Do advertisers truly know who their customers are? Is the buzzing performance advertising industry in danger of falling into a state of data ‘analysis paralysis’, and what’s all this fuss about customer lifetime value?
Armed with an insatiable appetite for ROI and an excitable desire to suck up immense amounts of data, we know that more advertisers are treading cautiously among the plentiful performance-led marketing channels. But with such innovative territory comes new and unexplored methods of practice, a clash of opinion over measuring and tracking tactics and of course, fresh challenges.
From the vertical measurement lead at Facebook EMEA and the VP and MD of Marin Software, to the CEO of customer acquisition and data management platform Convertr, we have tapped into the minds of a handful of contemporary ad tech experts to get their insights on some of the latest rumbles across the performance industry.
Getting the basics right
The ever-changing image of the almighty consumer and how best to target them has no doubt propelled CMOs and the like into a state of flux, particularly due to the fresh flood of ad tech tools that surfaced in 2014.
As an advertiser, looking at the simple concept of knowing one’s own customer seems a given. But in actual fact, knowing the profile of a customer is no mean feat, as iProspect UK’s chief revenue officer, Jim Brigden, explains.
Brigden, who has been at the digital performance agency for nearly six years, believes the majority of businesses only ‘believe they know’ who their customers are, but in reality most clients are still trying to get their heads around their own data and systems and are struggling to extract meaningful insight from their existing customers.
Emma Bowkett, CEO at Convertr Media, states that of course it varies from advertiser to advertiser, but her honest answer in most cases is also a no.
“Most clients have a good feel for the generic type or broad variations in their customer profiles, but they are often missing a range of data on their customers’ makeup,” she begins.
“While platforms, like ours, are clearly changing that, we’re also seeing a dramatic increase in the number of data centric marketers and data specialists within marketing teams. A lot of advertisers are realising the importance of enriched data profiles.”
Marin Software’s VP and MD of EMEA, Jon Myers, says it’s the enterprise level or large-scale online advertisers that have the best idea of ‘exactly’ who their customers are.
“These advertisers have enjoyed the luxury of being able to spend a decent amount of resource (both time and budget) on connecting technology platforms to build the most complete view of how their customers behave across different online channels and devices,” he said.
Tie to people, not cookies
Despite the lack of clarity some face with pulling apart their varying consumer profiles, plenty of advertisers are making headway in the space, according to social media giant Facebook.
Vertical measurement lead EMEA at Facebook, Nikhil Shah, claims advertisers have become extremely savvy at using an array of online signals to identify prospects and capture data on their customers.
He said the problem is that all of this intelligence is being tied back not to a person but a cookie, so as digital behaviour fragments across devices, the advertiser’s ability to target accurately is rapidly diminished.
“The level of sophistication has increased immensely, but awareness of the shortcomings of cookie-level data is not nearly as widespread, meaning many advertisers think they have more power than they really do,” Shah said.
UK managing director at affilinet, Helen Southgate, says that in her experience advertisers usually have a good understanding of who their target market and customer base are. She instead argues that the challenge is sometimes tying that to specific channels, and even deeper than that, to specific affiliates.
“This is more complex so it is understandable that not all advertisers would be able to do this,” Southgate comments.
But in the cases of an advertiser not knowing exactly who their clients are, how do they know what metrics and ROI mechanisms to track their performance marketing partners on?
Associate director at digital marketing consultancy Stream20, Teresa Lawrence, says the short answer is that they simply don’t.
“A key example of where we frequently see this causing problems is in the balance of new and existing customers being brought in through media channels,” Lawrence explains.
“In an ideal world we would know exactly who our existing customers are and we would optimise to lower spend and higher ROI, recognising that we are paying for these customers a second time and that ultimately our customer lifetime value (CLV) is being negatively impacted. This is just one example – the more we are able to segment our database and optimise our spend accordingly, the stronger our ROI will become.”
Poorly configured packages
In order to gain a better insight into who their customers are, from a data perspective, we asked our panel of performance marketing experts what advertisers need to do.
Myers, who has been in the online marketing industry for more than 16 years, said collecting actionable data is key.
“For first-party data to be useful, it needs to build a progressive profile of your customers,” he said.
“Engaging with your customers through great content, relevant ads and fresh creative is the only way to achieve this. Building this first-party data view in a data management platform (DMP) will enable you to action it and efficiently target advertising and even website personalisation.”
While Myers’ focus is on ‘actionable’ data, Lawrence, who has previously worked at Sky and Ted Baker as an affiliate marketing consultant, insists the starting point should be to track and tag absolutely everything.
She says once an advertiser is tracking their activity appropriately, this opens up a wealth of options to explore.
Brigden, who has previously worked at Yahoo! Tradedoubler and The Search Works, feels most clients just don’t spend enough hours understanding the importance of their analytics programmes. A lot of the time, he believes clients have poorly configured packages that don’t perform to the required standard.
Bowkett also agrees that advertisers need to find ways to enrich their existing data, giving great insight into who their customers are. She says the problem for advertisers isn’t the range of sources or the lack of data on offer, but in merging it into existing CRM data sets.
‘Analysis paralysis’
With so much data to contend with, naturally advertisers are also in danger of becoming overwhelmed with bundles of raw information.
From a data standpoint, Shah says Facebook uses a combination of pixel architecture and mobile SDKs to allow advertisers to achieve an enhanced understanding of their customers. This allows them to accurately identify cross-device conversion paths and ensure their clients are tying exposure and conversion back not to a cookie, but to a person – no matter what device they use.
While Facebook may be leading the way in this field, not everyone has the access and tools at hand to create such a seamless viewpoint.
Myers also stresses that there’s a danger of wasting too much time collecting and analysing data which is not given an end use.
