Innovative marketing thinking shows results

FMCG marketing is hard isn’t it? As brands you don’t even aim your marketing to the people who buy your products from you – you’re doing the work you might argue you want the retailer to do. In addition, you’re also competing with retailers’ aspirations to become brand owners themselves, with Tesco recently launching its own non-Tesco branded ice cream and pet food.

The indirect path to sales means that traditionally it has been difficult to gauge the success of marketing activity. Because you spend three hundred thousand on a television commercial and your sales are three million, it would be useful to think your ROI was ten to one. But there are so many other factors (and costs) - PoS, real estate, press, sales promotion and so on. Attribution is nigh-on impossible.

In the age of digital, it has been frustrating that Brand Consideration, the old advertising-oriented KPI, has remained the principal yardstick for marketers. Why so disappointing?

Digital provides the ability to track everything in a communication journey - or to be more accurate, it provides the means to track every movement a consumer makes online. So we can see when they clicked on a listing in Google, visited the brand website, opted in to emails, opened, clicked and selected a voucher, redeemed it... it’s what in the finance industry is called “straight-through processing”. It means you can keep custody of a customer all the way through their journey along your online marketing process. In marketing terms this is pure eCRM.

Now, if you’re a retailer the end of this journey is a sale. You can then say with utter confidence “I put in £1, and £26 came out. People with kids are highly responsive, 19 year-olds are a waste of marketing money, so let’s stop spending money acquiring them.” But if you’re an FMCG brand and the grocer is your customer and consumers theirs, to get attribution you need to exercise a bit of creative thinking.

First you need a benchmark. You need a database of your consumers, you don’t need many, ten thousand is plenty. And you need to have some real general population sales data, segmented into meaningful customer groups. You can buy this from Nectar or Dunnhumby. You then need to segment your own customer data exactly the same way so it’s comparable. On day one you look at purchase behaviour in your base versus that in the same segment in the general population. Run your eCRM marketing campaign. Then ask the same people about their behaviour. If the behaviour in your base has changed and that of the population hasn’t, then you have effectively isolated the results of your marketing activity - you actually know what effect you have made on sales.

We’ve successfully done this for a number of major brands. If you could increase footfall by 11% or purchase frequency by 3% imagine how much extra revenue you would be generating. FMCG marketing may be indirect, but with a little creative thinking it sure can be lucrative.

Social media value attribution

Everybody’s talking about how social media is the new big thing. Yesterday it was the next big thing. According to Facebook, the next big thing is, well, unknown so who knows what tomorrow will bring. So we have a marketing world set alight by the potential of social media, queuing up to use it, setting up plans to get into social media. But there’s no real rationale. It’s being done because it looks like it is important. People live there, so our world has changed. But as for value - well, who knows? KPIs all seem to surround the number of fans and Likes, sentiment (no matter how vague this is) and hope. Accountability - attribution - is the elephant in the room.

I’ve grown up with digital. In 1994 I set up a digital agency, building communities around websites for brands like Snickers and Hewlett-Packard. We added channels as we went along - search engines, ads, interactive television and mobile. Around ten years ago we had become part of the world’s fourth biggest advertising network, and the digital world looked full of colour, sexy as hell, with big brands piling in to spend money on visitors, eyeballs and sales. Having sold out, we next built an agency around something brand new in the world of digital marketing: accountability. We wanted to prove that digital could have tangible, measurable and commercial value. So we got into eCRM big time.

Working with brands like Virgin, NSPCC and News International we started creating digitally-delivered campaigns built around individual customers. What we learned about them and from them we used to better engage them. We used insights derived from demography and behaviour to inform targeting strategies that delivered relevant content when it was most likely to work. We used segmentation principles originated by the direct mail companies and facilitated by the cheapest of media, email, to improve response rates and sales revenues. We used Recency, Frequency and Value to benchmark customer segments, applied campaigns bespoked to each segment’s needs, and measured the changes. We gave marketers what they wanted: proof that what they were doing produced specific financial returns.

Today this is what we do, still. Sure, the channels have changed. We now use mobile, SMS and email, but we also use websites. What was once called personalisation has been adapted; for McCain Foods we extended the eCRM strategy from email onto its site, so that visitors see content based on which segment they belong to and where they are in a planned nudge-based customer journey. We track individuals through their entire web experience, bringing behavioural data back into the eCRM programme so we can attribute the contribution their experience makes towards changes in their value. Taking an example, we know that by increasing engagement through the programme, one specific segment has increased its average purchase frequency by 3% a year - leading to an increase in sales of around £1million.

This level of attribution means a client can justify spending part of its valuable marketing budget on this eCRM activity. If the incremental revenue a programme generates, and in particular the incremental margin it generates, is greater than the cost of generating it, then it’s a no-brainer. Likewise, one would think that if you could prove that the incremental margin was less than the cost of generating it, you’d close down the programme very quickly indeed.

And yet, social media defies this superbly clean logic. Because you cannot cast attribution, because you can’t tell whether it’s a positive or negative ROI, the hope that it’s the next big thing and it will be worth it seems to justify investment in it. Where’s the return? I read a statistic the other day that some Facebook campaign had generated an ROI of 4:1 (actually, they said “400%!!”). I’d love to know what that means... at a guess, this company isn’t making 25% margin, and unless it’s making 25% plus, that “ROI” is actually a loss.

So this is where we found ourselves, running fantastic, highly auditable campaigns, leveraging customer data for all its worth, using email, mobile and the web, when this groundswell of social media marketing buzz started preoccupying marketing minds. So Underwired has developed a tool that allows us to make some connections. It allows us to create specific calls to action to customer segments, and watch precisely what they do in response.

By creating this tool we’ve finally addressed the elephant in the room. We’ve added the ability to score individuals according to what social actions they take in response to our engagement programmes. It means we can add an advocacy dimension to our demographic, behavioural and motivation-based segmentation, and this means we can identify people who have value to us as recruiters and word-spreaders. We can even attribute new customers to an individual’s referrals, which gives us real power to tap into social behaviour and account for the results. This is the new big thing.