It’s data Jim, but not as we know it!

By: Mark Patron | September 23rd, 2008

Database Marketing – September 2008

Aligning offline and online marketing is obviously important, but in my experience it is rarely done well. Consumers expect seamless channel integration but often do not get it. I think the best way to tackle this important issue is to first compare offline and online marketing, and then draw some conclusions.

It makes sense to start by comparing offline and online data. Offline data is based around name and address. Online data is based on cookies. A typical offline data architecture might be a database structure based on a household/person/transaction hierarchy. Online it might be a user ID/cookie/session database structure. Offline the marketing database is typically full of demographic, lifestyle and RFM (recency, frequency, monetary value) data. Online the web analytics system, sometimes database, is full of behavioural and RFM data.

So our first conclusion is that RFM data is the common link between offline and online data. Our second finding could be; because cookies and households are so different maybe putting all of this data on one database could be inefficient. Offline marketing databases have been in existence for over twenty years. We know what data is important and what is not. We know what data to keep and we are reasonably comfortable and experienced at data mining. Online is much less mature. What data is important to keep online is only now becoming properly understood.

Targeting and segmentation are different online and offline. Online there is more segmentation, offline there is more targeting. Let’s compare direct mail and email targeting to demonstrate the difference. Mailing 100% of a marketing database at a cost of 30p to 50p per direct mail piece is rarely economic. A manual or scorecard selection may be made to mail, say, the 20% of the database that it is economic to mail. For email the economics are different. At a typical cost of 0.1p to 0.2p per email there is much less need to target the best names. In practice email marketers segment the full list to make offers more relevant.

Online and offline media like all media have their differences. Offline TV and print have good reach. Offline marketing databases offer good household targeting for direct mail and telemarketing. Online media have some obvious different characteristics. They are digital, interactive and immediate. There is no postage online which is nice, although this does lead to different issues and challenges like email deliverability. Offline media are more push, with the call to action being call this number or fill in the coupon. Online the media are more pull. For example, the consumer decides what terms they search on, not the marketer. Offline we try to trade people up the loyalty ladder, converting customers into multi-buyers and so on. Online the equivalent is improving customer engagement, so the consumer interacts with the brand through emails and the website until the consumer registers and then buys. The time a consumer may take to research online can be hours before a single purchase is made.

As more channels develop how they all interact is becoming more important. We know that many consumers research online and then buy offline. Recent research we did found that 40 – 60% of online sales are completed with a different medium to how they started. We also found that between 75 – 90% of sales have some different media that assisted in the sales process. Clearly giving 100% credit for the sale to the last media or “last click wins” is not good enough. The technology and data now exists to start to unpick this complex issue and allocate marketing budgets more accurately.

Privacy issues have similarities and differences online and offline. Junk mail and spam issues are similar. Poorly targeted marketing communications waste consumers’ time and wind them up. Offline current privacy issues as defined by the Information Commissioner’s Officer are the wide use of the Electoral Roll by marketers and a lack of transparency in use of personal data. Online privacy issues are driven more by consumers concerned about their privacy than legislators. These consumers tend to be technically savvy and know how to do something about their concerns.

There is also a demographic, maybe even cultural, difference. Online marketers are mostly under thirty. The average age of offline marketers tends to be older. Few companies fully integrate their offline and online marketing departments.

So what does this all mean for integration of online and offline. First, as with all things, be very clear about your goals and objectives. Second, be realistic, the relative maturity of offline and online are very different. Third, use RFM data to integrate offline and online rather than trying to putting everything in one Frankenstein database. Last but not least, I believe that true integrated marketing communications will not be a reality for some years yet, but that does not mean we can not start improving things now.