He believes the term ‘big data’ has mistakenly encouraged advertisers to hoard information, but not to do anything useful with it. He argues that advertisers don’t need to constantly add more data to their marketing feeds, but instead they must focus on adding actionable sets.
To achieve this, he says brands must connect technology platforms together to make data useful and then ask themselves if the information is able to drive more revenue or profit. If the answer is no, they shouldn’t invest in it.
“Advertisers should focus on avoiding ‘analysis paralysis’, such as over-analysing performance for low-traffic keywords instead of prioritising the high-traffic keywords to improve on,” Myers said.
“This is done by understanding what you’re trying to solve, the metrics you’re analysing, and what is actionable by taking large sets of data and segmenting them into smaller sets to focus on. This will help to hone in on which actions are feasible and which are not.”
Sophisticated segmentation & ‘huge opportunity’
So, equipped with the most valuable and actionable customer data, is this enough to satisfy advertisers and CMOs, and how important is it to monitor the end-to-end customer journey?
Southgate says that while not every client is monitoring the entire consumer route, more and more are doing this.
“The importance is to understand the different touch points along the journey and where marketing spend is being most efficient, and to use that data to make decisions on how to better increase ROI,” she added.
Lawrence agrees that advertisers are getting better at this all the time, but stressed there is still some way to go.
“Many advertisers have now developed very sophisticated segmentation, targeting and propensity modelling to ensure that communications sent to existing customers are as relevant and engaging as possible,” Lawrence said.
“However, through acquisition channels, there is still often little acknowledgement that the customer will have been through several previous interactions to get to this point. Here, attribution modelling is key – and if done correctly will not only tell you how much money a channel has made, but give you a much better picture of the routes your customers are taking to get there so that you can frame subsequent interactions accordingly.”
Bowkett said for direct-sale online brands, tracking the end-to-end journey is less of an issue, but the majority of marketers aren’t in this space, and for them it’s a major issue that hasn’t been solved.
She said most only get a partial view of the journey and that adservers, web analytics and attribution platforms will only tell you so much, before ‘falling down’ the moment any kind of offline channel or interaction occurs.
“The critical element is often the link from activity to the CRM platform, if you can’t integrate and track your marketing activity through this then you won’t get the complete picture,” she added.
“A true end-to-end acquisition platform will show the complete journey by integrating and tracking activity through an advertiser’s CRM platform.”
The emerging importance of CLV
Myers said the lifetime value of a customer is becoming increasingly valuable and obtainable to advertisers who can, and should where possible, integrate CRM or ERP data within its ad spend optimisation tool.
He said this way, advertisers can identify the most valuable types of customers and optimise spend towards them.
“In industries like gaming and automotive manufacturing, for example, this is absolutely crucial in order to boost ROI,” Myers explained.
“To optimise ad spend towards those who are most likely to buy a car or actively use a betting account it’s crucial to know who signed up for a test drive or free bet and where these potentially paying customers came from.”
“CLV is the next and most exciting, phase of optimisation for the industry so of course we all love talking about it,” Myers added.
“Optimisation for conversions is no longer enough, we’re starting to be able to optimise for actual revenue. Those advertisers who integrate agency knowledge and the latest performance and bid management technologies will enjoy the most success in optimising towards a true customer lifetime value.”
Bowkett also said it’s essential to optimise marketing to the sale value driven to the business, but unless a brand is tracking the total value of a customer, she stressed they were potentially optimising the wrong channels. “That’s why the CLV element is so important,” she added.
On the tracking the customer lifetime and tying different types of consumers to specific marketing channels, Brigden says the problem with a customer lifetime valuation is the speed of change for consumers.
He stressed the old belief that ‘when a consumer signs up, they sign up for life’ is simply not true in this fast-changing industry.
“There are many new entrants and startups in every industry who are tempting consumers away from established businesses. I am not sure a customer lifetime valuation holds true,” he said.
Southgate thinks customer lifetime value is no more or less important than it used to be, but she stresses the importance of being able to track a customer lifetime value back to its specific market source, i.e. an affiliate.
“This doesn’t happen often; there could be a number of reasons for this, perhaps it is not asked for, perhaps it is felt the benefits would not outweigh the investment in time and resource,” she said.
“Those advertisers that are able to do this find a more positive impact as it allows the network to review and work with publishers differently, perhaps for example, to improve customer quality or to optimise and leverage those that already drive high quality customers. The ROI could greatly be increased by sharing and understanding this data.”
An emerging breed of advertiser
From taking a single, unified view of all marketing channels, to picking apart streams of ‘actionable’ data and upping the focus on the longer term lifespan of a customer, one thing for certain is that advertisers are reshaping and shifting their focus on performance marketers and, of course, on the consumer journey.
Myers says advertisers are increasingly challenging agencies and performance marketing partners on ROI, efficiency and transparency. He notes a growing trend of advertisers increasingly checking in on agencies and performance marketing partners because many advertising professionals were once sat on the supplier side.
“As a result you have an emerging breed of advertisers who are more technologically informed than perhaps five to ten years ago. In my opinion, improved checks and balances can only be a good thing for the industry.”
Bowkett agrees and says many advertisers now have a much stronger understanding on their marketing data and use this to demand great insight from their partners.
She said Convertr is seeing first hand the effects of that as it is used by both clients and agencies. She added that agencies also crave the insight they give advertisers and while it places more demands on them to deliver campaigns that work, they are excited to know what is working, what isn’t and how the platform helps on big issues like compliance.
With marketers and advertisers alike so focused on the rapidly evolving multi-channel environment and its bottomless well of developments, can this cause a lapse in focus on knowing their own consumers? And how much emphasis should really be put on the ‘lifetime value’ of the sought-after consumer? Comment below and tell us your views…