I’m often in conversations with clients who see the appeal of developing increasingly targeted activations, including Shopper Marketing efforts. After all, it’s hard to stand opposed to focus and relevance.
At the same time, many clients are concerned with increasing the cost of reaching each household. Some call it “less efficient spending” compared to their traditional approach to managing marketing budgets.
For years, marketing and media departments have told Brand Managers and Merchants that “optimized” marketing plans were those with the lowest CPM (cost per thousand) for reaching a broadly-defined audience with the desired number of contacts (frequency).
This orientation toward measuring efforts (reach and frequency) instead of outcomes (ROI) leads to enormous waste and is responsible for undermining business growth. It presumes that you can’t really tell what impact your marketing dollars are having. If you can’t measure effectiveness, you might as well focus on efficiency and spend as little as possible!
But times have changed. The broad availability of granular shopper data, the proliferation of vehicles for behavior-based targeted marketing, and the growing demand for marketing accountability means that no one should have to guess (or give up) regarding marketing ROI. Overall, these trends favor an increased investment in shopper marketing, with a secondary opportunity to leverage learning from shopper insights to improve traditional consumer marketing.
So, where does the money come from to expand a more targeted and effective approach?
1. Rigorously evaluate the short-term and long-term ROI from current marketing efforts against behavior-based shopper segments, not against average shoppers or proxy segments such as demographics.
2. Stop doing what isn’t working, which usually includes marketing to the wrong shoppers or marketing to the right shoppers with the wrong proposition. Having the courage to act on the data and stop wasteful spending is the primary source of funds for reinvestment.
3. Dramatically reduce reach as you shift to targeted approaches by investing in the shoppers who matter most. This reduces marketing costs and sharpens organizational focus.
4. Leverage the tighter focus to be more relevant to your best shoppers on a segment and individualized basis, driving uplift, reducing churn, and growing brand value.
5. Adopt an aggressive test-and-learn approach to improving ROI. Routinely test content, offers, creative, frequency, and other variables.
6. Do more of what works over time. The journey never ends, but it does become increasingly profitable!
About the Author
Matt Nitzberg is Executive Vice President, Manufacturer Practice at dunnhumbyUSA.
In this role, Matt leads dunnhumby’s strategy and client relationships with brand owners in emerging channels and directs global strategy among dunnhumby’s consumer packaged goods business. Prior to his current role, Matt served as Global Vice President, dunnhumby ltd. in which he established and led dunnhumbyUSA’s Manufacturer Practice.
Before joining dunnhumby, Nitzberg held marketing roles of increasing responsibility at Procter & Gamble and Borden Foods. Nitzberg also held a variety of senior roles at Information Resources including the leadership of IRI’s National Accounts client group.