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Zip Code Targeting Is Dead

Posted by Jon Berna on Aug 28, 2020 5:01:48 PM

On 8/18, Google announced sweeping changes to the rules for ad targeting, affecting the way nearly every car dealership's advertising is placed in Google ad platform.  Zip Code level targeting will no longer work on 10/19.

Over the next 60 days, every ad account in automotive has to be rebuilt from the ground up.  As the vast majority of campaigns are managed manually, each digital marketing provider is trying to figure out (or should be) how they are going to start over from zero which will  most likely result in massive drops in performance.

Why will performance go down?

  1. Distraction.  Because so much time is going to be spent on rebuilding the targeting not on improvements this will create a chilling effect on all new campaigns
  2. CPC will likely go up.  This is because the vast majority of advertisers will default to big dumb radius-based search.  This means their targeting will be broader and less defined as previously setup.  This creates more local competition, which in turn increase cost per click.
  3. Re-optimization.  Each campaign will have to be closely monitored after the advertisers replace the zip targeting, since this is in effect doing hip replacement surgery on an 80-year-old patient. The post change optimization will have to be handled with precision.
  4. Manual management.  Agencies forced to change 100s of accounts are simply unprepared for this type of operational change event.  If they aren’t using an orchestration layer with automation this will consume nearly all of the work they do for the next 6 months.

FB-ZipCodeFriction-1

Why did Google do this?

There are two primary reasons that we can see.  First, it’s great PR right before an election when data privacy is something nearly everyone is concerned about.  Google can leverage this change later on should legislation show up that threatens them.  Second, we see the byproduct of these changes increasing dealership’s cost per click. The ad targeting will be less precise and the local competition will go up as lazy advertisers place a big radius around your store and call it a day.  Unfortunately, this will happen quite a bit.

So what’s next?

The only other disruptive event on this scale is the adoption of mobile, which occurred over nearly a decade ago. That created more pressure on website providers than advertisers.  This change will go in to effect in less than 60 days.  The time to ensure you have the right partner is right now.

How does this impact Driven Data customers?

We have used zip code level placement however only as an additional layer with our drive-time based placement and 1st party audience placement.  Since drive-time combined with audiences capture the purest signal of who is in your market, we have always prioritized these over zip code level placements.  Bottom line, what we do has always performed better, and combined with our customer suppression, we isolate customers' recent purchases and exclude them from receiving ads.  This combination saves our customers money and reduces CPC.

Driven Data's technology is built on a clean slate utilizing the most modern advertising automation and distribution in the industry.  For us, we simply flipped one switch to make these changes across every customer, and we got back to business doing great work for our customers.  We will continue to focus on creating new value, while nearly every advertiser in auto will be just trying to get back to where they were before this new policy.  

 

 

 

 

Topics: Marketing, Product, Paid Social, Paid Search

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