Published by: Andrew Llewellyn
Director, Audience Data
6/6/2023
Unlocking the Power of ZIP Codes
Targeting ads to specific audiences is crucial for brands and advertisers and is typically achieved by using digital cookies to track users’ online behavior and deliver ads. However, with increasing concerns around privacy and data protection, cookies are being deprecated.
Advertisers still need to reach customers and with no clear direction across the industry, and with a lack of awareness of cookieless adtech solutions, they must continue to take an omnichannel approach.
Instead of searching for the next overcomplicated sole identity solution, we’re going back to the basic, yet effective: ZIP code.
Given the close ties between ZIP codes and demographic information, the use of ZIP data for location-based targeting combined with contextual and paid social tactics is a great way to reach relevant audiences. It’s a cookieless solution that scales across all channels, devices, and media tactics.
To better understand the power of ZIPs, it’s important to know the history.
The History of ZIP Codes
ZIP codes, or Zone Improvement Plan codes, were first introduced by the United States Postal Service (USPS) in 1963. The purpose was to improve the efficiency of mail delivery by grouping addresses into geographical regions. By assigning a code to each region, the USPS could more easily sort and route mail.
Originally, ZIPs consisted of five digits, with the first three representing a region and the last two representing a specific delivery zone. Over time, the system has been expanded into nine-digit codes, for more precise location data.
As typical, marketers and businesses knew the value in ZIP codes and quickly jumped on the data for alternative ways to determine market groups.
The Weight of the ZIP Code
Now, when tracking individuals’ recent behavior online via cookies becomes less of the norm, getting back to basic ‘knowns’ of an audience’s true information knits together opportunities for scalable targeting across tactics.
Leveraging the relationship of ZIP codes and demographics is a great foundation that creates better targeting of specific regions or populations while withstanding consumer privacy.
ZIPs can serve as reliable indicators of similar traits and interests among demographics. Notably, the phenomenon of clustering, where people with similar backgrounds, interests, and means tend to group in specific geographic areas, is key for analyzing how demographic characteristics impact everyday life and across industries.
Let’s unravel a few important themes:
- Socioeconomic: People within similar income levels, education backgrounds, and occupations tend to reside in proximity. For example, affluent neighborhoods tend to have higher property values and household incomes.
*Image: Harvard. edu
Additionally, studies have proven that the ZIP code is a better indicator of life expectancy and overall health than even one’s genetic code.
- Lifestyle and interests: ZIPs can also be indicative of shared lifestyles and interests, even driving social influence. Just imagine 60-year-old retirees in a beach town filled with golf courses in the Carolinas. People living in the same neighborhoods often have similar access to amenities, restaurants, and cultural organizations and these similarities drive common behaviors and interests within specific ZIP codes.
- Cultural and ethnic communities: Certain ZIPs are known for housing specific cultural or ethnic communities. Advertisers can recognize this concentration and create culturally relevant and language-specific content for those ZIP codes.
So, the ZIP code carries a lot of weight and have become much more powerful than a system to deliver mail. Although the composition of ZIPs varies, they offer a way to identify groups of people without violating privacy.
Continuing to build on the basic ‘knowns’ of an audience’s ZIP and demographic information from trusted databases, creates a potential for a long-term solution for the industry that drives reach, scale, and performance.
So, how can we connect ZIP codes and demographic information? The US Census Bureau ties it all together in a nice package that’s accessible, like this example for New York state. The Census is collected every ten years and provides a comprehensive snapshot of the country’s population across demographic information on age, gender, race, ethnicity, education level, household income, etc. for each ZIP across the country.
Using ZIP Data in Advertising
By leveraging a combination of known ZIP and demographic data from the Census, advertisers can gain insights into their target audience, uncover new audiences, and effectively optimize their ad campaigns in a cookie-free solution across tactics.
Here are some additional examples of how advertisers can utilize ZIPs in targeting strategies:
- Geotargeting and Demographic: focus on ZIP and income levels to target a custom audience of users with direct mail and/or digital ads who are located within a radius of a physical store and measure foot traffic.
- Contextual: create custom audiences by layering Census demo, ZIP targets, and contextual insights for more granular audience definitions.
Analyzing the performance of these audiences across platforms allows marketers to easily adjust and validate targeting accordingly.
We’ve seen how with the ongoing shift towards a cookie-less world, it will be important to “make what’s old, new again.” ZIP data has become even more important for a brand’s audience targeting strategy to maintain a strong level of precision in targeting, while complying with new privacy regulations.
Don’t overlook this tried-and-true method that can still deliver impactful business results.
