Data-Driven Thinking" is written by members of the media community and contains fresh ideas on the digital revolution in media.
Today’s column is written by Marcus Tewksbury, global vice president for product strategy at Experian Marketing Services.
CMOs are still addicted to impressions. It doesn’t matter if they appear in banners, emails, 30-second spots, above the line or below it.
This seems counterintuitive to everything we read about big data, targeted ads and customer-centricity. Yet there is still a gulf between rhetoric and action in our industry. The proliferation of data has given us the ability to target audiences more precisely based on demographics, purchase history or behavior, but we want to do that at mass. Therefore, impressions are still our currency.
Marketing in a digital world requires that we strive to improve the customer experience and deliver a quality interaction every time, rather than just focusing on quantity, reach and volume. If the quality isn’t right, the volume can actually bend performance back into the negative. Doubling down on the old “at mass” techniques, regardless if they are data driven or not, just exacerbates the situation and creates noise that reinforces how little the brand knows or cares.
With the digital proliferation forever altering the equation between marketer and customer, the customer is now in control. CMOs seem to acknowledge this shift in power but have yet to move on from their formerly successful, volume-driven strategies. We need to give our CMO partners tangible steps for breaking their addiction and moving from the age of digital marketing to the age of marketing in a digital world.
Diagnose The Impression Addiction
The telltale sign of an impression addiction can be characterized by the desperate dependence on increasing volume to lift sales. And if that fails, there is the self-delusion that it was a channel anomaly that can be corrected by shifting to the bright shiny new one.
The traits you most commonly see with impression addicts include qualitative or demographic-driven customer segmentations. These CMOs use virtually no math or numbers to describe customers. They don’t know how many they have nor what they are worth.
There are also channel-centric organizational structures that emphasize traditional channels and budgets. Investments in technology, data and customer communications are often siloed. This results in metrics that are optimized for the channel, leaving the marketing department with little ability to measure overall or long-term customer engagement. General correlations are made to account for an increase in revenue or sales, but it is largely more art than science.
You may also notice a decrease in customer engagement. This might include list fatigue, rising opt-outs and audience contraction. However, the impression-addicted CMO won’t question or wonder why customers are churning. The lack of self-reflection moves straight to blaming other factors along the path to purchase – vendors, products and innovation. Unfortunately, the only solution to diminishing returns is increased volume and reach.
Stage An Intervention With Data
There is a plethora of market research about the importance of big data and relevance for enabling a better customer experience, but breaking the cycle often requires a very personal and specific scenario. For the data-driven marketer, intervention can start by showing longitudinal performance and performing a capping test.
Customers are the lifeblood of any business, and while the CMO may not know how to reorganize the organization around the customer, we have technology that can help lay the foundation. In a healthy business, this is reflected in the growth of the number of customers and relative wallet share. Something is wrong if a business is not growing along both of these dimensions.
A capping test involves universally suppressing a population of customers from standard communications to test a new strategy in which they are exposed solely to a lower frequency, highly targeted strategy. Compare response rates and purchase value across the two customer populations.
Stay On The Data-Driven Wagon
Successful CMOs will overcome their impression addiction and rediscover a love for their customers. This is when they forget about working budget ratios and focus on wallet share of wallet and customer equity measures. Sticking with results will give CMOs their strongest motivation to avoid succumbing to impressions. They can resist vanity metrics, such as clicks or Facebook likes, in favor of direct measurement of incrementally generated revenue.
This shift in performance measurement will help keep CMOs on the right track and dramatically raise their reputation in the C-suite. With precise metrics, marketing moves from being an unstable, unpredictable habit that needs to be funded, to the strategic core of the organization.