5 Data Points every Advertiser should look at...
Profitable consumer relationships come from consolidating first-, second-, and third-party data into a single management platform, then acting on it. Segment audiences, build look-alikes to expand reach, and track data cost as a share of impression cost so weak providers get culled. Each campaign feeds the next, and intuition guides rather than decides.
In English, please
Most companies already hold a lot of information about their customers, but it sits scattered across the organisation in separate systems that do not share what they know. A data management platform, usually shortened to DMP, is a single place to pool it: what people do online, who they are demographically, and what the company knows about them offline. The claim here is that this consolidated hub has more potential than siloed systems such as a customer relationship management system. Once everything sits in one place, you can ask questions like these: who are the company's most valuable customers, and how do they behave in both the digital and physical worlds?
The pooled information comes in three kinds. First-party data is what the advertiser collected itself. Second-party data comes from publishers. Third-party data is bought in from outside providers. In-house information matters, but its value increases sharply once third-party data is mixed in. Your own records highlight which audiences are valuable; bought-in data is then laid over the top to show attributes, behaviour and what people consume, along with factors like economics, family position and stage of life. Publisher data shows where visitors engaged or converted. Blending the three is meant to produce a fuller view of who the customer actually is.
Look-alike modelling means finding new people who share attributes with the customers an advertiser already has. The platform takes what it knows about existing customers, uses bought-in third-party data to find people who resemble them, and keeps adding compatible segments until the audience is large enough to run a campaign against. It works best, the essay says, when the platform has a large digital footprint: a platform that has already loaded more third-party data providers will uncover more look-alikes, which gives the marketer better and more profitable options when it comes to buying media.
Data is a cost, not a free input, so measuring it is part of the job. After a look-alike campaign, the platform can report what the data cost as a percentage of the cost per impression — what it costs to show the ad once — which shows which outside providers drove the most value. Providers that did not perform can then be culled from the next campaign. The platform should also report return on investment for the campaign as a whole and for each smaller segment inside it, because the results can surprise you: a provider can deliver a lot of impressions and still return very little.
Grouping customers into segments is meant to lift performance by delivering tailored, consistent messages across every channel. Each campaign, online or offline, then adds to a running data story that carries instructions into the next effort — under-performing messages and audiences included, since those provide guidance too. A more accurate read on the audience should improve campaigns across the board, television and print included. The honest limit sits in the closing line: marketing intuition will never be obsolete. The data may confirm what you already suspected, or it may be surprising and send you in a different direction. Either way, the platform guides strategies and actions rather than replacing the marketer's judgement.
Over the past decade, digital advertising has matured from an imprecise practice of* ‘seeing what works’* to a highly targeted system of matching the right audience with the right ad.
Below are five tips for using data to build more profitable consumer relationships:
1. A data management platform (DMP) offers greater potential than siloed systems like CRM to understanding the consumer information that already exists across the organisation. As it is consolidated into one place it is important to make sense of it and gain new confidence in marketing decisions. DMP can combine online behavioral data, socio-demographic data with offline data to create a single, centralized hub of consumer intelligence. With all offline and online data in one place, questions such as the following can be asked: who are the company’s most valuable consumers, and how do they behave in both the digital and physical worlds?
With a DMP, instant access to actionable feedback provides a solid basis for testing new strategies and new tactics. The data may paint a picture that confirms intuition; empowering marketers to make further refinements. Or the data may be surprising, leading marketers to take a different course of action. Either way, they know that their insights are based on facts, resulting in new marketing confidence and more decisive action.
2. Third party data can be blended with first party in-house and second party publisher data to provide a complete picture of an advertiser’s consumers, answering a wide range of questions about audience attributes and behaviors. In-house information is important, but its value increases dramatically when mixed with audience data from third party providers. With a data management platform, first party data helps to highlight valuable audiences, then third party data can be overlaid to develop an understanding of attributes, behaviors, and content consumption. For example, a DMP can show, from second party data, where visitors engaged or converted, and from third party data helps to illustrate factors such as economics, family position and stage of life.
3. Smart audience segmentation can help to improve marketing performance. Consumer relationships can be enhanced by delivering tailored, consistent messages across all channels.
4. Look-alike modelling is a method of finding audiences who share attributes with an advertiser’s existing consumers or other desired audiences. Understanding of audience segmentation can pave the way for expanding marketing reach. Marketers can use look-a-like modelling, a data management platform to employ third party data to discover audiences with similar attributes as existing consumers, enabling an advertiser to expand its reach effectively. As a DMP finds more compatible segments, the marketer ends up with an audience sizable enough to execute against in digital marketing efforts. Look-a-like modelling works best if the DMP has a large ‘digital footprint’. A platform that has pre-populated more third party data providers will uncover more lookalikes, giving the marketer better, more profitable options when it comes to purchasing media.
When an advertiser executes a look-a-like campaign, where they find new audiences that fit the profile of good consumers, the data management platform can report the data cost as a percentage of cost per impression, enabling the advertiser to see which third party data providers are driving the most value. They can then optimize their next campaign by culling out the data providers that did not perform well. The DMP should show the return on investment (ROI) of the whole campaign, as well as the ROI of each of the smaller segments in the campaign. Some surprising results may occur, like a data provider that yielded a lot of impressions but a low ROI. This information can be used to create better performing audiences for the next campaign.
5. Data-driven actions deliver fact-based insights. At the same time, marketers want to keep an eye on data costs to make sure they’re seeing the results required. When using data to build better consumer relationships, the opportunities for insight are significant. As marketing campaigns are executed, across both online and offline channels, the results can be added to the data ‘story’. Each campaign adds substance to the story and instructions for the next effort, creating an upward spiral of better and better performance. Of course, even under-performing messages or audiences can provide guidance for future
campaigns.
In summary, a more accurate understanding of audience can drive improvements across all campaigns—including TV and print. While marketing intuition will never be obsolete, marketers can also rely on a modern marketing platform to guide strategies and actions.
Reference: IAB Europe Road to Programmatic White Paper July 2015