Golden Nuggets: Advertising’s ‘Data’ Wave Has Arrived

When I look at the world of advertising, by way of my career path through the Direct Marketing Association and Harte Hanks and now with the Digital Advertising Alliance—I confess I’ve been a “direct response” snob by training. (As a PR guy, I tend to enjoy Kool-Aid.)

When I look at the world of advertising, by way of my career path through the Direct Marketing Association and Harte Hanks and now with the Digital Advertising Alliance—I confess I’ve been a “direct response” snob by training. (As a PR guy, I tend to enjoy Kool-Aid.)

Always a victim of brand czars and image advertising, the world of direct response long has been relegated to “below the line” and ironically “unmeasured media”—even though direct-response marketers (no matter what the medium) always had the secret sauce in sight: relentless testing, true measurability and accountability, all to figure out which advertising messages and campaigns actually produced. The result might be a sale, a lead, traffic—always a defined objective, with a return on investment obsession. What’s not sexy about advertising that works?

It seems like for 20-plus years—with the rise of database marketing, customer relationship management, inbound marketing, agency holding companies gobbling up digital and direct agencies, marketing automation, customer centricity, brand interaction, personas and analytics—we might be able to say to ourselves, data-driven advertising has arrived! All marketing is now integrated! We are now welcomed in the C-suite!

That does not take anything away from brilliant creative—we all love brilliant creative—but if the offer, the strategy, the audience are not on target, what good is brilliant creative?

Recently at the Direct Marketing Club of New York January luncheon, Bruce Biegel, senior managing director, The Winterberry Group, presented his annual media roundup of the prior year with projections for 2015. As Targeting Marketing reported, it’s a data lover’s dream. Every trend behind follow-the-money seems to point to responsible data collection, data sharing and data use at its core.

Bruce didn’t hold back. Direct and digital spending is forecast to grow 7.3 percent this year—compared to 1.5 percent growth for measured media (image advertising) categories. The former will feed GDP growth, he forecasts, while the latter will lag.

This is not a rub-your-face-in-it post (I’ve been on the other side a few times, too). It’s simply a recognition that whatever our biases and opinions about what’s hot and what’s not on Madison Avenue, Silicon Valley and data centers everywhere, it’s that advertising technology, the data sharing that fuels such technology, and the strategic insights and marketing executions made possible by analytics, are now a top priority for most every Chief Marketing Officer. DMA and even The White House previously have documented these trends.

We’re in the limelight—as much as digital and now data disruption has been uncomfortable for many, and with so many data silos still to break through and smart people yet to hire to make sense of it all. Ladies and gentleman, the glow feels good.

Happy Data Innovation Day this week (January 22).

Create a Bucket List

Whether you’re new to database marketing or a seasoned pro looking for some new idea to get your creative juices flowing, one of the most useful, and impactful, activities you can embark upon is to create what is called a “Bucket List.”

Whether you’re new to database marketing or a seasoned pro looking for some new idea to get your creative juices flowing, one of the most useful, and impactful, activities you can embark upon is to create what is called a “Bucket List.”

No, I’m not talking about a building a list of activities that you and a middle-aged companion wish to complete before you shed this mortal coil. I’m talking about taking a long, hard, and close look at your customers or prospects and getting to know them—really getting to know them—well enough to create broad classifications about who they are, what they do, what they like, and what affinities they share.

Remember, at the end of the day, database marketing is about sending out the right message to the right people at the right time—and, hopefully, achieving the desired response from the customer or prospect as a result. And without proper customer segmentation, this task simply cannot be done cost effectively, if at all.

Now, of course, there are many great customer segmentation models out there you can use. In a great article titled “Selecting a Customer Segmentation Approach” by Andrew Banasiewicz, Director of Analytic Services at Epsilon, four groups are identified: Predictive, Descriptive, Behavioral and Attitudinal.

Out of these four, the Predictive and Attitudinal models are arguably the most popular and widely used. Predictive is a model that uses value segments driven by customer purchase behaviors, extrapolating past behavior into future actions. An Attitudinal model, on the other hand, identifies affinity segments based on respondents’ expressed attitudes toward a company’s brand or products.

Now of course this list isn’t exhaustive and there are other models you can use. One popular alternative is Psychographic Profiling, which is used widely in the B-to-C space. In this model, consumers are assigned into groups according to their lifestyle, personality, attitude, interests and values.

