Bringing Precision to CONVERSION MARKETING

Connecting the dots toward a deeper understanding of customers BRINGING PRECISION TO CONVERSION MARKETING

marketers’ appetite for the digital ad medium. From Personalization to Precision A recent eMarketer report, for example, cited a Clearly, there is a widening gap between what Duke University study in which CMOs across marketers consider to be “personalized” and what multiple industries – from healthcare, banking and consumers perceive as relevant. Many of us have technology to retail, manufacturing and consumer experienced this in our everyday lives. You may packaged goods – said they planned to increase their casually browse an online retailer just once and be digital marketing spending over the next 12 months bombarded for the next several days by overtures Marketers can achieve greater relevancy by by anywhere from 8-22%. These same companies from the company as if you were a loyal customer. plan to reduce their traditional ad budgets by as Just think about all the “exclusive for you” branded connecting the dots on all of the available data much as 7-12%, according to the study, while upping promotional offers delivered through our e-mail their overall marketing spending in a wide range: inboxes or favorite web pages that end up ignored or and by working toward a deeper understanding anywhere from 1-20%. discarded as if they were the equivalent of spam. of their customers. DUE DILIGENCE: The Data Audit he quest for relevance is an age-old struggle in The question is: To what end? Are marketers If you ask any marketer, “How well do you know your customers?” you’re likely to raise a few marketing, but it has taken on a new urgency who employ all of these data-driven methods eyebrows. The truth is, it is difficult to get an objective answer to this question. Experts in the field in the digital age. Increasingly, the old rules getting more of their messages through to the have a suggestion: Start by looking at the data. T of mass marketing no longer apply. Opportu- right recipients? Are they strengthening bonds “The reality is, most CPG companies have very limited and inconsistent information about their nities to reach consumers through deeper insights with customers, providing real value in the form of customers. Their databases are relatively thin,” says Mark Hertenstein, Senior Vice President of and with greater precision abound in this era of more relevant offers or increasing the likelihood of Enterprise Solutions at Epsilon. data-driven marketing. purchases? A food manufacturer, for example, may have captured a customer’s name and e-mail address Recent trends are in the marketer’s favor. More While there are no easy answers, evidence suggests when he or she downloaded a recipe or signed consumers are exploring products and shopping on- that at least some of the efforts to target customers up for a promotion. Often times, however, that’s line, for example, leaving behind a valuable digital on a more personal level are falling on deaf ears. For where the data trail stops. A brand may have footprint. Today’s digital marketing landscape is instance, a recent global survey by Accenture found a basic demographic profile of its user base, awash in so-called “hyper-personalization” tech- that 42% of consumers are willing to pay for ad thanks to first-party research from the likes of niques, as companies seek to leverage this data trail blocking services that eliminate interruptions from Nielsen or IRI. But it must then work with a third- in order to tailor ad messages and promotional of- online ads. The alarmingly high figure was a clear party vendor like Epsilon to create additional fers to increasingly smaller segments of their tar- indication that “too many ads are poorly targeted,” contact points and a deeper understanding of get audience. Meanwhile, transactional data from said one top Accenture executive upon the release those consumers, Hertenstein says. “Now you not only know where they live, sources like retailer loyalty card programs provides of the report. Simply put, a misplaced ad has a high but what type of house they have, how many a window into purchase behavior and a platform chance of being regarded by consumers as irrelevant kids, their hobbies and interests,” he says. from which to launch shopper programs that are or a waste of time. “Do that across your database, and then you targeted specifically to those behaviors. Such cautionary statistics have not curbed have something to segment. Are they budget strapped? Health conscious? The deeper you go, the more meaningful the segments you can create.” “The technology marketers use to be Have marketers done their data audit? Here are five key questions to ask: 1. Do you have a sense of who your shoppers/consumers are or could be? relevant is accelerating as quickly as 2. Have you appended that basic profile with third-party data to complete the technology consumers possess to the view of the consumer? 3. Are you distinguishing data for insights and data for action? turn us off if we’re not.” 4. Are you connecting your message to the transaction? 5. Is your messaging driving the consumer towards a purchase? ALICIA SMESTAD, EVP, Senior Group Director and Senior Vice President, Catapult

