A Forrester Consulting

Thought Leadership Paper

Commissioned By MediaMath

July 2014

Advancing Practices In

Real-Time Marketing A Status Report On Progress Toward

A New Marketing Paradigm

Table Of Contents

Executive Summary ........................................................................................... 1

Marketers Envision A Real-Time, One-To-One Future .................................. 2

Moving From Vision To Execution Is Challenging ........................................ 3

Evolve To A New Marketing Approach ............................................................ 6

Key Recommendations ..................................................................................... 8

Appendix A: Methodology ................................................................................ 9

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1

Executive Summary

In March 2014, MediaMath commissioned Forrester

Consulting to evaluate marketers progress toward

delivering more targeted, relevant communications and the

challenges they face on this journey.

In conducting in-depth interviews with 18 senior marketers

in North America, Europe, and Asia Pacific in the retail,

financial services, and consumer packaged goods

industries, Forrester found that organizations are ready for a

world where personalized one-to-one interactions close to

real time are available.

KEY FINDINGS

Forresters study yielded three key findings:

Marketers are taking demonstrable, concrete actions to enable one-to-one marketing. Companies we spoke

with articulated a vision of marketing that is more relevant

to customers and adapts as additional insights into their

needs are revealed by each interaction. But we saw this is

more than a future vision, as these companies described

investments in data collection, insight development, and

campaign activation to advance toward this future state

over the next one to three years.

More advanced marketers are being more customer-centric. Having better customer knowledge enables

delivery of more relevant products, offers, and messages.

But the most sophisticated marketers we spoke to are

moving beyond a transactional mindset and think about

how to also enhance the customer relationship. They mix

in brand and customer service messages that dont lead

to immediate sales, but build longer-term loyalty that will

enhance customer lifetime value.

Data and the ability to change campaigns mid-flight enable a test-and-learn approach. Beyond having better

insight into customers needs to match the right message

and offer, marketers increasingly let live, in-market results

guide the directions campaigns take. While they use the

best available data and their best insights about their

business, they recognize that their decision may not be

correct. With systems that report customer responses on

a frequent (often daily) basis, and digital channels where

changing messages and offers is relatively low cost,

marketers consider their initial campaign plans as only

hypotheses, planning to read results and make changes

quickly as early results reveal what delivers the desired

business impacts. Companies described investments in data

collection, insight development, and campaign

activation to advance toward a new vision of

marketing over the next one to three years.

2

Marketers Envision A Real-Time, One-To-One Future

Consumers increasing engagement with myriad digital

devices and channels makes it harder to design the right

media mix and create the possibility of connecting with

consumers at each stage along their purchase journey.

Marketers envision delivering marketing messages that

synch with each consumers needs at each specific point

and are informed by knowledge of the individual from prior

interactions. In the Forrester Research Business

Technographics Global Data and Analytics Survey, 2014,

improving customer interaction and satisfaction was cited as

the second most important driver behind analytics initiatives

(see Figure 1).

FIGURE 1

Firms See Analytics As Key To Improving Customer Interactions

Base: 268 global data and analytics technology decision-makers and users

Source: Forresters Business Technographics Global Data and Analytics

Survey, 2014

Is this idea of delivering relevant, tailored experiences just a

far-off vision, or are marketers taking concrete steps to

make this vision real?

Our interviews confirmed that this vision is much on

marketers minds, as they described providing customers a

more consistent, personalized, and relevant experience

informed by a unified cross-channel view of the customers

relationship with the firm and its products. This vision is

beginning to take shape as firms take concrete actions to

collect the data, build the systems, and create the

processes to support this new approach. Several themes

emerged in our discussions:

Marketers make real progress on building one-to-one relationships. Many of the companies we interviewed

described not only a vision of real-time, one-to-one

marketing, but also detailed existing programs and areas

in which they have implemented it today, mainly in digital

marketing, website, and customer service interactions.

Others, such as a North American retailer we interviewed,

are completing foundational projects that will give them

the more complete view of the customer: We are in the

middle of a project to migrate from disparate customer

relationship management (CRM) databases to a central

repository of all our customer touchpoints. We will be in-

market by the holidays to test new marketing

approaches.

But there is a spectrum, not a single end point. Several companies described how they progressed from

mass marketing all the way to highly personalized, one-to-

one marketing as they became more sophisticated. The

degree of customization hinged on both the economics of

their business and the capabilities of their systems. The

North American retailer quoted above went on to say, I

can see having hundreds, even thousands, of segments,

and get smarter about which drive the most value, then

market to each differently according to their value.