Many B-to-B marketers, on the other hand, may prefer to use a segmentation model based on Firmographic variables, such as industry, number of locations, annual sales, job function and so on. Many software companies, not surprisingly, trend toward usage-based profiling, which includes variables, such as type of device used (desktop, tablet, mobile device), Operating System and so on.

One important fact that’s routinely overlooked is that successful customer segmentation requires taking a holistic approach. This includes aligning a firm’s segmentation goals to its marketing objectives and data acquisition investments. In other words, the data you have will determine not only which model you use, but also what marketing campaigns you’re able to run.

Now of course both data inputs and needs are in flux throughout the firm’s lifecycle. As Banasiewicz points out, for a firm in high-growth customer acquisition mode an Attitudinal model might work effectively for demand generation initiatives among qualified and segmented pools of prospects. Marketing campaigns in this scenario, we can assume, would speak to customer desires and affinities, with purpose of lead generation/nurture.

On the other hand, once the firm has acquired a large pool of customers, it’s not unrealistic to think that transitioning to a Behavioral model using inputs from past purchases will be more effective for running what are now CRM campaigns, focusing on driving lifetime value and repeat purchases.

Different groups not only have different attributes and attitudes, but consume different types of media. As such, they will respond to different types of offers, communicated in different ways and in different places. Where should a firm spend its marketing budget? Online display, email, direct mail, social media, print? … The choices are dizzying in today’s multichannel environment. Having a robust customer segmentation model can definitely help in the decision-making process.

Another important feature of customer segmentation is the realization that different customer groups can not only have wildly different demographic and psychographic identities, but very often will have strikingly varying lifetime values. To the surprise of some, a customer segment with a with younger average age will very often have a higher lifetime value than a group far senior to them, despite having far less disposable income to spend today. This may be based solely on the fact that the younger customers have, simply by being younger, many more years of being a loyal customer ahead of them. Taking this into account, many brands’ obsession with successfully penetrating the youth market should come as no surprise.

Now of course it’s easy to miss the forest for the trees, as customer segmentation is simply a means to an end, not an end in itself. Once you have broken your customers or prospects down into segments, the trickier (and for those who are not data geeks) more fun part of the equation involves devising incentive and reward strategies for each segment, and creating compelling marketing messages and collateral that can be used to get the message out across the various marketing channels. Knowing your customers, this part is a lot easier, which brings me full circle back to my point from the top: Create a bucket list.

Deciphering Big Data Is Key to Understanding Buyer’s Journey

Long before a sale is won or lost, customers and prospects embark on what can be called the “buyer’s journey.” This journey is a complex evolution spanning the entire lifecycle of the customer-vendor relationship, beginning with identification of the underlying business issue or need, and culminating in vendor selection.

Long before a sale is won or lost, customers and prospects embark on what can be called the “buyer’s journey.” This journey is a complex evolution spanning the entire lifecycle of the customer-vendor relationship, beginning with identification of the underlying business issue or need, and culminating in vendor selection.

Along the way, the prospect engages in a wide breadth of activities. Some are internal, such as winning over key stakeholders, building internal consensus and acquiring the necessary budget; while others are externally facing. For example, market research, engaging with colleagues in similar firms to share experiences, and of course contacting salespeople for product demos and pricing negotiation.

I do not claim to have coined the term ‘buyer’s journey.’ For more information on it, you can check out a great article by Christine Crandell that appeared on Forbes.com earlier this month. Among other things, Crandell does a great job explaining how social media can be leveraged to better connect with and understand the buyer’s journey, particularly during times when prospects are not engaged with your sales team. What’s especially interesting about the concept of the buyer’s journey is that prospects are actually unengaged with your firm during the vast majority of this process. Engagement only begins when prospects start their market research and contact a salesperson—usually not before.

Now how does this relate to database marketing? Well, it does in two huge ways. On a strategic basis, any marketer worth his or her own salt knows that effective marketing depends getting your message in front of qualified prospects as inexpensively as possible. In order to do this effectively, identifying how prospects are researching the marketplace is key. Why? Because this is where your prospects are spending much of their time, this is where you need to have your brand appearing front and center. So, from a marketing spend point of view, without a doubt this is where you’re going to get the most bang for your buck.

Now, of course, this is far easier said than done. It’s going to take a ton of market research, including customer interviews, focus groups, industry insight and general analysis to identify how your customers researched the marketplace prior to making a purchase. Did they attend key industry trade shows or events? Do they belong to specific peer or networking groups? What publications do they subscribe to? Whatever the answers to these questions are … well this is where you need to be.

