Master Class on Personalization, CX and Measuring Digital Marketing ROI
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Alp Mimaroglu gave a presentation on harnessing data and AI to enhance customer experience. He discussed how Amazon achieves strong customer experience through personalization, easy to use interfaces, fast delivery and returns. He emphasized that businesses should focus on incrementality and value creation when assessing digital advertising effectiveness. Personalized marketing works best for customers with little purchase history rather than frequent buyers. Proper evaluation of digital targeting requires considering whether customers would purchase without advertising. Strong customer experience builds valuable brands that can charge price premiums and capture more economic value over time.
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Master Class on Personalization, CX and Measuring Digital Marketing ROI
- 1. MASTER CLASS Alp Mimaroglu HEAD, MARKETING TECHNOLOGY, CAMPAIGNS, AND STRATEGY SYSCO DALLAS, TX ~ NOVEMBER 2 - 3, 2023 DIGIMARCONTEXAS.COM | #DigiMarConTexas Personalization in the Digital Age: Harnessing Data and AI for Enhanced Customer Experience
- 2. DigiMarCon Improve Your Digital Experience to Drive More Revenue Alp Mimaroglu Marketing Strategist and Technologist
- 4. Agenda • Customer Experience • Incrementality • Brand
- 6. Behind Amazon’s Strong CX... • Strong eCommerce: Easy to use, easy to find products, deals, inspiration. Marketplace for sellers and buyers. • Personalization: tailors recommendations based on customer preferences and history. • Interconnected Marketing, Sales, Service: ⚬ Big selection of products ⚬ Low prices for premium products (economies of scale) • Customer-Centric: ⚬ Really fast delivery and returns that are reliable • Product-led Growth: E.g. Customer reviews and ratings foster trust and informed decision-making. • Optimized Value Chain: across employees, customers, online and offline
- 8. Mistakes Businesses Make.... Working on the wrong things Roadmap Purchasing 1 or 2 cloud technologies hoping will solve everything Alignment and change, while outpacing competitors Missing Incrementality and Value Creation
- 9. • $225~ Billion a Year Spent on Google Advertising • Google Adwords • What is really driving the sale? *https://support.google.com/google-ads/answer/1722066 Advertising
- 10. •Does not account for the fact that people would buy irrespective of Google Ads •ROI shrinks under controlled experiment ●Need to consider incrementality ●Cost accounting *https://support.google.com/google-ads/answer/1722066 Advertising
- 11. Focus on what Matters And Assess the Right Metrics
- 12. Let’s Get More Tactical...
- 13. Incremental Digital Ad Effect? • Was the purchase after ad exposure incremental? • What is the counterfactual? ⚬ Would customer have purchased without ad exposure?
- 15. Incremental Digital Ad Effect? Google Organic MSN Organic Google Organic Google Paid • eBay tested the return of brand keywords in search advertising ⚬ E.g. users searching “eBay” or “eBay Shoes” ⚬ Hypothesis is users using search as navigation tool ⚬ When paid search turned off, ~99.5% of traffic went through organic search ⚬ Outcome: Stop brand-keyword paid search ads because organic search is free traffic MSN Paid • Blake, Nosko, and Tadelis (2015):
- 16. Value of Personalized Marketing Half the money I spend on advertising is wasted; the trouble is I don’t know which half John Wanamaker
- 18. Paid Search Impact by User Segment • eBay tested the return of non-brand keywords in search advertising ⚬ E.g. searched “used gibson les paul“ or “used guitar“ ⚬ The best search advertising results came from the least active customers (or no idea of the company or offering) • Zero historical purchases, then people with less than 3 purchases in past 12 months. • No purchases past 1 year (360 days) • Not aware item exists on eBay • Blake, Nosko, and Tadelis (2015): “Consumer Heterogeneity and Paid Search Effectiveness: A Large-scale Field Experiment”
