Working better at lower volume

What is the optimal way for marketers and data owners to work together? Data Strategy, in association with The Ark, asks three experts about how to get data to drive marketing, rather than the other way around. David Reed reports.

DS: “How central is an understanding of data to successful marketing and where should this knowledge be located – within the client’s marketing function, the marketing agency or an independent, neutral data specialist?”

Andy McDermott
Andy McDermott, Director, sales and marketing, Coopers of Stortford (AM)

AM:
A good understanding of the importance of data should exist throughout the organisation. However, as data drives successful marketing, then data knowledge and skills should be retained within the marketing department.

External agencies or independent specialists can add a lot of value, but even then the marketing department needs to have a good understanding of data in order to manage and control these specialist suppliers.

Thomas Adalbert
Thomas Adalbert, Managing director, Beatthatquote.com (TA)

TA:
It depends on the size of your database. If it is 1,000 people who buy Aston Martins, that is exceptionally valuable. If it is 1 million people who are only worth 10p each, that is very different. But it think you need to have both internal and external resources.

If your marketing manager comes and says they have got a great new idea, if you don’t understand your own data that well, you can’t say whether they are right. You might have to fight tooth and nail to get that internal resource, but once you do, you can develop the business around it.

If you are using an external resource, it needs to be a high level consultant, not a data owner. They should be able to think about the big questions, come in and say, have you thought of this? I wouldn’t expect to hear that from a marketing agency.

Martin Jaggard
Martin Jaggard Managing director The Ark (MJ)

MJ:
A good understanding is absolutely central to the role of marketing. If you don’t understand what your customers look like and, from there, what your prospective customers look like, then how can you begin to formalise a coherent marcomms strategy and begin to communicate it on behalf of your brand?

All three parties have a vital role to play. From a brand perspective, they need to have an intimate understanding of who their customers are in order to define brand strategy. Their agency needs to share that knowledge in order to implement relevant communications and the insight and data should be provided from a third-party specialist who can provide everything from the management of the client data, analytical insight in order to define the campaign brief and ultimately the right data to support the campaign activities. All parties share a collective responsibility in ensuring this is achieved.

In our view, neutrality from a third-party data specialist is vital. It’s important the client has a data partner whose sole interest is in providing the very best data solutions including bought-in data, data for appending and data for analysis and insight. The data partner should have access to the very best data in the market and not be limited to offering the client only data they own or data which they can source from owners they have favourable terms with. Quality and performance is what matters here.

DS: “Data owners have an interest in keeping volumes high, while clients have an interest in keeping prices down. How are these pressures balanced and what are the implications for return on investment when one wins out over the other?”

AM: As a direct response marketer, one of my biggest challenges is finding significant volumes of prospect or customer data which provide me with an adequate ROI. The cost of the data is one factor that determines ROI, but a far more important factor is data performance.
So in the long term, both clients and data owners share an interest in the same business goal – the supply and availability of targeted data that produce a strong ROI for the marketer on a consistent basis.

TA: They have killed each other. Back in my days at The Preference Service, we had exceptionally high quality data that performed six times better than everybody else. But clients wouldn’t pay six times more for it. They had a fixed price in their budget.
Sales guys in data owners have got their targets and have to hit those numbers. So if a client wants to cut what they pay from 10p to 6p per 0 to

12 month record, they may actually give them 0 to 24 months. When that file doesn’t perform very well, the client cuts their price to 4p, so they are given 0 to 36 months. That is what has been happening.

Clients have no way to audit the recency of data. The only way they find out is once they have mailed it and get poor performance. The only way forward is for clients not to be scared about sharing performance data with suppliers. Once everybody can see what the ROI is, there might be more willingness to supply the best performing files and get paid a premium for it.

MJ: Both clients and data suppliers are equally complicit in this situation. Data suppliers have not done themselves or the industry any favours over the past 20 years by giving in to the temptation to provide volume over quality in order to maintain revenue levels. If they had both resisted the urge and taken a longer term strategic view, we believe the industry as a whole would be in a far better place.
On the other hand, as volumes have increased, clients have pressed suppliers to reduce data costs meaning that there is too much of a temptation for data suppliers to increase volumes to make up the gap. Invariably this mean including data which does exactly meet the criteria laid down by the client.

The net result is reduced response rates and this becomes a self perpetuating cycle. This cycle has to change with clients being prepared to pay more for better quality data and data owners only providing the volumes that exactly match the brief they have been given.
It is possible to achieve excellent response rates and good ROI if only all parties work together. Up to 20 per cent response rates are easily possible if all parties work together to the same objective.

DS: “Does the planning cycle of marketing allow for the data source to influence the nature, volume and goals of a campaign and at what point should data strategy and marketing strategy intersect?”

AM: Yes it does. Although large direct mail campaigns can have quite long planning cycles, it would still be the volume, source and quality of the data that would form the foundations of any campaigns. With other channels – such as data-driven email campaigns or trigger emails – the campaign cycles are vastly reduced.