Financial services lead the way. With multiple products, frequent contact with consumers in diverse channels, and

potential for high lifetime value, financial services firms

are furthest along. A European firm described its systems

functionality this way: Every night we rank 250 messages

and offers for each of our customers based on propensity

models. Then, if a customer has an inbound contact, he

receives a personalized offer. That night, we take the

results, refine the models, and re-rank the messages and

offers.

Retail shows mixed progress. Retailers in different categories face different challenges that determine their

ability to execute one-to-one. A European retailer

described a tactical application of using real-time data to

clear overstocked inventory, while a North American

retailer spoke of its desire to use data to duplicate the

personal recommendations its store associates provide to

shoppers.

Consumer packaged goods (CPG) has a different vision. CPG marketers understand the concept and

believe it is the future, but struggle to understand how to

apply it to their products. These brands have less direct

contact with consumers, so they see less ability to

What are the most important goals/drivers yourorganization considers when planning or

orchestrating your business intelligence strategy?

Improve data qualityand consistency

34%

Monitor, improve, and optimizeprocess performance

38%

Improve customer interactionand satsifaction

42%

Make better-informedbusiness decisions

51%

3

personalize ads and offers. But they are actively exploring

collaborations with grocery retailers, seeing the potential

to tap the grocers loyalty program data for joint marketing

programs delivering relevant messages via mobile

devices.

On one end, there is mass marketing,

and at the other end of the extreme is

one-to-one marketing. I think we can

all agree that we want to move closer

to one-to-one but how far within

that range do you go down?

Financial services marketer, North America

Moving From Vision To Execution Is Challenging

While marketers see the potential of more personalized,

relevant messages and are beginning to move toward it,

they told us of many challenges and barriers. They

described issues with collecting a comprehensive data set,

extracting insights, activating those insights to achieve

marketing goals, and changing the skills, processes, and

organizational structures to enable their future vision.

DATA IS THE FOUNDATION

Business leaders have told Forrester Research that the

quality of data is more important than the quantity, and they

lack full confidence in their data quality (see Figure 2).

Interviewees widely agreed that data is the foundation of a

real-time, one-to-one approach. While some encounter

issues with data quality, the bigger issues are around

connecting disparate online and offline sources, extracting

insights, and connecting the data to systems that activate it

in the marketplace. Specifically, business leaders described

challenges with:

FIGURE 2

Data Is The Foundation, But It Must Be Strengthened

Base: 775 global data and analytics technology users

Source: Forresters Business Technographics Global Data and Analytics Survey, 2014

Bridging silos. In the interviews, firms acknowledged they already have a lot of data, but often it sits in different

databases, different business units, or both. Bringing this

data together into a single repository is the first challenge

many firms face. An Asian retailer noted, For each of our

divisions, registration for the eCommerce site is a

Data quality more than data volume is the mostimportant feature that makes data valuable

for analytics innovation.

How much do you trust in the data quality andresults analysis of your organization'sbusiness intelligence applications?

Agree/strongly agree69%

Disagree/strongly disagree7%

Neither agree nordisagree

24%

Trust completely31%

Have little trust7%

Don't have any trust1%

Trust somewhat61%

4

separate customer name and address than the loyalty

program. I can quickly count six different databases

across our company.

Connecting data. Even putting all the data in a single, centralized database still leaves the challenge of

matching the different sources and types of data to a

single individual. Matching online and offline sources is

particularly difficult, as a North American financial

services marketer explained: When you are trying to

overlay demographic data on top of cookies, at best you

get a 30% to 40% match rate.

Knowing what data is meaningful. With the large volumes of data being generated, our interviewees

struggle to find the critical data that will lead to valuable

insights. We heard two contrasting approaches: capture

everything, then apply analytics to uncover the insights

versus being more selective about what data is kept and

what is ignored. Companies with more sophisticated

marketing analytics functions were more willing to collect

a broad data set, confident that they could extract

actionable insights. The head of marketing analytics for a

European financial services firm told us: We have a data

lake to bring all the data across the enterprise together.

Then we have the analytics tools and approach. This

gives us the means to explore new insights.

Unlocking social datas value. The interview subjects face a dilemma with the information from social networks:

On the one hand, the depth and personal nature of the

information is extremely rich, but on the other hand, both

the volume and format of the data make it difficult to work

with. An Asian financial services marketer told us: The

appetite to integrate social media into marketing

communication is there. We have been challenged with

how we add value and derive a relevant conversation.

