President, Customer Engagement, Commerce
and Marketing Technology, China & Asia
Ogilvy is a creative network,
re-founded to make brands
matter in a complex, noisy,
Consumers expect, and data enables, more personalized brand messaging
Greater relevancy will produce higher conversion rates
Broadcast is dead. Data is ubiquitous, but, ironically, vastly underutilized by marketers in China’s ecosystems. Just as brands and agencies have gotten to grips with the era of precision marketing, so a new, more personal challenge is arising: the ability to use data to know what customers want, and here and how they want it.
In 2018, China generated 7.6 zettabytes of data (a zettabyte is around one trillion gigabytes). By 2025, that amount is expected to grow to 48.6ZB. That’s a lot of zeros and we are not even in a 5G world yet.
But data is only part of the story and when combined with the vast growth of digital, the future either looks like all your birthdays come early, or a dystopian nightmare. Either way, it is happening.
At the 2019 FutureScapes conference in Beijing, global market intelligence firm IDC predicted that 65 percent of China’s GDP will be driven by digital by 2022 and the growth of industry will be powered by digital products, operations, and relationships. Despite the growth of available data, brands and agencies are yet to fully embrace the wave washing over the industry… but times are changing.
Back to the data future
The slight slowdown in the Chinese economy is good for better data use. The constriction should help us all focus our energy on the things that matter: using data to understand who is buying what; where they are; and what they want along with how they want it.
We’ve had numerous conversations with clients over the years about DDM (data-driven marketing). In the distant past, eyes glazed, and the conversation quickly moved on. Recently, with top lines slowing and bottom lines stagnating, finding where to spend their ever-reducing marketing budget has pushed data to the top of the agenda for most CMOs.
Data-driven marketing is not a new phenomenon. Direct mail has used data at its core to locate and understand the best targets and their respective response rates. Even the rigor on which A/B testing direct mail was built is only slowly coming back into marketing fashion.
Direct mail and direct marketing have since then progressed in all markets globally except one: China. With the relative late adoption of the internet in the country, email never really took off as the prevalent form of communication; instead, China leapfrogged into the digital age, and the pursuit of reach over relevance became the norm.
In its simplest form, DDM is about using available data –first-, second-, or third-party data - to deliver a slightly more precisely targeted message to a group of consumers.
DDM is not only helpful when identifying which consumers and when to target them, it’s also immensely valuable in terms of business analysis; which market, which product, which channel, which is most effective, which aspect to optimize and repeat.
After almost two decades since the early days of the digital revolution, the evolution of the DDM craft—from more precisely targeting consumers to actually delivering personalized messages for them—is upon us.
The increase in personalization is likely driven by three key trends:
- // The desire of otherwise overindulged consumers to feel they have been recognized as “special” individuals (and we’re not talking foil embossing your handbag at LVMH). We’re talking about recognition, and perhaps the relevant reward for a purchase or a portion of your time.
- // The rapid improvements in technology to enable individual messages to be delivered in a cost-effective manner, that have finally made personalization at scale a reality.
- // The third, and likely most important trend, is the levelling out of the returns on precision marketing. Alibaba’s AIPL (awareness interest, purchase, loyalty) model, and the equivalent on other platforms, have delivered an increase in efficiency. But as the returns on just better targeting are reaching their practical limits (you can only target to a point where past it you need to be conveying a more personal message), brands are starting to consider increasing the effectiveness of the message and the need to become truly relevant to a particular set of consumers.
Yes, 1:1 marketing is not for every brand or sector, and indeed the ROI for many categories may make the holy grail of 1:1 too time consuming for the return. Many brands can consider an incremental step from mainly broadcast toward a model of 1:few as the right approach.
There is a myriad of marketing innovations that the industry embraces (or dismisses) every few years. But as growth rates slow, consumers demand more from brands, and technology and available data continue to grow exponentially, here to stay are the ability and desire to make data-driven marketing and the short step up to personalized messages that really drive relevancy and conversion.
Brand Building Action Points
- Make data a strategy
Put data at the center of all the brand’s marketing decisions. From sizing the market, to selecting the segments, to locating the points on the customer journey that really matter.
- Collect all available data
Look at the first-party data you have within the organization, from product sales data to customer membership / WeChat / transactional data, and also consider second- and third-party data for understanding newer audiences for penetration and larger macro or sector trends that might bring opportunity.
- Be efficient and effective
Consider measuring your current campaign work in-market to understand if there can be additional returns if there is an increase in the personal content being delivered.
- Embrace technology
There is likely a considerable amount of marketing technology sitting within the organization, probably in the IT department. Keep it simple, start with good analytics that drive business and progress forward. Have a vision that leads toward personalized 1:1 communications if it works for your brand and category.
- Move with agility
Real-time campaigns that are in a constant state of optimization, reflecting frequent data inputs, targeted and personalized to the most valuable customers should be the norm—for all marketeers. They seem to be becoming the norm for the fickle Chinese consumer.