Using zip codes, polling, and the US Census to find untapped markets for ecommerce brands

A while back, I was doing some work for a growing ecommerce brand. As I sifted through two year’s worth of customer zip code data, I discovered something rather remarkable. 

Among the over 12,000 zip codes with at least one order, the brand’s highest and lowest performing zip codes were separated by only five miles. One straddles Williamsburg, Brooklyn – ground zero for affluent hipsters — while the other covers East New York, Brooklyn, a neighborhood with markedly different demographics, notably race and income.*

Take a look at the map below, with shows the differential percentage of total orders relative to population at the zip code level across New York City.

This discovery highlights the ongoing tug-of-war between performance marketing and brand building, and shows the enduring significance of an old technology: polling

First the tug-of-war.

Many ecommerce brands initially drive growth by relying on paid search, paid social, and email marketing to target a niche segment of shoppers with an underserved need, before transitioning to above-the-line campaigns aimed at mass market buyers. 

The skincare brand is still in the initial growth phase – impressively, they’re doubling orders yearly – yet they, like many others, are grappling with how to move into the next phrase. Above-the-line advertising is tough to measure, yields returns over months and years (which often exceed a brand's runway), and comes with a hefty price tag.

Take, for instance, advertising in New York City’s subway.

The L train, which originates in East New York, passes through Williamsburg and terminates on the west side of Manhattan (see map below), seems like a great opportunity to expose the ecommerce brand to existing customers and a portion of the 3.5 million people who ride the subway everyday in New York City.

Yet displaying single posters in subway cars for four weeks costs about $35,000**. While that will garner about six million impressions, which is comparable to the value you’d get on Facebook and Instagram^, a successful above-the-line campaign typically requires more ad space and a minimum six-month run.

And even then, there are no guarantees.

So how are brands supposed to extend their reach without gambling their entire budget?

If I had a fool-proof answer I’d probably be lounging on a beach sipping an expensive cocktail.

That said, there is one sensible strategy I can offer. It involves identifying the largest group of potential shoppers who, while unaware of a brand, are most likely to become customers if they were more informed, and then targeting these shoppers through digital channels.

While finding such a segment might seem as straightforward as pointing out the tallest building in a skyline, the process is much trickier.

An analysis of a brand’s order data, in combination with zip codes databases and publicly accessible datasets, can provide much-needed context, as the analysis for the skincare brand illustrates.

Nevertheless, like relying on Google Maps for everything except navigation and route planning, there’s a crucial third piece to this approach that’s required: polling.

For instance, during a recent project with an ecommerce brand, I polled a representative sample of shoppers from the brand’s market, and discovered a segment of approximately 25 million shoppers who expressed strong interest in the brand, even though they had not been previously aware of it.

This segment (females between 35-54 years old) was known to the brand but overlooked, and a subsequent analysis hinted at one reason why. Using data from the American Community Survey at the census tract level, we saw how age influenced shoppers to relocate to the surrounding suburban areas - areas outside the bustling metropolitan centers the brand had been primarily targeting.

(Here’s a similar example from the Washington-DC metropolitan area, with the population of two age groups — 18 to 24 year olds and 30 to 34 year olds — as a percent of each tract’s total population. Click “Map 1” and “Map 2" to see the difference.)

These findings established at least a model for a feasible middle ground - one that bridges the gap between continued reliance on digital channels for conversion and expanding the broader market to enhance brand awareness and credibility. Now, if they wish to invest $35k, they can do so with greater confidence.

The profound demographic lesson I’ve learned from analyzing many ecommerce customer bases

If a brand amasses one hundred thousand unique customers over its lifetime, it constitutes a mere .0004% of the United States’ consumer population (adults, 18+). This figure is significantly smaller than the combined population of three zip codes —11249, 10011, and 10014 — the L train traverses as it ventures west from Williamsburg to its terminus on 8th street in Manhattan.

As marketers, it’s easy to let our feeds and dashboards block substantial untapped markets. The crux of successful ecommerce brand expansion, then, isn't about choosing between performance marketing or brand building. It's about leveraging the tools at our disposal—like polling—to gain a deeper understanding of the landscape.

In the world of ecommerce, having the full picture of that landscape can be the difference between stagnation and breakthrough growth.

_________

*These two zip codes differ across just about every demographic, most notably race and income. Williamsburg has a mere 2.8% black population, whereas East New York has only 1.3% white residents. The median household income in Williamsburg stands at nearly $100k, while in East New York, it hovers around $37k.

** That’s the minimum entry spend.

^ Depending on your bidding strategy and campaign type