Consumers require value in exchange for data
As more brands seek to monetise their customer data by sharing it with commercial partners they will need to gain consumers’ trust, and make sure the benefits are clear to all the parties involved.
Detailed customer data is a powerful tool, and brands are capitalising on monetising this currency in a number of creative ways.
Among these is the widespread automatic sharing of website users’ data with the site owner’s commercial partners, according to research by data security firm TRUSTe. A study in April 2012 discovered that 36 per cent of the UK’s top 50 websites automatically share user information with third parties for commercial purposes, according to the site owners’ privacy policies.
Brands’ commercial use of the data they hold doesn’t end there: in recent months both Sky and Sainsbury’s - among the biggest repositories of in-depth customer data - have announced partnerships rooted in using their databases to provide services to business customers.
In September, Sky announced an agreement with Channel 4 that will see a range of the broadcaster’s linear channels and its on-demand service, 4OD, become available across Sky’s digital platforms. The deal, described as a “data partnership” by Channel 4 director of commercial and business development Sarah Rose, means Channel 4 will receive viewing data from Sky’s customer database through Sky IQ, its customer intelligence division.
Sky has also just created a panel of more than 500,000 homes, whose viewing it monitors in order to gain insight into their habits and preferences.
Sky IQ deputy managing director Tony Mooney says: “Our aim is to use anonymised, aggregated viewing information to identify trends and provide us with deeper insights into how Sky customers watch TV. We expect these insights to be valuable to advertisers who want to reach their target audiences more effectively, but also for broadcasters like Channel 4, to help them understand more about their viewers.”
Next year Sky also plans to launch its long-awaited AdSmart technology, a tool that will apply the insight generated by Sky IQ to allow advertisers to target different audience segments with different TV ads running simultaneously.
Opt out option
The key to Sky’s latest initiatives is ensuring that customers see a clear benefit in sharing their data and understand that they won’t be personally identified by it. The broadcaster wrote to all customers last year explaining that it was extending its viewing panel and giving them the option to opt out. It also explained the benefits of being part of the panel - for example, programme recommendations presented on screen and tailored advertising.
The mutual benefit that this represents, according to Sky, is something that resonates with O2. The telecoms brand runs two loyalty schemes, Priority Moments and O2 More, that allow other brands - such as House of Fraser and Bulmers Cider - to market to specific groups of O2 customers that have opted in.
O2 Media head of client strategy, insight and creativity Andreas Nicolaou says: “The reason services like O2 More have been so successful is because we keep the customer experience as our top priority. There has to be a clear value exchange for the customer in any activity we run.”
To ensure this is the case, O2 enables customers to select preferences that determine which types of messages that they receive.
“For example, customers who have selected to hear about food and drink would receive an offer for 50 per cent off takeaway pizza, says Nicolaou. “Because of this highly targeted approach, we see very high response and engagement levels.”
Over 10 million O2 customers are now opted into O2 More alone, he adds.
The idea of a clear value exchange is also cited by Sainsbury’s group development director Luke Jensen as integral to the success of the Nectar loyalty scheme, which is 10 years old this year.
“[Nectar] is a grown-up relationship where consumers are choosing to engage in a scheme where they know we are using information about their shopping habits to reward them. It is about providing a better customer experience,” he says.
Sainsbury’s has just announced a joint partnership with loyalty group Aimia, owner of the Nectar brand, that builds on these foundations. Called I2C, it is designed to provide suppliers with a better understanding of Sainsbury’s customers through access to Nectar data, as well as offering them a single service to advertise across the retailer’s different communication channels - from trolleys to the coupons issued at its tills.
According to Jensen, the initiative will provide Sainsbury’s with an additional revenue stream from its suppliers, charged on the basis of each campaign. “What we have done is to connect things that were previously relatively unconnected, bringing together the whole suite of marketing services under one organisational roof with one interface. What it means for our customers is that they will get a consistent set of messages and some very strong offers,” he explains.
It is a joining of forces that Jensen expects to see continuing in the consumer goods industry, as product manufacturers seek to tap into retailers’ customer data.
“They are increasingly recognising that one of the most effective ways of getting that customer insight is in fact through us and in partnership with us, because they only have a relatively narrow part of that consumers’ behaviour.
“It is beyond knowing what deodorant people wear, and even as an FMCG supplier you don’t really know who is buying that deodorant.”
Publishers are also leveraging their customer databases on behalf of other brands. IPC Media offers a range of services - including market research, customer insight, list rental and lead generation - to third-party brands.
IPC Media head of database marketing Lee Wilmore says: “Data sales have fallen since the recession started, however there are some areas performing well, especially where we offer our existing ad clients direct access to our customers. Integrated campaigns that include data capture, direct marketing and the insight that this can generate are of increasing value to our clients.”
He continues: “The growth in the use of online channels has clearly benefited IPC when it comes to realising the value in its data. Digital provides us with an opportunity to collect more data variables and from a wider audience than our print media, so we can do more with our segmentation. Digital also makes data collection for our clients cheaper and more accessible.”
New revenue stream
Wilmore says that typical data capture costs can be from £50 to £100 per thousand names and addresses, but this is free online. He adds: “Digital has also created a new revenue stream for us - lead generation driven by email marketing.”
For example, IPC uses the email addresses of customers that have opted in to send them offers for Graze.com, the service for snacks sent by post. “If customers click through and sign up, we receive revenue from Graze for each customer,” says Wilmore.
