“Data: The Ultimate Driver
      of Marketing Growth”


           by Paul Price

       Global President, Rapp




Associ...
Paul Price ANA Final                                               Page 2




Slide 1: Data: The Ultimate Driver of Market...
Paul Price ANA Final                                                  Page 3




driven marketing. And I’m delighted to te...
Paul Price ANA Final                                                Page 4




Slide 4:               Adopt some data toda...
Paul Price ANA Final                                                     Page 5




Slide 7:               Image of Human ...
Paul Price ANA Final                                               Page 6




Slide 8:               I feel
              ...
Paul Price ANA Final                                                   Page 7




Slide 9:               The Behavioral Da...
Paul Price ANA Final                                                  Page 8




Today, thanks to advances in analytics an...
Paul Price ANA Final                                               Page 9




Slide 12:              Digital Anthropology
...
Paul Price ANA Final                                                Page 10




places a great responsibility on us to be ...
Paul Price ANA Final                                                Page 11




For Mercedes-Benz’s new clean diesel SUV l...
Paul Price ANA Final                                                  Page 12




Imagine the possibilities. One day we wi...
Paul Price ANA Final                                              Page 13




future! But instead of gazing into a crystal...
Paul Price ANA Final                                                Page 14




Here’s another example, in this case a ret...
Paul Price ANA Final                                              Page 15




Slide 18:              Increasing customer l...
Paul Price ANA Final                                                Page 16




member communication. To date, over 20,000...
Paul Price ANA Final                                               Page 17




and people whose spending was declining. By...
Paul Price ANA Final                                             Page 18




50 percent. And at this point I’m going to as...
Paul Price ANA Final                                               Page 19




Mercedes-Benz, no doubt, stands as one of t...
Paul Price ANA Final                                                Page 20




You can then imagine that with such an emp...
Paul Price ANA Final                                              Page 21




Data is our competitive advantage… and as a ...
Paul Price ANA Final                                              Page 22




They thought about that for a while but ulti...
Paul Price ANA Final                                             Page 23




Slide 23:              Mercedes-Benz Fashion ...
Paul Price ANA Final                                               Page 24




The AMG Performance Tour is a unique way to...
Paul Price ANA Final                                              Page 25




Okay Paul, back to you.



(Paul returns, sh...
Paul Price ANA Final                                              Page 26




Slide 26:              The human machine



...
Paul Price ANA Final                                               Page 27




agency. The targeting agency is the marketi...
Paul Price ANA Final                                                Page 28




Finally, at this turbulent moment in time,...
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2008 ANA Masters of Marketing Speech

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How data-driven marketing has helped our clients drive growth.

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2008 ANA Masters of Marketing Speech

