Targeting Readiness Study Shows CMOs Missing Their Mark

Publication: Exclusive
Date: June 14, 2012

Ray Velez

Global CTO Razorfish

You wouldn’t dust off the old Selectric if you wanted to write a memo, or use a football-sized mobile phone a la Gordon Gekko to make a call. So why are you using pre-digital methods to segment your consumer base and determine what digital experiences they receive?

Well, maybe you’re not stuck in the past, but too many in the industry are. They’re content to use old models for understanding consumers rather than taking advantage of the massive torrent of data that the digital age has turned on to get better results from digital marketing. When it comes to targeting, there’s a lot of room for companies to get smarter.

In my role as digital agency Razorfish’s global chief technology officer, I’ve been aggressively counseling brands to take advantage of cloud computing and Big Data. But it’s not enough to just collect the data. You have to use it, and too many executives aren’t, as was clear in a recent study from Razorfish and Adobe (’s parent company). Together, we conducted the first-ever Targeting Readiness Study, based on conversations with more than 120 executives in the U.S., including CEOs, CIOs, CTOs, and CMOs.

The survey revealed a big gap between where marketers are and where they should be on targeting. Besides using old segmentation approaches and looking only at the top of the purchase funnel, brands aren’t always sure which digital channels they control, and internal barriers that slow or even stop the development of targeting capabilities are common.

In this article, I’m going to walk you through the issues and provide a schema for understanding where you fall on the targeting spectrum.

Digital Segmentation For A Digital World
Because 49 percent of survey respondents consider themselves strong at targeting experiences to segmented groups of online audiences, we expected to see more businesses demonstrating maturity with their site-side segmentation capabilities. Surprisingly, only 12 percent have implemented the ability to target a recognized segment and measure the results. Less than 50 percent were able to recognize a returning/loyal customer versus a prospect.

When I take a look at a brand’s segmentation approach, I often see something like this: five to 10 personas based on historical sales data and customer profiles. I know the brand is likely capturing an enormous amount of behavioral information from its digital properties—precious information about their activities, habits, and attitudes that aren’t being used. The focus is often customer acquisition, which ignores consumers who are deeper in the customer journey, and on revenue-per-segment, a metric that doesn’t take into account the lifetime value of a customer. (Note, we avoid calling it a “sales funnel” because digital has broken the nice, neat funnel of old. Now customers can and do take diverse journeys to acquisition.)

This yields bad consumer interactions. In the absence of behavioral data that gives you a sense of who they are, consumers aren’t being served personalized experiences that reflect where they are in the customer journey. And where there’s no customization, conversion rates are lower, and your ad dollars are wasted.

Now apply that behavioral data and a whole different world emerges. Microsegments appear and allow for the creation of more tailored experiences that reach customers further down the purchase funnel, in trial, or even at advocacy stages. This isn’t just a nice-to-have; there’s triple-digit ROI growth to be had here.

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