Another key to deciphering the buyer’s journey is understanding how the prospect is engaging with your firm across all Key Performance Indicators (KPIs). This understanding can only be arrived at through a deep analysis of every touchpoint between you are your customers. The best way to achieve this is to identify and extract customer and prospect data wherever it may reside. There are no shortcuts here. For large organizations, it can be located in an email broadcast tool, CRM, ERP, Marketing Automation Solution or purpose-built Master Data Management (MDM) Hub, among other places.

Now, of course, this means extracting and sifting through tons and tons of data—everything ranging from garden variety campaign analytics to purchasing history, from personal attributes to company insight, from demographic data to psychographic profile. Tracking, archiving and sorting out all this information is big business. In fact, many in the industry are now referring to this reality as ‘Big Data,’ as companies track and store vast troves of information that they need to make sense out of. In addition to the physical IT infrastructure required to capture and store the information, making sense out of it often requires technical expertise. Without wanting to veer off topic, if this sounds interesting then I suggest turning to NPR, where an interesting and in-depth story on Big Data aired on November 29, 2011.

As I was saying, once the data is extracted, you need to make sense out of it. Paramount to this task is the process of creating robust user profiles replete with detailed demographic, psychographic and, of course, (for B2B) firmographic information—in effect, multi-dimensional user profiles—and mapping it back to KPIs that help identify engagement patterns and behavior central to the buyer’s journey.

Once user profiles have been established, this is where the fun parts comes in, as marketers leverage this information to create compelling offers that speak to the various customer segments. The good news is that recent technological innovations have made this job much easier and more effective. Using marketing automation tools, it’s now possible to broadcast varying sophisticated drip marketing campaigns to various segments of your database—segments that can now easily be created using complex rules based on both list attributes and user engagement. What’s more, the marketing message itself—email creative, direct mail piece, landing page, and so on—can now be highly personalized based on profile data, resulting in higher response rates, reduced media costs and, of course, improved customer satisfaction.

I hope this all makes sense. Any comments or feedback are welcome.

Addressing the Skills Gap: 5 Reasons Why Year-End Giving Should Include a DMEF Donation

The uncertain domestic and global economy masks a glaring concern—one that goes to the root of sustainability in our discipline. In the direct, digital and database marketing fields, there is a tremendous shortage now of qualified professionals, and likely in the near and long term.

The demand [for talent] has far outstripped the supply.” – Joe Zawadzki, Chief Executive, MediaMath, The New York Times (Front Page, Oct. 31, 2011)

The uncertain domestic and global economy masks a glaring concern—one that goes to the root of sustainability in our discipline. In the direct, digital and database marketing fields, there is a tremendous shortage now of qualified professionals, and likely in the near and long term.

  1. In its seminal research report, From Stretched to Strengthened: Insights from the Global Chief Marketing Officer Study (October 2011), IBM states that an explosion of data, social platforms, channel and device choices, and shifting demographics all point to tremendous hurdles for CMOs [chief marketing officers] to overcome. IBM calls it “a gap in readiness.” The ability of higher institutions to provide global (and local) brands with people with skills necessary to capitalize on customer-centric interactions is vital.

  2. Another current report from McKinsey’s Global Institute, Big Data: The next frontier for innovation, competition and productivity (May 2011), states that the world needs as many as 190,000 specialists with deep analytical skills whose sole focus is Web marketing (never mind, analyzing data in multi-channel environments). These new professionals will need to be steeped in mathematics and statistics, as well as in marketing and the vertical markets where brands reside.

  3. During the 2010-2012 period, according to the Direct Marketing Association (The Power of Direct Marketing, October 2011), the U.S. economy is forecast to create more than 280,000 jobs from mobile, search, Internet and email marketing alone. It’s vital we are able to deliver and develop professionals in our field who have requisite knowledge and education.

  4. In a recent employment study for Direct Marketing Association (Quarterly Digital and Direct Marketing Employment Report, September 2011), undertaken by Jerry Bernhart Associates, employers noted that analytics-related posts are the most highly sought in our field, followed by marketing, sales, creative and information technology. Most recently, 61 percent of employer respondents said they were experiencing difficulty attracting the right talent for open positions, with 50 percent attributing this to a shortage of qualified candidates, and 18 percent to a lack of specific job or technical skills.