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demographic indexing. Too often, it tries to tailor a robust way, either because they don’t see the value one-size-fits-all message to groups that may or may of it or they think it’s covered by consumer insights,” not represent a company’s most valuable customers. Smestad says. “Generally speaking, shopper insights “Adding this new layer of precision to conver- are seen as an afterthought.” sion marketing helps minimize waste because we’re Consumer insights seek to uncover people’s wants delivering the right message to the right people at and needs: their usage or attitudes towards a brand the right time,” says Brian Cohen, Executive Vice or product. Shopper insights delve into behavioral President/Group Director and Head of Digital factors such as barriers to purchase in an attempt to Integration at Catapult. “It will get us closer to the position a brand within a unique shopping solution. point where we stop thinking about reach, frequen- By thinking of these as two unrelated sets of data, cy and impressions. We need to focus on sales and marketers often fail to gain a complete picture of other key performance indicators that marketers the shopper’s decision-making process. are increasingly judged on for their success.” “Because today’s shopping journey is so fragment- A 10-step action plan can be found on page 6. In ed and there are so many digital behaviors involved, the following sections, we examine how marketers you cannot isolate the consumer from the shopper,” can merge shopper/consumer insights, improve says Mark Hertenstein, Senior Vice President of the segmentation process, strengthen messaging Enterprise Solutions at Epsilon. “We have to chal- and enrich measurement techniques – the four lenge our usual definitions of consumer insights and So where are marketers going wrong? but it is still too focused on delivery improvement key pillars of a more precise conversion-marketing frame them more around the shopper. We need to “Marketers are not using all of the available data and optimization, versus relevance.” strategy. start asking deeper questions in order to figure out to get a better picture of who their customers are Over the past two years, Catapult has been how we should engage and talk to our customers or what might be useful or relevant to them,” says refining its chief marketing model, known as PILLAR ONE: along their digital and physical journeys.” Alicia Smestad, EVP, Senior Group Director at conversion marketing, adding depth and precision Insights Knowing which questions to ask is part of the Catapult. “The same types of marketing, messaging through enhanced segmentation techniques. learning process as brands go deeper into segmentation. Bring shopper to the forefront of and targeting get repeated because the brand or Its new approach centers on developing ways to Normally, a brand conducts segmentation by grouping retailer hasn’t tied back to the fact that what they’ve communicate with real people versus activating consumer insights people in a one-dimensional demographic index (for sent their customers before hasn’t worked and is not against vague consumer targets. example, by region or household income level), while a relevant. They’re not doing anything significant to “We’re having a deeper conversation on how we As marketers work to refine their methods, they must retailer may construct its segments around a particular learn how to change the approach or close the loop help and execute marketing that identifies, reaches also confront certain organizational challenges. One shopping behavior (such as people who only buy a on a purchase.” and messages to a specific customer or customer seg- imperative is to forge greater collaboration between certain category on sale). Despite the widespread availability of data from ment,” says Peter Cloutier, Chief Marketing Officer consumer insights and shopper insights groups. Most Catapult’s new approach goes much further. It a variety of independent sources, Smestad says that at Catapult. “We do this in service of building a brand marketing departments tend to view these as entirely combines more detailed demographic and lifestyle very few marketers have taken the necessary steps to connection and get someone to do something – click, separate functions, often placing far greater emphasis information with transactional data to create multi- access complete information about their customers’ share, download, post and ultimately buy. This is the on the former than on the latter. “Most companies layered segments, and then builds an entire marketing demographic profiles and lifestyle interests. Even core of conversion marketing.” have not established shopper insights teams in a plan around each of those segments. “What’s really those who have, she argues, often do not connect the In the updated segmentation approach, a dots between this type of research and transactional marketer’s first step is to conduct a deep data analysis data or online search behaviors to generate a more in order to build a clearer portrait of its customer base holistic view of how brands fit into their customers’ and to identify segments that make the most sense lives. (See “The Data Audit” on page 3.) to target based on who they are and how they shop. “The shopper journey has spark points: Smestad believes the intent of personalization The scope of this analysis, including the number and is a good one; however, she says the process needs nature of the segments, will vary depending upon the It could be a billboard, banner ad, to be directed at understanding what motivates a brand’s marketing objectives. customer toward a purchase or brand loyalty versus This process, in turn, enables a brand or retailer seeing a sign inside a venue or even tailoring specific messages to a particular audience. to conduct its marketing more efficiently because it “Pushing different messages versus pulling is the can work simultaneously to optimize its message and talking to your friends on social media.” goal of much of the industry right now,” she says. audience – i.e., to craft a message that is most likely “Personalization is focused on a custom message for to resonate with a carefully identified group. By BRIAN COHEN, EVP/Group Director and each person throughout channels, or on different contrast, traditional mass marketing loosely defines Head of Digital Integration, Catapult messages for different user groups. This is progress, its customer base with broader segments using