TA: It does. The big data owners do massive data collection campaigns in January to March to get data in for clients’ Summer campaigns, and again in September to November for big January campaigns. So they are doing their planning around those big spenders.

The way we look at it in our business is that we know there is a lot of insurance renewal in August and September, then February and March. So we make sure we have got enough money in our coffers to do acquisition activity then. But then, my whole background is data, so if I didn’t do that, it would be tragic!

One of my biggest mistakes was saying I knew how to get 1 million records for a survey in January, based on an average 4 to 5 per cent conversion rate. But it went bad. So now, I would not base my targets on a fixed volume. If the data is not there, that is tough.

MJ: No, because data is invariably not considered early enough in the process. It should be the first thing any marketer should consider – if you don’t know who you are talking to, then how can you plan anything else? Data all too often becomes an afterthought with clients establishing strategy, creating and producing collateral and then at the very end asking, “who shall we send this to?”

DS: “Should data be treated as a media – planned and bought through an independent agency – rather than as a commodity – bought on price in the open market?”

AM: Prospect data should be treated as a media. However, it doesn’t have to be purchased via an independent agency if you have adequate skills and market knowledge in-house. We look at each data segment for prospect direct mail campaigns in a similar way to how we look at every press advert, insert or online media – they all have to meet an acceptable ROI target in both the short term and for the customer’s lifetime value.

TA: It is already bought that way. Everyone looks at the schedule from the point of view of opportunities to see a TV ad, for example, then goes out to buy those ratings. Data is bought in the same way.

But there are problems with the way media owners operate. If you are buying a press ad for a car in the Midlands area from a national newspaper, why not bolt on reader data and mail them at the same time? They see the idea as a good one, but it never happens.

That is usually down to their background and pedigree – people are either press or radio or TV or data. So you need to understand the background of the person you are dealing with. Data people will slice and dice every which way, but they can’t take it up a notch to give you a strategic view.

MJ: Yes it should be planned as media. All too often, clients forge relationships with one or two data owners and do not get an holistic view of everything that is available to them in the market. An independent data agency should be able provide clients with a completely neutral view and then produce a considered response based on meeting the objectives contained within the client’s brief.

As you would expect, every data owner will tell you that they have the biggest, widest, most comprehensive data available. The truth is that, with over 200 data owners in the market, no single data organisation has the best of everything – they all have their strengths and weaknesses.

We find that it’s often the smaller providers who have the best data. These organisations will typically provide their data to larger companies who then integrate it within their portfolio to sell on as part of their data solution. For a client to obtain the best-performing data at the right price and remain compliant, it is important to be aware of all data providers in the market.

All too often, clients appoint a media agency to plan and buy across all channels, including data. We believe that data is a specialist topic and that media agencies should not purchase data. Vice versa, data agencies should not try and buy media.

DS: “How important are compliance and warranties about the sources of data and where should responsibility for this sit?”

AM: I mostly rent data from reputable sources and so I don’t expect there to be an issue with warranties, permissions or compliance. However, when I do test a new data source, then I believe the onus is on me to ask the right questions so I can be assured the data is fit for purpose.

TA: The problem is that everybody wants there to be an audit and standard, but it never happens because everybody churns – they do not have enough time in their roles to do certain things.

MJ: In a time of increased sensitivity regarding the loss and misuse of personal information, stringent compliance is vital. It’s far too easy for companies to set up and obtain data by whatever means with nobody asking to see the relevant evidence regarding registration, ownership, opt-ins and compliance.

The responsibility sits with the data owner to warrant that the data they are offering is data that they own; has been collected in the correct way; and all permissions, etc are in place. Ideally, the data owner should warrant that the data is accurate and fit for purpose. The client and/or their data agency should ensure they ask for this evidence prior to purchasing any data in order to ensure they do not buy or use data which is non-compliant and might come back to give them problems in the future.

DS: “What are the challenges of scoping the data market given the number of data owners and the cross-licensing of data sets between sources?”

AM: In recent years, as many data owners have experienced a steady increase in the cost of collecting data, they have turned to licensing datasets to create large compiled databases where the source of the data is less clear. This creates issues for a direct response marketer like me as I consider the source of the data to be one of the most important factors in determining likely success. If a data owner can’t tell me (or isn’t prepared to divulge) all of the data sources that make up a given dataset, then I don’t go near it.

TA: You can have some idea about what you are buying. But as soon as you get into high volume databases – anything above 500,000 records – it becomes very hard to understand the source. Even if it works in a test, once you roll out, that data could be coming from any number of sources.

MJ: The first challenge is establishing ownership, because so many data businesses buy-in or swap data with other businesses. It is a requirement of the Data Protection Act to establish who is the Data Controller and who is the Data Processor before you purchase data.

With so many businesses selling data, it is very difficult, unless you have the time and resources, to establish who owns what and to verify that the data is compliant. Quite often, an independent data planner/buyer is the best option as they should have carried out these checks as part of their overall service to the client.

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