Businesses face various issues that require immediate solutions, from how to manage cash flow to choosing the right suppliers and distribution channels to recruiting and hiring personnel. One of the most important decisions a business owner makes is which advertising strategy to use: vertical or horizontal — and that doesn’t just refer to ad positioning.
What Is Vertical Advertising?
Vertical advertising is a type of marketing strategy that companies use to target their most significant market sectors for their products or services. Businesses that adopt a vertical marketing strategy offer customized products that appeal to customer needs in a specific industry, such as publishing, insurance, real estate, transport and, health care.
People within any given vertical market have similar interests, needs and demands; therefore, the customer base is relatively homogeneous. Rather than appealing to broad groups of consumers, vertical advertising is dedicated to the needs of a distinct niche.
In a vertical market, customers gravitate toward a single product manufacturer or service provider to accommodate all their needs. They choose vertical markets because they know they will receive products or services designed specifically for them. Because the audience for the product is narrowly defined, marketers are able to prepare highly targeted advertising and promotional campaigns dedicated to their unique audience. Although the reach of the advertising might be limited, it is exact and effective, often considered to be a “known buy”.
What Is a Known Buy?
Vertical ad networks deliver advertising to specific audience segments, building exclusive relationships with web publishers that have loyal visitors to ensure quality page views and accurate data. Advertisers benefit from vertical ad networks because they can buy well-defined, segregated audiences from a single source. Such precise focus allows marketers to understand their customers better and generate higher CPMs.
Vertical ad networks are effective at delivering high-quality traffic and ensuring transparency to the advertiser. For this reason, vertical ad networks are known as a “known buy” because advertisers know which audiences they’re targeting.
What Are Strategies for Vertical Advertising?
Companies that specialize have lower levels of competition, but they also have higher risks of fluctuating demand, which makes customer relations incredibly important. In such a narrow market, every connection with a client is crucial.
One example of successful vertical advertising is Lefty’s San Francisco, which sells a variety of products, including school and office supplies, kitchen utensils, gardening tools, and accessories — all specifically designed for left-handers. Realizing that only 10 percent of the population is left-handed, Lefty’s capitalized on a natural niche market. Lefty’s advertises to its target audience with pay-per-click marketing: If a person is searching for left-handed scissors on Google, the Lefty’s online store will be the first website on the list.
What Is Horizontal Advertising?
Horizontal advertising is a marketing strategy, that companies use to appeal to potential customers who share some common characteristics but are distributed across a range of industries. In a horizontal market, all customers use the product or service for the same purpose, regardless of their sector or enterprise.
Companies implement a horizontal marketing strategy to reach the general public. Typically, they offer a standardized product that appeals to a wide range of industries. For instance, an office paper brand might create an advertising campaign that targets banks, offices, bureaus, agencies, public administration offices and other organizations. Such products enjoy wide applicability and high demand, so the competition within the horizontal markets is high.
Compared to vertical advertising, horizontal advertising is more diverse because it appeals to a wider clientele. This requires marketers to design a more sophisticated campaign across channels using various marketing tactics. Horizontal customer interaction may require vendors to focus on different aspects of the product marketing. For example, a bakery might advertise its products to families pointing as low-carb and gluten-free, while advertising the same product to luxury magazines highlighting its gourmet characteristics.
What Is a Blind Buy?
Horizontal ad networks offer global, large-scale and numerous targeting capabilities for marketers. These ad networks deliver advertising on a wide base of inventory available. Such ad networks are considered a “blind buy” because advertisers know less about where their ads will be served. Although advertisers are unaware who will see their ads, they might choose specific content channels the ad will be served only on depending on the content category.
A blind network is a powerful tool for marketing campaigns that require large volumes of inexpensive traffic. However, because advertisers know little to nothing about where the ad will appear and publishers have no idea what kind of ad it might be, blind ad networks struggle with transparency and brand safety.
What Are Strategies for Horizontal Advertising?
To combat the challenges associated with horizontal markets, some companies choose to collaborate to reach broader and diverse audiences and to get the most of their marketing opportunities. In these instances, the two businesses typically offer different products but target a similar audience. For example, Coca-Cola joined forces with Pringles, and the two items were marketed and distributed together. This allowed both businesses to dramatically increase production capabilities and maximize revenues.
By offering standardized products, the companies can operate at a larger scale, which ensures the lower production cost. Moreover, the production of standardized products is easily automated, which results in additional cost savings.
With continuous feedback from multiple channels, it is relatively easy for horizontal producers to identify areas for improvement and upgrade the product according to the customer needs. But because the companies cater to large audiences, the customers’ bargaining power is minimized, and the businesses enjoy higher levels of price control than in vertical markets where fluctuations are common.
Both vertical and horizontal ad networks have advantages and disadvantages, and most businesses don’t just choose one or the other. The correct choice should depend on specific campaign goals and marketing objectives.