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new is the idea of connecting the segments to each Answer: It should start by learning more about pillar of your marketing strategy, so that everything the customers it already has. is working together,” Hertenstein says. “Think about all the people who have glasses or So how does this work? Consider the following who need glasses; what motivates them to buy; what scenario: types of brands, styles and price you need to have Let’s say that a major eyewear retailer wants for certain groups of people in different stores – to grow its customer base by expanding one of its these are all consumer insights,” Smestad says. top-selling product lines. As part of the initiative, it is As it compares this information with behavior- looking to add new styles of frames and conduct var- al data and purchase transactions, the retailer may ious promotional activities. How should this retailer discover a value segment of suburban shoppers build and execute its customer acquisition strategy? who buy glasses once every three years; that could

ACTION PLAN 1. Build a deeper view of your existing ferent groups and get to know them consumers: through testing scalable segments. • What they buy: purchase data and be one component of its strategy. Another group above analysis is how many segments to create, and 4. Who buys your brand a lot? Can you find behaviors might be a sub-segment of urban Millennials, who how many different customer profile and behavioral others who look like them? What would • Who they are: demographic data are less sensitive about price but want to feel like attributes to assign to each segment. “Part of this is you say/message/offer them? • What they do: shopping, media, interests they’re keeping up with the latest trends in eyewear. you’re learning how to segment as you go along,” 5. Who buys your brand infrequently? What “This segment would have a very different reason Smestad says. “There are an unlimited number of 2. Build current user “clusters” and non- might help them think of your brand more for coming into the store,” Smestad says. “You have possible segments, but it’s a good idea to start with user clusters. or in a different way? to build your assortment and messaging to each of less because you can always add more as you get 3. Develop strategies for growth based these segments very differently.” better at the process.” 6. Who do you think is your next “white on testing these clusters. By creating more informed segments in this way, A CPG manufacturer, for example, might start with space” to reinvent your brand to a new A sample strategy might work as follows: the retailer will know exactly which customers it a segment of value-seeking Hispanic shoppers who segment/cluster? How would you propose Assume that there are 100 types of con- is going after and how best to communicate with live in the southwestern U.S. and then assign lifestyle to be relevant to that group? sumers that use your brand today based them. It can then use this framework to create a attributes to further distinguish consumers within that on the modeling of attributes across the 7. Reset what you “know” to what data resonant message for each group. segment, such as “pragmatists” or “dreamers.” Next, deeper data sources outlined in the follow- you can connect together to “learn.” it might cross-populate the segment with “Mom” ing sections. Now take those 100 dif- 8. Work with partners to enhance PILLAR TWO: Messaging pragmatists or “Mom” dreamers who live in another the data you have and the data part of the country, or with Boomer pragmatists and you don’t. This will be an ongoing Creative must be an integral part of Boomer dreamers who live in the Southwest. Any number of additional behavioral variables endeavor. the strategy: Make the message fit the could be added to further illuminate the identities 9. Measurement of sales impact is the audience. and motivations of these segments, such as attitudes only way to validate your relevance. towards shopping (e.g., pleasure versus chore) and a Focus on bringing that key data set In today’s non-egalitarian marketing world, a low, medium or high level of coupon usage. Each in as table stakes. handful of powerful brands can afford to run permutation creates a potentially valuable new 10. Get results that amplify your outrageously expensive ad campaigns that may grab segment and the need for a dedicated messaging strategies to continue year-over-year attention without saying anything that might make strategy. For example, this particular CPG brand growth versus simply looking for a particular group of people want to buy the product. would not want to speak to its pragmatic consumers “what’s next.” (A certain chatty green lizard comes to mind.) For all in the same way it does to dreamers, even if both other marketers, it is far more economical to tailor a groups share the other traits of being value-seeking creative strategy to the needs of a specific audience. shoppers with kids living at home. And that will require a better understanding of the Among brick-and-mortar retailers, Kroger has people the marketer is trying to reach. taken this process to the extreme, using powerful Along this vein, one of the critical decisions in the computer algorithms and granular data from its