  5. The Direct Marketing Educational Foundation (DMEF) serves to address the skills gap by enabling its Scholarship program, Student Career Forums, intensive training in interactive marketing (I-MIX), its Professor’s Institute, among other activities, to make direct and interactive marketing one of the most highly attractive fields for young adults. During the past year, DMEF engaged 2,580 students, more than 270 professors, and 650 schools in its various programs. We stand ready to exceed our success this coming year—but we need your support to do it.

For these five reasons, I just sent my donation to DMEF for its year-end DirectWorks Challenge (an initiative where I serve as a consultant). I encourage every professional in our field to make a tax-deductible donation today—preferably before Dec. 31, with my thanks: www.directworks.org/contribute

It’s the one donation that keeps giving back to us as marketing professionals.

Turning Email and Social Synergy Into Opportunity

In marketing — as in candy bowls — chasing too much opportunity can produce nothing more than paralysis or, at best, a dilution of the effort when it’s spread too thinly.

Too much candy isn’t good for you. As appealing as that big bowl of M&Ms looks right now, you know that if you get even get close to it, you’re going to regret it.

The same can be true in marketing. Working with a marketer who is merging three email programs into one campaign management application, I realized very early that there was huge opportunity for synergy of content as well as cross-selling and promotion between the three brands. The marketer was very excited about the possibility of managing the programs in a true CRM-driven fashion. That was only possible once the programs were generated off the same database and integrated at the subscriber level. Until now, the best this marketer could do was run separate promotions with similar offers, then try to compare the impact on revenue and unsubscribes after the fact. There were never very promising results.

With everything managed in one solution, the field is open for new approaches. A quick diagram of the combined customer base by brand showed a very slim overlap between them. At first glance, that feels like all upside — what a great opportunity to expose each brand to new, known audiences. It’s a big bowl of untouched delicious chocolate!

Synergy situations like this do create opportunity. That can be very exciting. But before you get too swept up in dreaming big, consider how important it is to prioritize those opportunities. In marketing — as in candy bowls — chasing too much opportunity can produce nothing more than paralysis or, at best, a dilution of the effort when it’s spread too thinly.

Consider these factors to help prioritize the opportunities before you:

1. Permission. Never assume permission. Period. First, it may be illegal depending on the countries where you market. Second, it’s bad marketing. There’s plenty of cross-sellling opportunities along the existing permission grants that you own today. At the same time, encourage subscribers to sign up for more types of messages from other brands in your preference center.

Lest you falter in your steadfastness, take this tale to heart: We had one marketer recently suffer a big drop in sender reputation and inbox placement. We traced the high complaints to a few campaigns promoting retail partners. Even though it was the marketer’s brand, template and “from” line, subscribers thought the messages were actually from the partners. Complaints were very high, even though the partners were trusted brands themselves. Subscribers knew they didn’t sign up for email from those brands and didn’t stop to check to see if it was a cross-promotion. They just clicked the spam button. Even if you own the partner brands, don’t assume your subscribers know that. I can’t emphasize enough how important it is to gain permission and earn it with every message you send.

2. Audience profile. You don’t have the time or resources to tackle every possible cross-promotion opportunity, so focus on the two to three that have the right criteria — reach, revenue and strategic importance. The latter is sometimes hard to gauge, but it usually involves business drivers, high-value customers or high-visibility projects. Balance those factors out in a spreadsheet so that you have real science behind your discussions. Make sure that every test has an actionable learning so that you can continue to improve and optimize.

3. Brand affinity. Just like in social marketing, customers who already trust you are the ones most likely to take your advice on cross-promotional purchases. Therefore, segment not just by permission status but also by the likelihood of brand affinity that will encourage cross-pollinization of the brands. For example, free online members may have a very low brand affinity and thus are least likely to welcome cross-promotions. Paid members who have purchased recently or have more than one product will be more likely to welcome upsell offers (and not complain).

4. Sales channel preference. A factor that became more important than we initially considered is sales channel — e.g., those who purchase in-store versus online. Not only are there demographic differences between the two, but there are also differences in the way email is used. For example, in this case email wasn’t very successful at encouraging in-store customers to purchase online, but it was effective in generating store traffic. Seems obvious now that we see the results, but of course the magic is in the discovery.

5. Customer life cycle. This is perhaps the most important factor. I’ve found time and again that marketers are way too confident in their assumptions about how interested consumers are in their offers. In fact, you have to start way back in the life cycle for cross-promotions, just as you would with new prospects (which, of course, many of these people are). Nurturing has to start with discovery and exploration. Too many times marketers hit prospects with offers well before they’ve established credibility with them or before they even acknowledge their own needs.