- 19. Paid Search Attribution by User Segment • Frequent purchasers are more likely to engage with Google paid search or click ads ⚬ Advertising engagement occurs mostly from people buying 50+ times a year ● Advertising has no positive effect on purchasing behavior - for high-volume, frequent purchasers. ⚬ Purchase would have occurred without advertising ⚬ Highlights tendency of industry-used attribution models to mistakenly treat purchases as causally influenced by ads. • Blake, Nosko, and Tadelis (2015): “Consumer Heterogeneity and Paid Search Effectiveness: A Large-scale Field Experiment” Count of Buyers in Each Group
- 20. Economic Value of Digital Targeting •A Customer Dwells On A Product Page ⚬Then does not purchase ⚬Later retargeted on Facebook ⚬Finally clicks the ad and buys the product •Does The Economic Value Apply? ⚬Target customer if expected profit is positive
- 21. Economic Value of Digital Targeting Scenario B: Buys irrespective of targeting Even if not (re)targeted, the customer returns to the product page and makes the purchase Scenario A: The customer does not return to the product page if not (re)targeted
- 22. Economic Value of Digital Targeting • Scenario A Compared to not retargeting, the value of targeting is positive • Scenario B The customer buys irrespective of targeting, hence the value of targeting is negative/mute • Issues ⚬ In scenario B we observe that the customer retargeted and purchased the T shirt, and might mistakenly conclude that retargeting caused the purchase ⚬ Need to consider the counterfactual ￭ Would have the customer bought without advertising? • Compare to potential outcomes framework ⚬ Economic value of digital targeting must be based on the incremental profit
- 23. Economic Value of Digital Targeting • A conceptually correct prediction of the economic value of digital targeting must consider the potential outcomes ⚬ Profit if we target ⚬ Profit if not target customer • The best targeting is based on a comparison of potential outcomes
- 24. Economic Value of Digital Targeting • Target a customer if the incremental value from targeting exceeds the cost • We observe if the customer was targeted and if the customer was not targeted
- 25. Strong Customer Experience Creates Strong Brands
- 26. Brand Value
- 27. The Power of Brand Value Brand is the ability to charge price premium
- 28. Neverfull MM M40995 $2,030 The Power of Brand Value Brand is the ability to charge price premium Voyager Medium Logo Tote Bag Style # 30F8GV6T2B $298
- 29. Price Quantity Strong Brands Allows More Value Capture by Pushing out the Demand Curve Brand Development
- 30. Price Quantity Maximizing Growth Opportunities by Capturing Value Brand Development Typically Luxury Brands Capture Value Here
- 31. Price Quantity Brand Development Maximizing Growth Opportunities by Capturing Value Typically Value Brands Capture their value here
- 32. Where Does Brand Value Come From? • Customer Experience • Consistent Experience • Others Peoples Experiences • Advertising • Distribution • Pricing • Product, Service, Packaging • Logos, color
- 33. Brand Value in Louis Vuitton Balance Sheet Goodwill and intangibles
- 34. Brand Value in Linkedin ‘Goodwill’ can be an indicator of brand value during acquisition • December 2016 Microsoft Acquires Linkedin for $27 Billion • Goodwill is an intangible asset that shows up during acquisitions • Goodwill = purchase price - (assets - liabilities • Impairment: occurs when an asset drops in value ⚬ AOL Impairment: $98.7~ billion in 2002
- 35. Google Trends is not a measure of Brand Online traffic is not a measure of Brand
- 36. Measuring Brand Value Price Premium Goodwill and Intangibles Revenue A to B to C NPS or Survey Take a substitute and discount cashflows to Net Present Value (NPV)
- 38. Strong Brand Captures More Value Investing in CX Creates Strong Brand Incrementality Exceptional CX KEY TAKEAWAYS
- 39. Alp Mimaroglu SENIOR LEADER IN MARKETING STRATEGY & TECHNOLOGY LinkedIn www.linkedin.com/in/alpmimar E-mail Address alpmimar@gmail.com CONTACT Any Questions or To Schedule an Informational Session
- 40. Thank you