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example, let’s say a marketer has identified four segments of moms for its brand of baby food: PILLAR THREE: Media organic, natural, mainstream and value. The core Shift the focus from media buying to creative may remain the same for each group, but individual segments may receive a slightly different media delivery message based on different visuals contained within the ads. Of the four pillars discussed here, media perhaps Programmatic creative may also be applied to has the most direct correlation with the concept of search marketing. Fandango can send an e-mail to precision. Traditionally, media is purchased with a customer that says, “Save $2 on your next movie,” the goal of reaching a broad demographic audience. and if that customer opens the email within 100 Instead, the goal should be to reframe the conversa- yards of a given movie theater, the content/message tion about delivering the right message to the right (i.e., movies/ads) will be the same as the ones nearby. audience in a way that’s non-intrusive and relevant. “This is not easy to do,” Cloutier says, “but it can “The question becomes: Can you be more impact- increase relevance to the customer by ten-fold.” ful with a precise buy than a mass market spend to

loyalty card program to segment down to the der to create a 360-degree view of the consumer.” KEY CONCEPT: Shopper Journeys individual customer level. Even in this case, however, The previous scenario provides insights into how For years, marketers have tried any number of ways to describe and capture the consumer’s path the retailer’s marketing and communications strategy messaging is derived from the segmentation. When to purchase. “Nobody shops in the same way,” says Brian Cohen, EVP/Group Director and Head is still tethered to only one facet of its customer base communicating with style-conscious Millennials, of Digital Integration at Catapult. “But as marketers, we all tend to plan in the same ways and like – i.e., their purchasing patterns. Similarly, Amazon is for example, the eyewear retailer might dispense to think we know exactly what the user experience looks like.” a master at cross-selling products to customers based with a standard one-size-fits-all offer (e.g., “Get That user experience is becoming more complex as new technologies provide digitally savvy on their browsing histories, but doesn’t necessarily $100 off a pair of glasses with your next eye exam”) shoppers with an increasing array of options. There are multiple decisions to make at every step bundle or promote offers in a way that suggests a and try to create a more individualized message. For along today’s shopper journey. deep knowledge of those customers. instance, it might shift from the pragmatic “It’s time To account for these trends, Cohen uses “Shopper data from retailers is purely transactional: to replace your glasses” to the more aspirational a mapping model that he describes as a It tells you who is buying the brand or category, but it “Check out the latest frames we have in store.” sophisticated decision tree. “The shopper doesn’t tell you anything about who those people are There are a variety of ways to scale messaging that journey is like a highway with off-ramps, or what is motivating their purchases,” Hertenstein is tailored to the unique needs of each group. One and each exit has a number of turns where says. “You have to layer in attitudinal behaviors and method is to overlay the notion of programmatic any number of decisions can be made,” lifestyle behaviors. These are all very different types advertising (which currently focuses on the delivery he explains. “These are what I call spark of data, and you must use them in combination in or- and placement of ads) onto the creative itself. For points: It could be a billboard, banner ad, seeing a sign inside a venue or even talking to your friends on social media.” At each of these spark points, he inserts a conversion mechanism – a key perfor- mance indicator that provides a measure “Everyone seems to be measuring with of the consumer response. In the case of a banner ad, “Do you ignore it, click on it, or a short-term sales lift mentality. We keep in the back of your head?” he asks. “There’s always a next step. We want to should be measuring with the intent of know what the conversion mechanism will be at each of those steps.” Cohen sees this process as moving consumers along the highway. “We can’t force someone to learning.” buy something,” he says. “Marketers can’t change behavior, but we can enable behavior. When consumers do decide to make a purchase, we can make sure that we’re in the right place at the right time – with something that works for them.” CHARLEY CIRESI, Vice President of Client Services, Catapult/Nsight Connect.