What have you learned from your efforts to create new revenue and customer satisfaction opportunities through data integration? Please share your thoughts and ideas in the comments section below.

Building Your Facebook Community

In July, 2010, Facebook announced that more than 500 million people worldwide were actively using the social media site to connect with family, friends and, yes, increasingly, brands. While Facebook continues to evolve as a marketing platform, a growing number of marketers are looking to leverage this channel to engage consumers and build communities. But what are some of the secrets to success, and how can you leverage these best practices to build a powerful community of brand advocates?

In July, 2010, Facebook announced that more than 500 million people worldwide were actively using the social media site to connect with family, friends and, yes, increasingly, brands. While Facebook continues to evolve as a marketing platform, a growing number of marketers are looking to leverage this channel to engage consumers and build communities. But what are some of the secrets to success, and how can you leverage these best practices to build a powerful community of brand advocates?

Listen. Understand. Then frame the conversation.
Before attempting to develop a full Facebook fan page for your brand, first determine the nature of the conversation between your brand and its customers. When it comes to framing the conversation, the brands that build successful Facebook communities take their cues from their customers and don’t try to dictate or dominate the relationship. They do this by listening. Follow these tips to tap into multiple listening sources to uncover shared passions:

Brand audit. Type your brand name into Facebook’s search bar to take a pulse of the nature of the conversations already taking place about your brand.

Leverage traditional market research. Collect information about how your customers use social media, and what kind of content and conversations are important to them. Survey your customer base through database marketing, website intercept surveys and third-party research panels. Use focus groups to drill down into the attitudes and particular content, features and functionalities that will set you apart.

Listening tools. Use powerful monitoring tools to filter the immense amount of discussions and activity surrounding your brand, and to identify opportunities and key areas of interest.

Acquire and grow: Build your fan base. So you’ve identified a shared passion that will underpin your general community framework. Up next: building your base. The best acquisition strategies leverage existing customer touchpoints as well as opportunities within Facebook’s ecosystem. Take the following steps:

  • secure a vanity URL and make it easy to be found;
  • clearly define the benefits of joining your page;
  • invite existing customers via email;
  • offer something unique or exclusive, giving those who like your brand a reason to visit, engage with and recommend your page;
  • test different placements of the “Like” button across your existing digital touchpoints;
  • include your Facebook page’s link on relevant paid search terms;
  • include Facebook URLs/tags on traditional advertising efforts (e.g., print, TV, radio);
  • “favorite” related brands; and
  • test Facebook advertising.

Stir the pot: Engage your fan base. Once you’ve acquired fans, create a compelling experience that keeps them engaged and actively participating. Keep in mind that engaging your fans is a journey, not a destination. Do the following to keep fans engaged:

  • provide them with unique access to special content and/or offers;
  • create and test applications like polls, trivia, simple games and widgets, making sure the underlying subject of those applications syncs with the shared passion of your community;
  • shower your fans with public recognition;
  • encourage user-generated content;
  • rotate and target content (e.g., geo-posts) to keep it relevant;
  • think internationally; and
  • adjust your content strategy accordingly.

Build trust. Being open isn’t always easy. Many brands shy away from social media out of fear that their fans and followers may say something negative or turn on them. Deal with issues and problems in an open, transparent way. In fact, if you’ve done a good job offering value and engaging those who like your page, you may find they’re your biggest defenders. To build trust with your fans, do the following:

  • post a comment policy;
  • remove spam;
  • be transparent and authentic;
  • remain calm and think before you act (i.e., respond/post);
  • train and communicate your goals with those responsible for managing/engaging fans; and
  • build a corporate policy and communicate that policy internally so employees understand how to engage consumers in a transparent manner.

Have fun: Analyze and optimize. So, how do you know if you’re doing a good job? Tracking and analytics will help you get a handle on your page’s performance. Try the following tracking tactics:

  • use unique tracking codes for Facebook posts;
  • leverage Facebook Insights to understand activity and usage;
  • identify brand advocates and tag them in your database — you may even want to consider rewarding them for their support with bonus points; and
  • communicate your learnings and institutionalize them.

Finally — and perhaps most importantly — don’t lose sight of the fact that Facebook is an evolving platform. No one person can keep up with all the developments, so make sure you partner right. Find an agency and/or support system that’s well-versed on Facebook best practices and your brand, and has shown a proven ability to engage consumers.