Finding new kinds of data. In order to serve individual customers in a highly customized fashion, firms look for

new kinds of data to build services around. An Asian

retailer told us: We now capture vehicle identification

numbers (VINs) because, for example, the same year and

model car may use one of four different fuel pumps. The

VIN tells you which is right for that specific car. Linking

this data in-store and on our website, weve brought our

return rate down from 20% to 1%, but more importantly,

the customer gets the right part the first time.

For every customer, we have every

product and every transaction

monetary and nonmonetary going

back 10 years. That gives us a great

deal of understanding of what the

customer is doing, what is his value,

and how he is interacting with our

channels.

Asian financial services marketer

ACTIVATION REQUIRES A BALANCE OF

TECHNOLOGY AND PLANNING

Collecting, organizing, and extracting insights from data is

just the first step. The next challenging step is connecting

the data to systems and strategies that will use it to create

business value. Companies told us that building the right

technology base is important, but alone it isnt enough.

Real-time presentation of relevant offers requires a different

way of planning message creation, including:

Connecting insights to customer-facing systems. Marketers today are focused on delivering customized

experience through digital touchpoints, customer service

contacts, and stores. Legacy technology systems often

separate databases from delivery systems like CRM and

email services. Moving the data and insights from one to

the other hampers marketers ability to execute their

customization strategies. An Asian retailer told us: We

use Oracle SQL Developer to pull campaign lists, then

use Responsys to deliver email communication. It is quite

cumbersome and we are piloting redevelopment of that

whole platform.

Planning for real time. Marketers told us about a hybrid approach that can be used to help these systems function

effectively. In this approach, planning is still a critical

element to create a range of potential offers, but the

actual decision of which specific message or offers to

present happens in the moment of interaction. An Asian

financial services marketers explained it this way: You do

planning at a segment level, and when someone in a

particular segment comes in, you have a shelf of offers

5

available. Then, based on the individual nature of the

interaction, one particular offer is presented.

Using ever smaller segments. Interviewees said that, practically speaking, true one-to-one marketing may not

be feasible today, but they have found segmenting

customers into smaller groups moves them closer to that

ideal. Several firms told us how their data fuels models

that create an increasing number of segments, each with

fewer customers. These smaller groups act similarly

enough to achieve the desired boost. An Asian financial

services provider explained: A lot of the activity is going

to be based more on segments. They might be quite

refined segments but theyll still be bigger than one.

Diversifying offers and messages. These different segments by their nature have different needs, which in

turn require different offers and messages. So, as the

number of segments increases, the volume of potential

messages increases proportionally. A European financial

services marketer told us: We currently have 250

messages and offers, up from 91 at the end of last year.

We will have 350 by years end. It is self-increasing

because product managers must have a very good offer

that is ranked highly.

Incorporating brand and service messages. Much of the thought about real-time messages revolves around

presenting a product and value proposition that spurs an

immediate sale. The more advanced companies we

spoke to realize, though, that customers arent always in-

market and that messages about other aspects of the

relationship have an important place as well. Not all our

club communication is about loyalty. If you get stuck on

that you miss the wider opportunity. Our highest click-

through ever was not a product and price message; it was

a how-to guide on using a particular product, An Asian

retailer told us.

Applying data in acquisition and branding. Marketers have the most data and the greatest potential for real-

time, one-to-one communications with existing customers

interacting in their owned channels. But that doesnt mean

upsell, loyalty, and retention are the only areas where this

kind of application of data has value. In fact, a North

American financial services marketer sees data as the

key to differentiation in acquiring customers: When I think

about how we can win, its not reaching the consumer

when hes already far into the purchase process. Its

figuring out how you can reach him right before he is

about to start thinking about a purchase. If I knew

someones probability of getting married, for example, that

might impact my marketing decisions.

Protecting the customer relationship. Privacy is an increasing concern as data volumes increase, because

the kinds of data collected become more sensitive, and

connecting different sources can make some consumers

feel uncomfortable. Most companies are aware of the

potential damage this could bring to customer

relationships and consciously try to minimize this risk, as

this European retailer described: You cannot afford to

damage the customer relationship through

communication. We have to make sure we have

permission to talk to them, we give them opportunities to

opt out, [and] we have the hygiene factor right so we have

good data that is properly managed.

We display a personalized offer and

capture how the customer reacts.

