marketing Differ From Propensity Modeling?

Propensity modeling is the action of defining consumer segments with strong likelihoods of converting. Propensity marketing is the strategy of reaching and engaging with those identified consumers.

How Does Propensity Marketing Differ From Lookalike Marketing?

Propensity marketing and lookalike marketing are essentially synonyms.

• Lookalike Marketing: Marketing strategies that identify the historically best customers and target consumers who “look like” those best customers – in terms of demographics and online behaviors. With lookalike marketing, it’s assumed that consumers who look like past customers will have the greatest propensity to be high converters in the future.
• Propensity Marketing: Advertisers identify consumer segments based on their propensity to take certain actions and target consumers who “look like” consumers from those segments. With propensity marketing, it’s assumed that “lookalike” consumers will have conversion rates similar to consumers originally placed within consumer segments.

What Data Is Required For Propensity Marketing?

Propensity marketing requires the analysis of multiple data sets, often including:

• First-Party Historical Data: Historical data helps identify the best customers, defined through conversions or retention, from a prior time period.
• Third-Party Data Sets: Often, third-party demographic and behavioral data overlays are used to learn more about the customers with the highest propensity to convert.
• Second-Party Data Sets: Second-party data sets are typically used to help with media targeting. These data sets match consumer segments with their lookalikes across digital channels.

Advertisers that have massive first-party data sets may be able to rely solely on their own data sets for complete consumer profiling and targeting. Advertisers without massive first-party data sets, or with data that is not continually updated, will want to partner with teams like Digital Media Solutions (DMS). DMS helps digital advertising clients de-risk their advertising spend while scaling their customer bases by tapping into our first-party data asset, proprietary technology and expansive media reach. Contact DMS to learn more.

What Are The Limitations Of Propensity Marketing?

Propensity marketing can be a powerful method of refining marketing strategies and controlling media spend while boosting conversion rates. However, propensity marketing is based primarily on historical actions. Because consumer mindsets and behaviors change over time, propensity-based consumer segments can miss the mark over time. 

Especially when regularly refined based on newer conversion rates, propensity marketing can result in narrow audiences that are difficult to scale. Marketers using propensity marketing should consider regularly testing audiences outside the lookalike groups to identify missed high-propensity consumer segments.

What Is The Best Way To Get Started With Propensity Marketing?

Start by contacting Digital Media Solutions.

Digital Media Solutions^® (DMS) is a leading provider of technology-enabled digital performance advertising solutions connecting consumers and advertisers.

• DMS First-Party Data Asset: Insights and signals put the right message in front of the right consumer at the right time and place.
• DMS Proprietary Technology: DMS proprietary technology connects advertisers with publishers and consumers, tracking digital performance advertising data in real time and offering valuable insight into campaign performance.
• DMS Expansive Digital Media Reach: Our expansive digital media reach, encompassing social media, search, display and programmatic, email, Aimtells and connected TV, touches approximately 70% of U.S. adults.