He states that rates at which emails sent on behalf of other companies are opened by consumers often exceed benchmarks published by the Direct Marketing Association. “We believe in the future that data will play a far bigger role in our business, in many as yet unknown ways, but certainly in driving revenues from our advertisers as we give them direct access to our customers.”
Dennis Publishing has also embraced the digital space, recently setting up ThreePM, a subsidiary that specialises in driving subscription sales for magazines online via email campaigns, affiliate marketing and search engine marketing, for example. It has more than 150 publisher clients and carries out targeted campaigns on behalf of these to its customer database.
ThreePM commercial marketing manager Lee Woodman says: “If someone has bought a subscription to Men’s Fitness, for example, we know that person may be interested in fitness, so it gives us the ability to retarget that person. It means a publisher can target a particular demographic - for example men in their 20s interested in sport - based on the data ThreePM holds.”
ThreePM also carries out extensive customer research among its database and shares these insights with publishers. “We can gather insight into the very beginning of a consumer journey when people are buying a magazine subscription. So from a publisher’s point of view, that data is very valuable,” says Woodman.
“Publishers often exist in a very niche market, and we can bring them general insight into how people buy magazines - what people are willing to pay and what will incentivise them to buy it.”
Of course, while accurate customer data used well will benefit both brands and customers, companies have to continue to work hard to foster trust and educate consumers about what data is being used and for what purposes. A report commissioned by O2 among 5,000 adults in the UK in September 2012 shows that, despite 85 per cent of the public using store loyalty cards, only 41 per cent see the benefits of the schemes.
It concluded that the public has high levels of discomfort with sharing data, but suggested that attitudes towards sharing change when people are given more control over choosing what data is shared, and when the benefit of sharing is made clear to them.
Jensen is clear about how Nectar - and Sainsbury’s I2C scheme - uses customer data. “The specific personally identifiable data does not go anywhere beyond us. So we might do a campaign on behalf of a supplier, but we will continue to control that data. Our relationship with our shoppers is our biggest asset so we will treat that with an extremely high level of care.”
IPC also retains control of its customer data, and ‘seeds’ its mailing lists with fake addresses that are used to monitor whether any unauthorised messages are sent to them. “As the opportunity to misuse email addresses is so high, we run a ‘hosted’ service, whereby the client sends us their email and we do the transmission, so the data never leaves our secure email system,” says IPC’s Wilmore.
“All emails must also carry an option to unsubscribe. We want to be transparent with our business customers and not infringe upon our relationships with our subscribers, so we strive to be very clear about the ways we use data when we collect it.”
ThreePM asks consumers to sign a third-party privacy statement. “It signs them into receiving third party offers and promotions,” says Woodman. The company sends out a newsletter every Wednesday and a follow up on a Friday, achieving a conversion rate of over 10 per cent.
Honesty, it seems, is the best policy, and it will be necessary in order to gain consumers trust and convince them to keep giving brands their personal details. As a host of brands are now demonstrating, the appeal of sharing data with commercial partners will only grow.
Case study: Smart New Homes
Property website Smart New Homes, part of Trinity Mirror Digital Property, represents 85 per cent of all new homes for sale in England, Wales and Scotland. It has a database of over 290,000 people who are interested in buying new homes. The company generates additional revenue by allowing its developer clients to talk to those customers who have opted in.
Smart New Homes director Steven Lees says: “We will target emails by geography - people living in close proximity to a new development - or specifically target young families, retirees or investors, for example, or by price range, house type or house size. It can be specified by the client. Developers can be as targeted, or as broad, as they want to be.”
The quantity of campaigns fluctuates month to month and reflects seasonality within the market, but figures for targeted email campaigns reap an average unique open rate of 20 per cent and an average unique click-through rate of 6 per cent. Developers pay Smart New Homes per number of homebuyers contacted. “It is quite an important part of our business,” says Lees.
Senior marketing strategy consultant
Brands fly or fail based on their ability not only to engage consumers but also to drive transactions. They’ve used data to enable this for some time but are now looking for new and innovative ways to use data to drive existing and new revenue streams.
Today, brands want to identify internal data assets that are not being used to the full. And, increasingly, they’re keen to explore both how their data assets may be monetised by providing value to other companies and to explore the reverse, where another brand’s customer data may be imported to energise customer insight and marketing results. The problem is how to do this.
The fact is most organisations are not set up to make the most of their data assets. Many marketing departments are run by brand marketers and product managers who may not have experience in creating data products.
A key place to begin is identifying a critical need the data will meet, and that almost always comes from putting the consumer first. Consumers will share information when they trust you and know they will get something in return; the more they understand, the more they share. Consumers also now understand that to get a more personalised experience and preferential offers from a brand they need to share accurate information.
Trust and privacy go hand in hand through all of this. It takes years to build a brand and in the modern world of marketing, it can take minutes to ruin one. Again, it’s imperative to put the customer first, ensuring any use of data is not only within the letter of privacy law but the spirit - and very much in the interests of the consumer.
Marketers today need to think strategically, to create plans that better identify internal and external data. And that’s before we consider ‘new’ powerful but challenging data, such as from social media.
For most brands, given their everyday challenges, it’s not easy to think strategically about data monetisation, about where to begin, or about which sources to connect and how to connect them. The obstacles to monetising data will continue to challenge even the most proactive organisations, and third-party experts will often have all the answers.