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Smestad says. “They’re measuring, but they’re not With all of these tools in hand, marketers can begin measuring enough and they’re not learning how to to build a strategy that – regardless of the specific “We have to challenge our usual improve the program with each successive try.” tactics or brands – is guided by the core principle definitions of consumer insights and With so much clutter in the marketplace, it is of creating value for customers through relevance. difficult for any marketer to know which tactics or Thus, marketers can reframe the conversation from frame them more around the shopper.” circumstances in any given campaign or program led concerns about privacy, ad blockers and the myriad directly to a sale. By setting up a test versus control ways in which consumers can tune out messages, to measurement system, however, a brand or retailer has an opportunity to become (at the very least) a more MARK HERTENSTEIN, Senior Vice President of a statistically relevant sample in which it can connect welcome intrusion into their lives. Enterprise Solutions, Epsilon household data to stores to markets in order to isolate “The technology that we as marketers use in the factors or components that worked best. order to be relevant is accelerating as quickly as the For example, the eyewear retailer could test stores technology the consumer possesses to turn us off if within two major metro markets: one that received we are not,” Smestad says. “Relevance is the currency reach a certain number of eyeballs, and can you pro- the shorter term. This is where precision marketing the $100 off promotion, and the other that did not. “It of value. And if you’ve achieved that, you will have duce the same result for a lot less money?” Smestad can play a critical role. It can help you better define would require matching samples with sufficient scale; earned the right to talk to your customers.” n says. It’s a laser versus a shotgun approach. your audience and eliminate inefficiencies as you the stores in the two markets have to be similar in In the short term, brands may still want to rely work to balance the brand’s priorities and objectives.” terms of brand development, distribution and so forth,” About the Author: Michael Applebaum is a freelance on the broad reach of national media, particularly Smestad says. “There’s a lot of planning in this system, writer and editor who specializes in developing features if they have the general sales results to show for it. PILLAR FOUR: Measurement but it allows you to eliminate all the other variables out- that address all aspects of marketing. He trained in the But going forward, marketers will start to think of side of what you’re testing that contributed to a sale.” New York City publishing industry and held senior- media less in terms of reach against an audience and The chart below illustrates one type of hard-data level editorships at Brandweek, Photo District News Transition from soft to hard metrics; and Spy magazine. He has covered marketing since more in terms of intersecting with their segments measurement model using four distinct data categories understand what needs to be measured 2000 and now produces various independent research, – whether measuring against acquisition (new (increasing in predictive power from right to left). and why copywriting and editing projects for businesses and household prospects) or frequency (current house- Within each section are steps to add precision to agencies. His marketing journalism work has been hold KPIs). The next section includes more on this a conversion marketing strategy through four key regularly featured in Adweek and Shopper Marketing evolving approach to media and measurement. Going forward, marketers will need to embrace pillars: insights, messaging, media and measurement. magazine. He is based in Chicago. Marketers, of course, are already coming to terms a shift in priorities with regard to measurement. with a drastic shift in how media gets bought and Marketers today remain largely focused on “soft” sold in today’s fragmented advertising landscape. metrics – such as engagement rates, clicks and im- HARD MEASURES: The increasing role of digital ad platforms like the pressions – versus looking at hard data that would Primary Methods Facebook Exchange and streaming services like indicate a more direct impact on purchases. After TEST VS. CONTROL PRE VS. POST SURVEY REGRESSION/MIX those of Netflix and Pandora mean that almost any all, it’s one thing for a brand to know whether or for • Household tagged and • Sales data read for • Shopper intercepts • Significant gathering company can be in the business of buying media. how long consumers watched its video-enabled ad, purchase data available trends 4 weeks prior or online surveys to of inputs across all Major marketers including Procter & Gamble are and another to determine if the views caused those for “exposed” vs. compared to during capture purchase intent spending to build bringing more of their programmatic ad buying consumers to take any action with their wallets. “unexposed” matching and post-event sales changes or brand models to isolate the in-house, and the responsibility for ad placement is Even as marketers have become increasingly ac- • Stores matched and • Sales data read for perception changes impact of specific increasingly being divvied up between the traditional countable for showing sales results, they are not nec- store level sales data year-over-year results of those exposed vs. stimuli unexposed or pre vs. media buying houses, integrated agencies (including essarily clear on what needs to be measured, or why, available for test vs. • Cannot separate post event shopper marketing agencies) and third-party vendors. says Ciresi. “Everyone seems to be measuring with control groups of stores impact of overlapping Given these dramatic changes in the media mar- a short-term sales lift mentality,” he says. “Instead, • Markets matched and support and cannot ketplace, it is particularly important for shopper we should be measuring with the intent of learning, sales data available for isolate other market marketers to remain focused on their specific client so we can continually optimize our campaigns and test vs. control groups factors (competition, objectives, says Charley Ciresi, Vice President of programs as we go.” seasonality, pricing) Client Services at Catapult/Nsight Connect. In the previous eyewear scenario, for example, the “If your goal is to build brand equity or brand retailer is likely to use total store volume to assess the awareness over the longer term, you may still want success of its customer acquisition strategy. Howev- Planned before Requires enough Reported data vs. Reads only to think of media in terms of reach and frequency,” er, that single metric does not allow it to dig further execution for scale to see a actual data “big stuff” says Ciresi. “In shopper marketing, we have to think – i.e., to know which parts of the program worked feasibility & cost difference about what’s converting the shopper to a buyer, so with different segments. “They don’t know who’s our results metrics are going to be very different in coming into which stores or what brought them in,”

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