Scatter Loss

In the area of advertising, scatter loss is defined as the proportion of people reached with a marketing campaign, who are not included in a specific target group and who are not interested in the products and services being advertised. The marketing campaign or communication may be considered ineffective if the scatter loss exceeds other KPIs such as leads or sales. Although scatter loss cannot be completely avoided, it can be significantly reduced by various actions such as target group analysis, targeting, segmentation, and the choice of medium.

General information

Scatter loss occurs whenever a marketing campaign reaches people who are not interested in the advertised product or company. An advertising campaign is meant to reach as many prospective customers as possible at the lowest possible price per advertising contact. The larger the scatter loss, the higher the price per communication with the consumers. Scatter loss should be avoided or reduced in advertising, since it increases costs for all marketing actions without any expected success rate per communication.

The methods for minimizing scatter loss are recorded in a media plan including distribution schedule and distribution. The distribution schedule is part of media planning. Aspects such as advertising objectives, the target group, as well as, the time and the period of distribution of the advertising message are defined therein. Subsequently, the advertising will be delivered in an advertising medium. A distinction is made between random and targeted scattering (or distribution). The former includes, for example, geographical locations such as cities or regions in which advertising is being done. The latter includes target group analysis and selection to avoid scatter loss from the beginning.

Generally, the success of the campaign will be measured after this. In the case of online advertising, monitoring and regular reporting on actions are easier than in the case of offline advertising, since only average values for possible visual contacts can be given. In the case of online advertising, however, methods such as tracking, retargeting or A/B testing are available to increase the effectiveness of the advertising actions.

Level of scatter loss for mailings

The amount of scatter loss varies greatly depending on the chosen advertising medium. If, for example, a mailing is done to a purchased address list, the response rates are seldom more than 2 percent, but usually they are even lower. Accordingly, the advertiser has to accept very high scatter loss. Even response rates of 1 per thousand can sometimes be regarded as successful, in other words, only one in a thousand approached consumers responds. If, on the other hand, advertisement is sent to existing customers, the response rate could reach up to 10 percent. In this case, the target group is already heavily pre-sorted, as customers have already expressed their interest in the company through previous purchases. The scatter loss is therefore minimized by the fact that existing customers are approached. The scatter loss can be further reduced with a personal approach, a suitable frequency of the message, good content, coupons or discounts for existing customers.

The amount of scatter loss during Internet advertising

Scatter loss is much lower for Internet advertising campaigns, especially in direct marketing, social marketing, viral marketing or search engine advertising. The possibilities of target-group-oriented approach and targeting make this possible.

Taking Facebook marketing as an example, the entrepreneur can access a wide range of details on the target group, including:

• Location
• Gender
• Age
• Personal interests
• Education
• Connect to the advertiser
• Partner categories
• As well as custom audiences

These filter functions can be used to ensure that the ad is only displayed to a specific group of people. For example, if a publisher buys a magazine for soccer fans, it could filter its target group with regard to their personal interests and specify that the ad should only be displayed to people whose interests include soccer.

Relevance to online marketing

Search engine optimization partly serves the purpose of reducing scatter loss as part of advertising on the Internet. A website or an online shop is optimized for specific keywords that match its products. For example, a manufacturer of bed linen could make sure that he is among the first positions in the SERPs when “single bed linen” is being searched for. Thanks to specially created landing pages, it is ensured that the user is brought exactly where he wants to go in his search for linen for a single bed. The landing page advertises specifically for this product and is generally optimized for such keywords.

The list of the researched keywords will also come in very handy for online shop advertising in search engines. They reflect the interest of potential customers and ideally reflect their search intention. The better the keywords match the users’ search intention, the less will be the scatter loss because these keywords attract qualified, interested consumers to the shop owner’s website or landing page. For this purpose, it is useful to distinguish between different types of search queries (transactional, informative, navigational, etc.) as well as different types of keywords (generic, mid-tail, long-tail).

However, keywords are only the first step in minimizing scatter loss. Other aspects impact the ROI of a promotion and business model, such as conversion optimization, ease of use, short, simple purchase and payment procedures, as well as many other aspects (such as image, reputation or customer service).