Reach and Relevance – the need for balance in data-driven marketing

This post follows a recent post by Bob Hoffman reproduced on the MyCustomer.com website on the 24th August (‘Why P&G proves that precision targeted advertising is a mess’) which was in response to an article originally posted on The Wall Street Journal on August 17th 2016 entitled P&G to scale back targeted Facebook ads’. There seems to be much confusion in the Marketing world on the efficacy (or not) of targeted Marketing (data-driven marketing) vs. mass marketing approaches and we wanted to give our opinion on this important topic.  Let’s look at the facts in the article from Mr Hoffman. It appears that Mr Hoffman is being selective about what he takes from the recent article about P&G.  He has wrongly concluded that Marc Pritchard believes all Digital display media and targeting doesn’t workThis is not what Mr Pritchard said or is known to believe. What he actually said in the original article is:

“We targeted too much and we went too narrow…and now we’re looking at: What is the best way to get the most reach but also the right precision?”.

P&G’s focus, quite clearly, is to strike the right BALANCE between reach and precision.  And this is absolutely the right thing for any brand to do! P&G have recognised that they went too far towards precision only, and failed to strike that balance. And for us, this is at the centre of a best practice data-driven marketing strategy…using data across the path to purchase and post-purchase to drive a range of objectives (from penetration to advocacy) and using the optimal balance of media channels to deliver the message to maximise reach and frequency.  Relatively untargeted broadcast media will be used in synergy with targeted, engaging messages delivered through digital media and other channels.  It is lazy thinking to think marketing is about one or the other.  Getting the balance right is the challenge for CMOs but the role of data and digital is fundamental.

DATA DRIVEN MARKETING (DDM) AT THE COREThe key to data-driven marketing

 Many CPG brands are placing a data-driven strategy at the core of their Marketing transformation thinking.  A number of our Consumer Packaged Goods clients are moving to develop the concept of ‘Precision Marketing at Scale’, where a Reach + Relevance mentality is the modus operandi. In the same vein, brands such as Coca-Cola and Diageo are moving to a Penetration brand growth model, but are still looking to use their considerable data assets to deliver the concept of ‘mass customisation’. Such brands are increasingly using their content assets and loyalty programs as a means to further build their owned first party data repository, traditionally a gap in the thinking and armoury of the CPG brands. Complementary third party data is then ingested into these consumer data management platforms to build addressable consumer personas that translate into the ability to buy more efficient programmatic digital media.  The key? At all times these brands are NOT dropping the concept and need for mass reach and are not moving to a model of ultra-targeting. They are simply using data to understand their audiences better, and subsequently develop content and messaging that is more relevant to these specific – but still large scale – audiences. And they are balancing the use of online programmatically bought media with offline media to deliver these messages…almost always still with a scale objective. 

That for us is ‘Data-driven Precision Marketing’. Just last week, outgoing Mondelez Chief Media & eCommerce Officer, Bonin Bough, talked about how FMCG/CPG giants won’t survive without getting to grips with data.

DIGITAL SPEND = BAD RESULTS?

Let’s look at UNILEVER as a good case in practice alongside this P&G case. Their CMO, Keith Weed, has recently stated the below, stressing that ‘PRECISION IS A REACH TOOL’:

“Data is a huge opportunity for better understanding consumers and driving creativity. Before, we were in a broadcast mode and marketing TO people…now we can engage people and use data to do that at scale.
Precision used to be a targeting tool…now it’s a reach tool”.

It’s very rash of Mr Hoffman to claim P&G’s 8% decline in sales is due to their shift in spend towards digital channels. Unilever would beg to differ I am sure!  Like P&G, Unilever now spend 24% (c50% in the US) of their total media spend on digital channels. This focus on Digital media is supported by their well-documented ‘People Data’ approach to data-driven Marketing. Has this worked? Turnover in 2015 grew 10% to $53bn, caused, in part, by what CEO Paul Polman calls ‘increased support behind brand building’.  Indeed, in an arguably tougher economic environment in 2016, H1 results are still showing underlying sales growth of 4.7% (with volume up 2.2%), ahead of their markets…and P&G.

DATA FOR CONSUMER UNDERSTANDING

For TCF, data-driven Marketing programs are as much about using data to better understand consumers and audiences as they are with how brands better execute.  A recent WARC report on the most effective marketing campaigns in the world placed P&G as the top advertiser (followed by UL, Coke, Heineken, Pepsi – all data-driven businesses!).  The secret to P&G’s success? According to Roisin Donnelly, Brand Director for P&G in Northern Europe, it remains “deeply understanding the consumer better than anybody else”. For TCF, this is where data analysis and science plays such a key role; driving insights that help brands develop more relevant stories that can also then use data and tech to be told in ever more effective and efficient ways.   

Indeed, the same WARC report also found that 11 of the top 20 ranked campaigns were in fact digitally led. Crucially, WARC go on to stress the balance and integration needed between online and offline: “These are digital-led but not necessarily digital-only campaigns. Many of the digital-led campaigns were backed by paid ad support, either online or offline”. (there’s that balance again!).

FROM PRECISION MARKETING TO DATA-DRIVEN MARKETING?

Given all of this, perhaps it is better to begin calling this space ‘Data-driven Marketing’ vs. ‘Precision Marketing’. The objective is so much more than Precision in the old sense of the word (i.e. niche, small scale, super targeted). The objective is of course brand growth at scale driven by an effective balance of Reach and Relevance to impact the right audiences with the right messages…and try to avoid the waste of days gone by when we simply had to ‘spray and pray’ with our Marketing. Today Marketing is about ‘Art + Science’, using data and tech to better understand, engage and connect with audiences.

data-driven marketingThe idea that all digital display is broken or doesn’t work is simply, well, to quote Mr Hoffman himself…horse-shit !   Sure, Digital as a channel has challenges (don’t they all?), but ultimately balance is all about using the most cost effective channel to influence each purchase decision.  For some consumers this may be a broadly relevant TV advert, for others it may need to be more targeted, relevant and through more direct channels.  Key is the fact that there is no ‘one size fits all’.

THE NEED FOR STRATEGY AND MANAGEMENT

To avoid the ‘mess’ Mr Hoffman warns about, clients need to develop an appropriate data-driven Marketing strategy based on addressing specific business challenges and questions. A strategy that defines how to ingest and analyse the right data in a smart and careful way to both better understand consumer and shopper audiences and then execute in the optimal manner across channels… with in all probability an element of Digital media within the plan to reach those lightly reached or not reached at all by TV (yes, those people do exist!).  We talk about using SMART data to support the strategy.  There is so much data out there, marketers can struggle to know where to start.  The key is in developing a data strategy to support the marketing strategy and consumer journeys.  This defines what 1st , 2nd and 3rd party data should be used across the consumer lifecycle to drive insight and understanding, to execute (e.g. through finer targeting to defined audiences at defined stages of the funnel) and to help brands attribute success to various elements of their marketing strategy and adjust the strategy accordingly.  Our SCHEMA® research shows that 65% of companies have some sort of data strategy, but less than 20% apply it.  Those figures are lower for CPGs.

 In reality this is just classic media and connections planning that has been around for some years now; it’s just that today we have the ability to use data and technology to super-charge our ability to be MORE relevant than ever before. 

Nick Broomfield is a Director of The Customer Framework.

Would love your comments on this (nick.broomfield@thecustomerframework.com)