No More Excuses for Crappy Segmentation

Personalization Strategies Are Driving More Effective Ads, leveraging data to deliver a highly relevant ad to the right person at the right time

I watch a lot of hockey.  Which means I have to watch a lot of ads for cars and pickup trucks. Historically, some advertisers throw tons of cash to target demographics watching sporting events. Namely for hockey, TV is a medium with a wide reach that can attract Males 25-39.  

However, surely this is a ridiculously broad category - I’m not in the market for a Chevy, and have seen the ‘Real People’ campaign so much, I can probably recite all the lines (as an aside, these spoofs made me feel a bit better about life)

Digital Advertising provides a platform to get highly specific and cater ads that are specifically relevant to me. But clearly it is easier said than done.

What is Marketing Personalization, Exactly?

Harvard Business Review was talking about One-to-One Marketing way back in 1999.  Here they define it as “being willing and able to change your behavior toward an individual customer based on what the customer tells you and what else you know about that customer.”

Elaborated in the book, The One to One Future, the concept describes managing customers rather than products, differentiating customers not just products, measuring share of customer not share of market, and developing economies of scope rather than economies of scale.  

Insert in Box

Today, companies are far more data rich than 20 years ago. Given that we can collect, organize and derive far more meaning from data, we can now deploy marketing strategies where we leverage data to deliver individualized messages and product offerings specific to our customers’ needs. The popularity of Account Based Marketing is an extension of this thinking.

Instead of broadly lumping in customers into buckets like Male, 25-39, we can create segments that organize based on demographic, contextual, and behavioral data. Instead of making our best guess about classify segments around pretty arbitrary features like gender and age, we can now leverage machine learning to understand trends that perhaps weren’t so obvious.

Growth of Marketing Personalization

Brand owners recognize the potential.  Most marketers worldwide claim to have some level of personalization strategy in place.  

According to a recent Monetate study, almost three-quarters of retailers in North America have listed “Personalization” as their #1 priority for 2017. But many of those brands also indicate it could take up to three years to implement their personalization strategies.

And it seems those who are willing to put in the effort are seeing results.  Linus Gregoriadis, U.K. research director at Econsultancy claimed that ‘Businesses implementing personalized marketing have seen an average increase of 19% in total sales’.  

Daniel Faggella runs CLVboost, a boutique email marketing consultancy in Massachusetts surveyed over 50 machine learning marketing experts and found that while most executives voted “Search” as the AI marketing tool with the highest profit potential today, “Recommendation and Personalization” topped the list for ROI potential in the coming five years.

The More Segments, the Merrier

Lotame, a leading Data Management Platform, argues that coming up with a handful of customer segments is over simplifying things and recommends building up to 100 different segments to experience with.  

"Data management is facilitating an explosion in the extrapolation of the media planning capability. Properly diversifying a data portfolio means evolving from media plans built on a single piece of creative split across five line items, and moving into an environment with hundreds of line items.”

"Those segments cannot only be leveraged for testing and rapid refinement but can also be aligned with hundreds of pieces of creative to get to the true one-to-one communications...”

Segment based on Behaviour

Segmentation can also occur through consistent patterns on how consumers are behaving. Being able to cluster segments based on consumers’ habits, can help advertisers understand which campaigns and activities are driving results across a range of different groupings.   This ideally will lead to more productive campaigns, saving a huge amount of wastage that occurs with overly broad segments.

Large companies are getting into the act too. DMP Rocket Fuel incorporates IBM’s Watson into their predictive marketing platform ‘to better understand the content where ads will land’. This is likely to establish some sort of consumer intent.  This type of information is often referred to as ‘Thick Data’, defined by Teradata as qualitative information that provides insights into the everyday emotional lives of consumers.

In fact, according to Yahoo, the Receptivity of Emotions study, even reaching customers in the right mood could make digital ads 40% more effective.  Understanding when the timing is appropriate to show an ad for a mutual fund as opposed to a bag of chips is incredibly valuable. Especially in the context of B2B sales where approaching someone with a more complex offering is likely to be much more successful when the person is in ‘work-mode’.

Further, leveraging this ‘Big Data’ can really illuminate consumer behaviour and provide insights into why consumers behave in a particular fashion, what preferences they may have, and ultimately identify why certain trends stick.

