Modern marketing is all about building data-based profiles of consumers in order to accurately target them. But not all data sets are created equal. Rakuten Marketing’s APAC director of strategy and marketing Samantha Deavin, explains the importance of clean data when targeting consumers.
Just stop and think for a minute about how accurate the ads you’re served with are. Occasionally, as if by magic, you’ll spot an ad spruiking something you were speaking about or searching for only minutes earlier.
Then at other times the exact opposite applies. For instance, a friend of mine was recently left shaking her head after being served a banner ad for maternity wear and baby products, despite not being pregnant or looking to have children in the near future.
This scenario is a prime example of what happens when data insights and user profiles are inaccurate for their intended audience. And there are consequences beyond raised eyebrows from the recipient of the ad.
Poor quality data is costing businesses dearly today. That’s certainly the finding from Gartner’s Data Quality Market survey, which suggests that an average of $15 million is lost by organisations that lack or cannot access high-quality data.
One of the major reasons businesses achieve sub-optimal results comes down to where they source their data.
Over the last decade a popular business model – and one that has certainly had a degree of success – has been the harvesting of large quantities of third-party data by adtech companies.
This is mostly done via seeding web browsers with cookies to track users online habits and affinities.
There are two problems with a heavy reliance on third-party data that I can see. Firstly, privacy regulations that demand more transparency in how data is collected, and recent tracking prevention initiatives across browsers are making third-party sets harder to come by.
In line with these changes, consumers expect relevant, contextual advertising – the sort that doesn’t leave them scratching their heads.
Secondly, businesses need clean, first-party data to mitigate the drawbacks of third-party data.
Simply speaking, to gain the clearest marketing insights you need to turn your attention to the point of sale. You certainly won’t get a better read on a consumer’s interest in a product than by ascertaining whether they’ve bought it or something similar before.
That’s the ultimate strength of first-party data. Rakuten Marketing research backs up the efficacy of this point of sale information. Using first-party consumer data from over 70 Rakuten businesses worldwide to fuel prospecting campaigns for clients, the aggregated and pseudonymised data that drove these campaigns
resulted in a 229 per cent increase in conversion rate, and a 51 per cent increase in new customers.
Additional research also shows that if you can hit that first time customer with a compelling offer, then you’re exponentially more likely to retain them with each additional purchase.
The 2017 Rakuten Marketing Brand Affinity report demonstrated that 27% of first-time purchasers will purchase a second time, but 45 per cent of second-time purchasers will purchase again, and 66 per cent of those who have purchased five times will purchase again.
There are some valuable learnings from this research. Marketers looking to fuel their next programmatic campaign should appreciate that a vote with the wallet is the best endorsement of all.
It’s also the prime starting point for targeting consumers, the likes of whom they will dedicate their time to making repeat customers.
We live in a climate of increasing awareness around privacy and diminished effectiveness of third-party data-reliant businesses. For this reason, it has become imperative to maximise owned first-party data, or alternatively, align marketing plans with partners who prioritise clean data.