How do CRM and programmatic work together, and what are the challenges for advertisers that haven’t yet achieved such integration?
Econsultancy and Sociomantic Labs have published a new report, The Role of CRM in Data-Driven Marketing, so I thought I’d give an overview of where these disciplines meet.
The benefits of using CRM in programmatic
Programmatic advertising shows a particular banner or a video ad to a particular consumer. That’s essentially its power.
The consumer is recognised by a cookie which gives away their demographic, past behaviour, geography or device, and then the advertiser can serve whatever content they feel best suits.
However, CRM or first-party data is often not integrated with programmatic media spend.
This seems counterintuitive to the advertising layman (like me) because spend appears to be wasted.
As consultant Mark Patron puts it:
Currently, if you’re a big brand and you have 25% of the UK as customers, a quarter of the time you are talking to your customers and three-quarters of the time you’re not.
It would make a big difference to be able to differentiate between the two, from a display advertising point of view.
So, say I’m a customer of a broadband internet provider – it doesn’t make much sense for that provider to show me ads that extol the virtues of its contracts.
Yes, these ads might contribute to my renewal, but without the advertiser knowing who I am, it can’t tailor the ad to my specific circumstances.
Even if I do click through the ad, if CRM data isn’t integrated with the campaign, I will be sent to a salesy page, rather than a ‘welcome back’ message.
In fact, CRM data is often used in ad campaigns in the telco industry – check out this example from O2 (the photo below shows examples of some O2 creative on Facebook).
The personalised ads achieved 49% lower cost per order (CPO). In the early upgrade segment the CPO reduced by a whopping 61%.
CRM data isn’t just about online activity either. That’s one of the advantages of using first-party data – you may be targeting customers that have never used your website.
This could be retail customers with a loyalty card (think IKEA perhaps). If you know their email address, this can be used in social advertising or Google’s Customer Match.
Data management platforms (DMPs) can also match personal information with cookie pools.
The challenges of integrating CRM & programmatic
You have to be in it for the long-haul
Using first-party data means that an effective model has to be used for programmatic spend, one more akin to the lifecycle management that database marketers will use.
To maximise lifetime value is often the goal, but this isn’t something that can be determined with a quick test, plugging CRM data into a DMP and awaiting great results.
Testing and learning here applies to multiple channels across an extended time frame.
It’s much more to take on than the fairly discrete methods of matching media to generic personas or behaviours.
Rav Dhaliwal of AllSaints talks about the power of this long-term approach in the Econsultancy report:
It’s all about bidding for the right customer at the right time. How do I know that customer is worth making a bid on? That’s where CLV [customer lifetime value] comes in. It helps add intelligence to these decisions…
Through deep integrations with our own first-party data sources, we now can micro-target customers based on numerous signals of user intent and propensity – the envy of many other brands’ display marketing programmes.
The organisation might not be ready
Where does CRM live in your organisation? Is it in marketing? Is it linked to media buy in any way?
Separate teams and skills naturally lead to a reluctance or simple inertia when it comes to integrating CRM and media.
Media buying can be alien to the CRM team.
Nick Bonney, Head of Insight at Camelot, says organisational skills and approach can be the biggest hindrance:
For all the talk about big data, the technology to some extent can be a bit of a red herring. And actually the people and the process, are as, if not more important, than the technology piece.
You can have all the best toys in the box, but if your business isn’t working in a way that enables you to get the best data out of them, it’s still going to be a waste of money.
Technology, as usual, holds everyone up
A tech stack needs to be able to seamlessly move CRM data to a DMP and back again, by way of other software.
If organisations are yet to pull data out of silos, that’s a big job to begin with.
While first-party data will also be supplied anonymously, there’s no doubt that privacy compliance (how can you legally use customer data?) is a concern.
However, as the O2 example shows, those combining the power of CRM and programmatic media at scale are making big strides.
For more on this topic, read The Role of CRM in Data-Driven Marketing.