Challenges with Marketing Personalization

But, as with most marketing technologies, matching the lofty promise with actual results is keeping a lot of executives busy.

The solutions are only as good as the data they’re built off.  Ad fraud has been discussed ad nauseum, but if you have questionable data integrity, you may be reluctant to trust that the trends established in the many segments are not being unduly influenced by bad data.  One hopes that with increased volume, accuracy can be ratcheted up, but easier said than done.

And the industry needs to be sensitive not to inspire a consumer backlash. Personalization done badly can be ineffective in the least, progressing to annoying or worse disturbing.  Lisa Lacy from The Drum put together a great post entitled ‘5 Tips to Personalize Your Marketing (Without Looking Like a Creep)

Making broad sweeping generalizations about people based on a few attributes (whether it be age, race or gender) is usually a pretty terrible idea, but we constantly do it in segmentation. Never say never, but I don't see a Chevy Silverado in my future, despite seeing those ads each commercial break during the hockey game.  Using data properly, and employing personalization strategies that better tailor the right information, to the right person, at the right time can help engage a target audience who is already tired of too many terrible ads.

Stephen Carriere
Choosing the Right Marketing Tech

Sensational headlines make it seem that the journey for marketing executives is full of landmines.  The reality is that choosing the right marketing technology really isn’t so complicated.  Taking a step back and creating a commonsense framework to address new martech investment is something any marketing department should be able to do pretty easily.

In an earlier post, we explored how Marketers are increasingly under pressure to deliver upon the traditional creative or qualitative nature of the domain while being able to adapt to a rapidly changing marketing technology landscape that is more and more data driven and quantitative.

I joked that building a good MarTech stack isn't rocket science (even though a lot of that tech was literally built by rocket scientists). There is a ton of great information out there - I’m a pretty big fan of the work being done at for instance, and recommend checking that out to stay current.

Separating What is Sizzle, What is Steak

The challenge however is the absolute volume of material out there - and particularly tech companies spouting hyperbolic statements to justify developing the latest, shiny new tech that is going to change the world.  (I think this partly from VC pressure that everyone better produce ‘hockey stick’ growth, and the subsequent shake out like we are seeing in the adtech industry, but that’s probably a rant for another day!)

In particular, we’ve seen a lot of buzz around fraud in digital advertising lately, where research suggest that 20-40% of ad spend is lost to fraud, with billions of dollars wasted each year.  Not coincidentally, these alarming reports are often authored by companies selling their ad verification solutions.  
I don’t want to suggest that something like ad fraud isn’t a serious issue that needs to be addressed - it most certainly is - but I’d want to illustrate how challenging it is for Marketers to effectively prioritize their marketing technology investment when they are inundated constantly with research suggesting that their strategies aren’t as effective as they could be, and consequently, there is a good chance they’ll be canned for it.


Measure Likely Impact, Not Lofty Promises

There are certainly good resources out there that identify a simple process to pick the right marketing technologies. Slalom, a ‘purpose driven consulting firm’, has a good article about ‘adapting and becoming more technically savvy, using data and analytics to capture (your) customers’ preferences and create more personalized communication’, and ultimately, choosing the right tech.

They argue not to be seduced by the shiny object and being stuck with a bunch of ‘discrete tech that failed to deliver on the lofty promises’, but to effectively plan around three activities - Explore, Establish, and Enable.  

(Because it seems as an industry we seem incapable of producing a framework that doesn't include  a list and bonus points for any type of alliteration in the title - I am pretty sure I will be given an honourary PhD for designing a framework that includes 7 steps to marketing success that all start with the letter ‘G’).  

Use Some Common Sense

Really, though, employing any common sense process that ranks your internal technical, business and budgetary requirements against the vendors’ solutions probably will do the trick.  Marketo produced a webinar on Finding the Right Marketing Solution which articulates this process pretty well.

With all the sensational headlines it seems scary out there, but it really isn’t so complicated.  Taking a step back and creating a commonsense framework to address new marketing tech investment is something any marketing department should be able to do pretty easily.

How Can Marketers Adapt to a Rapidly Changing Marketing Technology Landscape?


The skill-set required to thrive as a marketer has changed as the set of available tools is expanding every day.  But developing a framework to categorize the tech and then filter by strategic importance and scale of implementation is a common sense way to address it.