Then we use this feedback to fuel

ranking the offers for the next day.

Right now we run about 400 million

calculations each night.

European financial services marketer

CHANGE MANAGEMENT IS AN ESSENTIAL ACTIVITY

Data, technology, and messages are important elements of

a real-time, one-to-one strategy. But many of the firms we

interviewed emphasized that without changes to

organizational structures, processes, and mindsets, results

will fall far short of their full potential. Four themes emerged

from our interviews with business leaders:

Senior management must be on board. As with any significant new initiative, leadership from the top is critical

as a signal to the organization that change is not optional.

One way to gain this support is to ensure executives

experience new technology. The analytics director for an

Asian retailer described his approach: The managing

director was on board from day one. Then we got the rest

of the leadership team iPhones, and it really opened them

up to the world of the smartphone. One had this revelation

and came in one day and said, I bought a car on my

6

iPhone. They really saw how the world is changing and

that helped get us on this journey.

Shifting marketings mindset from instinct to data. Marketing is accustomed to applying significant amounts

of judgment, experience, and instinct to its strategies and

tactics. With increasingly accurate data, sometimes those

instincts are correct, but often they are proven wrong.

Several of our interviewees told us that effecting this

mindset shift requires even greater care and effort than

building the technology, including a North American retail

firm that confided, Our merchandisers believe in the art

of it. It will take time to build credibility. Data and

technology you can throw money at and fix. You cant

throw money at fixing culture.

Customer centricity is at odds with organizational structure. At the heart of real-time, one-to-one marketing

is a philosophy that makes customer needs paramount,

trumping corporate strategies and priorities historically

built around specific products or business units. Several

firms we spoke to noted how large a shift this will require,

including this Asian financial services firm: The product

areas pretty much drive the agenda, and therefore most

of the conversations with customers are product-centric. It

is an extremely huge mind shift going to a customer-

centric world. Id say it is a two- or three-year journey, but

it is exactly where we want to be.

Accepting experiments and risk. For the decades of the mass marketing era, marketing had proven frameworks

and rules of thumb that delivered predictable results.

Firms employed them in order to limit downside risk, and

new employees were indoctrinated in them. As those

guidelines lose effectiveness in the face of technological

and consumer change, firms must be willing to let go of

them and adopt a test-and-learn attitude. Organizations

now need to have the openness and the willingness to

experiment, stated a North American consumer

packaged goods marketer. Companies that dedicate

themselves to learning will inevitably make mistakes but

will have an advantage over competitors.

Technology is not really a barrier,

and if its a barrier today, it wont be

in six months. The biggest challenge is

how you equip an organization with

the skills, knowledge, tools, and

confidence to move forward.

Consumer packaged goods marketer with global

responsibility

Evolve To A New Marketing Approach

Our interviews clearly indicate that the shift to real-time,

one-to-one marketing is no longer a far-off vision but is

underway broadly across industries and different areas of

the world. This change requires more of marketers and their

firms than simply learning a few new technologies; it

demands reframing the role of marketing and redesigning

the processes that support it. The companies we spoke to

for this report represent a range of firms at different stages

in this evolution, but their experience reveals a common

sequence of steps marketers can anticipate as their

organizations navigate this journey:

Invest in data quality. While it is tempting to try to operate in the one-to-one world as fast as possible, the

right foundation must be built to support it. Almost all of

our interviewees described a period of discovering,

cleaning, and consolidating customer data as an essential

early step in this process. An Asian retailer told us: We

have about 24 disparate customer databases that we are

currently pulling together. Assuming we get adequate

funding, it will probably come to fruition in three to four

years.

Build a data-centric culture. Individuals and companies have been successful in the past relying on experience

and instinct, and it is human nature to stick with the tried

and true. Proving that data-driven decisions are more

successful and that the ability to deliver individually

tailored offers and messages deliver higher returns

requires a more robust approach. Realize that some staff

will feel uncomfortable with this change, and work hard to

win them over. Bring them into the data and analytics

7

process and show them their knowledge is valuable in

making the models more accurate. An Asian retailer

noted: Our buyers still bring a lot of value to source the

right products. But they need to let go of some areas and

use data to strengthen their decisions.

Keep consumer privacy concerns in mind. While you gather increasing amounts of data and use it to inform

new ways to market, dont overlook the people whom the

data represents and their sensitivities. The power of that

data can alienate customers if companies go too far. A

North American retailer takes this cautious approach:

Were combining direct mail and online customer data

and starting to get bigger and better insights about our

customers. The outlier is our rewards database, which is

driven by our credit offerings out of our internal bank. We

keep this data at arms length because we want to be in

the top decile of retailers when it comes to privacy.