One definition of marketing is the act of building profitable customer relationships. For a long time, the way in which marketers interacted with their customers has been relatively consistent. And then things changed, and man, did they change quickly!

Tech is Changing our Concept of What Makes a Good Marketer

The Technology of Marketing, and technology generally, is having a significant impact on the marketer’s relationship with his or her customer, and has suddenly provided executives a hint that we’re closer to finding the Marketing Holy Grail - an accurate view on marketing return on investment.

Expectations on the Marketing Department have increased dramatically. Deloitte Digital did a survey with 89% of respondents agreeing that digitalization has changed the role and content of marketing. CMOs are viewed as being more influential to an organizations success over the past five years.

CMO’s are struggling to deliver

Spencer Stuart's study of 100 top-spending organizations in the U.S. showed average tenure was down to 42 months in 2016, from 44 in 2015. By comparison, CEOs averaged more than seven years with a company.

CMO's and Senior Leadership appreciate the pace of change of digital marketing, but may not be confident that their organization is keeping up. In particular, in Canada, we’re not doing nearly as well as we should.

According to Vanson Bourne, Canada is considered to be a “digital laggard,” ranking 13th out of 16 countries in its “digital transformation index,” a composite of factors measuring what companies are doing to catch up digitally.

Balancing the Qualitative with Quants

The challenge has two major facets -  one inward focused -the skillset required to thrive as a marketer has changed and the other external - the technological playing field where marketers are competing is evolving every day.

Firstly, CMO’s need to change their mindset from being masters of the qualitative aspects of understanding their products and customers to being masters of both the quantitative and qualitative attributes.  

“The CMO of the future is more of a chief digital officer who has a solid understanding of branding rather than a CMO with a sense for digital.” said Ari Aronson from the Ari Agency.

But how are we doing today?  In 2017, at least 30% of CEOs will fire their CMO's for "not mustering the blended skill set they need personally to pull off digital business transformation," according to a recent report from Forrester Research and featured in Ad Age.

BCG shares some uncomfortable truths about our readiness also in a paper entitled ‘The Talent Revolution in Digital Marketing’ where they state: “Marketing organizations are feeling the pressure created by these shifts. And while still important, traditional skills such as creativity and brand building no longer suffice in a digital-first reality. Marketing has become much more of a science requiring technical, data-crunching abilities.“

Secondly, CMO’s need to be dynamic in their learning to match the pace of rapidly evolving landscape for martech. They need to know their Hadoop’s from their ‘DSP’s, and their SEO’s from their PPC’s.

Today, Marketing is now a fundamental driver of IT purchasing. According to Gartner, CMOs will spend more this year on IT than their counterpart CIOs.

Industry Resources Help Chart Out the Industry

While understanding the basics isn't so challenging, keeping pace with all the new stuff consistently is tough.  There has been a number of valuable resources that are very popular in the industry.

Luma Partners produces their Luma Scape series, a fantastic classification of different companies of marketing and advertising technology.  Likewise, Marketing Technology Landscape produced by Scott Brinker from ChiefMartech, is fantastic.

One of the first pieces of research done for Digitopian was to create a clear digital marketing road-map that:

  1. Defines the landscape - Marketing Technologies that should be considered

  2. Provides a framework to prioritize marketing technologies

  3. Contrasts Canadian Financial Institutions (i) to their peers and (ii) best practice from other industries or geographies across the range of significant Digital Marketing Practices.

This has proved to be a challenging endeavour, namely because it deals with a moving target and what is considered ‘best in class’ today isn't necessarily what will be leading tomorrow.

I wanted to determine the fundamental attributes of digital marketing in my benchmark, but without getting bogged down with too much detail. Ultimately, making something specifically for financial services, I was able to organize technologies into 5 major categories and about 40 sub-categories - I’m still working on getting it shorter, but I’m not too optimistic!

To be a good CMO today is a lot more complicated.  But if data and ‘quants’ are kind of scary to you, there is hope.  

Building a good MarTech stack isn't rocket science (even though a lot of that tech was literally built by rocket scientists).  Simply going through and categorizing the available tech by the business pain they address, then coming up with a framework to filter out what is strategically important now and in the future against size of investment is an achievable step, no matter what your comfort level.

Ultimately, as long as CMO’s have the willingness to embrace a career of constant learning, they’ll be fine.  Frankly, these are the core skills that got them there in the first place