Manage change with a hybrid organizational structure. Product-centric organizational structures wont

disappear overnight, and firms must carefully manage the

transition to customer-centric structures. An Asian

financial services company described how it is overlaying

customer-centric thinking on existing structures with an

eye toward completing the shift as customer-centric

capabilities mature: I am building the data, technology,

and front-end systems for customer one-to-one

marketing, and we will test those in parallel with our

product marketing until we define customer-centric

processes and team instructions.

Use these capabilities for a more flexible campaign approach. Marketers typically plan for a years activity,

then spend the year executing the plan. The more

advanced firms we talk to consider these plans only a

starting point, and their process allows for an early read of

results and optimization based on these results. A

European financial services marketer described his firms

system in which propensity models make offers and

message decisions. New offers and messages are added

on a daily basis, exposed to customers, and their

response is used nightly to refine the propensity models.

The following day, an individual message will get more or

fewer exposures based on the previous days results.

8

Key Recommendations

This report reveals marketers are in the early stages of building the kind of targeted, personalized marketing they see

as the future.

Having a plan for how you will use your big data. There is little dispute that more data is better, but without a plan for what to do once you have amassed all that data, you could end up in the situation a North American

financial services marketer said he hears often from peers at other companies: We just spent a lot of money on

hardware because we know well need it eventually. But for what, I dont know. A European retailer advised

considering the flexibility of the system: What becomes very expensive is change. If you buy into a system or

infrastructure that is very hard to move away from, it gets complex. Its committing to business process and

business activity that is where the risk comes in.

Supporting your strategy with the right technology. Interviewees consistently told us about three critical technology elements needed to operate in a real-time world: 1) systems to capture and centralize data; 2) tools to

turn raw data into insights about customer needs and preferences; and 3) cross-channel tools to use these

insights to present relevant products and offers. Companies need to start now to plan for a multiyear

implementation. As a North American retailer told us, On a scale of 5 being fully implemented, it will take us two

years to get to level 3, then another couple of years to get to the next level.

Making test and learn a key part of your strategy. Our interviewees told us that with the right data and technology, they were able to track results more quickly and optimize their marketing based on those results. This

changes the nature of planning to focus more on defining the segments of customers you talk to and

understanding their needs, but not deciding each offer in each campaign. A European financial services firm

explained: We have extensive customer research to ask them what they think and what they like. But in the end

it is what they do that matters most.

Knowing that driving transactions is important, but not the sole application of one-to-one marketing. Next best action is the watchword for many one-to-one marketing campaigns, but having a constant barrage of

offers risks alienating customers. We heard from several of our companies whose strategy deliberately mixes

sales offers with service, branding, and informational content. An Asian retailer stated: The trick is all this has to

be a value exchange. I will give you permission to have my data if there is something in it for me. We trade off

where we see a benefit for ourselves.

Hiring translators to create a stronger connection between analytics and business challenges. Traditional marketers arent conversant with analytics, and an Asian financial services analytics director noted

that a lot of analytics requests he initially got from business groups in his firm were quite shallow. His remedy:

Create a team of relationship managers on his team who have in-depth knowledge of analytic capabilities but sit

in a business unit. By working day to day with the business unit and understanding their challenges, metrics, and

direction, they translate from the business problem to the analytics guys who will do the work. Until a new

generation of marketers has been raised with analytics as a core skill, these translators will be critical to unlocking

value in data.

Democratizing analytics and data access. Today, analytics skills are a rare commodity, and most of the firms we spoke to use the center of excellence model to build a team of highly skilled specialists. The disadvantage is

that, in a market that is moving as rapidly as todays, this separation increases time-to-value and may miss

opportunities. The most advanced firms are already planning for a day when access to the models, tools, and

dashboards will be more widely distributed and the front-line managers will use them in day-to-day decisions.

9

Appendix A: Methodology

In this study, Forrester interviewed 18 organizations in a variety of industries in North America, Europe, and Asia Pacific to

evaluate the value and complexity of real-time, one-to-one marketing. Survey participants included decision-makers in

marketing who lead digital marketing or marketing analysis teams or projects. Questions provided to the participants asked

about the state of current data and marketing efforts and what their future plans and considerations might be. The study

began in March 2014.