  1. 1. “Data: The Ultimate Driver of Marketing Growth” by Paul Price Global President, Rapp Association of National Advertisers 2008 Annual Conference Sunday, September 19, 2008
  2. 2. Paul Price ANA Final Page 2 Slide 1: Data: The Ultimate Driver of Marketing Growth Good morning. Thank you, Bob, and our compliments to you and the ANA on choosing such a prescient topic as growth for this convention. It’s the primary challenge facing marketers in every era. And at the moment, it seems less and less under our control. Fortunately, we have some good news. New technologies and mathematical modeling are revealing the secrets of growth and delivering insights that can act as growth springboards. Today we can map out straightforward steps to increase a brand's control over growth. We can even make it fairly predictable. These are real breakthroughs. They are exciting. And they couldn't have come at a better time. So, this morning I will share a perspective on growth I believe none of us can afford to ignore — the new competitive advantage of data-
  3. 3. Paul Price ANA Final Page 3 driven marketing. And I’m delighted to tell you that we have a little help. In a few minutes our partner Drew Slaven of Mercedes-Benz North America will be joining me. But in the meantime, I have a couple of objectives here. Slide 2: Data is not (necessarily) boring! The first is to prove conclusively that it is possible to talk about data without putting everyone to sleep. Slide 3: Where my money at? Second, I want to introduce a new concept of marketing that I believe can make us all more effective, profitable and accountable. A concept that will help us finally recapture the famous half of the marketing budget that John Wanamaker, or maybe it was Henry Procter, knew was wasted but couldn’t identify.
  4. 4. Paul Price ANA Final Page 4 Slide 4: Adopt some data today! My third and in some ways most important objective is to convince you that data can be the best friend any marketer will ever have. Used well, it delivers invaluable insights, reduces waste, helps you make better decisions for your brands and, most importantly, drives growth in a way that is both powerful and predictable. Now, although we’d all like things to be simple, most things — and consumers in particular — are not. In fact, if you think about it, with their intricate neural networks and multilayered decision-making processes, consumers are a lot like very complex machines. Slide 5: Image of Robbie the Robot No, no, not like that. Slide 6: Image of the Terminator And definitely not like that. More like…us. After all, we’re all consumers of something.
  5. 5. Paul Price ANA Final Page 5 Slide 7: Image of Human Machine Now imagine that each one of us is filled with countless switches that respond to every sort of stimulus, from facts to sensory input to the urges of the emotions. And, making things more complicated, no two of us are exactly alike in how our switches work. Whether we’re dealing with humans or machines, our job as marketers is the same: to inspire a response in a sufficient number of consumers to create growth. And when we sit down to work out how, the problem is the same: It’s extremely hard to tell what switches to throw or exactly what they all do, assuming we can reach them. What we need is a model, a sort of Google map of the mind. And the big news is, little by little data is helping us create one. I’ll tell you more about that in a moment. But first, let’s spend a minute on how we’ve been making our marketing decisions until now.
  6. 6. Paul Price ANA Final Page 6 Slide 8: I feel I think I do For most of marketing history, we’ve had three categories of information to guide us: attitudes, opinions and behavior. I feel, I think and I do. Attitude research is certainly valuable — it gives us general ideas about interests and preferences and a context for more detailed investigation. But opinions are much less helpful. As many of us have learned the hard way, consumers are not reliable witnesses about their future behavior. What people believe about things changes all the time — just look at the election polls. In some cases, people probably don’t even believe what they tell us at the time. How else could “New Coke” or the Edsel have happened? On the other hand, we are predictable creatures. Once we establish patterns, we tend to stick close to them. And that means people’s past behavior is incredibly valuable and helpful — a real marketing goldmine.
  7. 7. Paul Price ANA Final Page 7 Slide 9: The Behavioral Data Stream Marketers have been gathering a widening stream of data on consumer behavior for decades, but until very recently we lacked an efficient way to really analyze and use it. Then, in the past ten to fifteen years, computers became so powerful, so fast, so smart and so affordable, the world changed. For starters, computers enabled the arrival of the World Wide Web, electronic funds transfers, personal electronic devices and other digital innovations that turned the data stream into a data tsunami. I just read somewhere that Google has now indexed over 1 trillion unique URLs — that’s more Web addresses than the number of stars in the Milky Way! Slide 10: Taming the Tsunami The good news for us is, expanding computer power also gave us a way to take all of that data and use it. With the help of cookies and related technologies, we developed the ability to chart people’s journeys around the Web and make note of what caught their eye.
  8. 8. Paul Price ANA Final Page 8 Today, thanks to advances in analytics and modeling, we can convert that data into reliable insights that help improve the return on our investments. It’s not quite a Google map, but we’re getting there. Slide 11: Social Media = Social Data The latest breakthrough in the effort to track, understand and predict consumer behavior is a by-product of the rise of social media. Right now, all over the world, millions upon millions of people are online sharing their ideas on blogs and forums, sharing news and gossip on Facebook, sharing photos on Flickr, sharing videos on YouTube, sharing their most fleeting notions on Twitter, and doing thousands of other things that tell us not only what they’re up to but what they are thinking. And all of this activity is generating a vast sea of data. It is the largest, most organic and most mind-blowingly detailed focus group ever assembled in the history of mankind.
  9. 9. Paul Price ANA Final Page 9 Slide 12: Digital Anthropology To make use of all this data, innovative companies are adding new skill sets and creating new disciplines. At mine, we’re introducing Digital Anthropology, which uses the Web as a population base. Our software sweeps the Web and filters and interprets volume and velocity in ways that show us how our clients’ brands are faring in online communities. We scan over three million sources and harvest naturally occurring conversations. Basically, it’s a massively wild and fast-moving form of primary research. We entrust that research to our Cultural Anthropology team, which uses proprietary ethnographic and linguistic methods to turn data into insights. Slide 13: image to illustrate customer intimacy Step back and think about that for a moment. The data we are now collecting online is allowing us to achieve unparalleled intimacy with consumers. We know what they are thinking, who they are e-mailing, who their friends are, what they are buying, what movies they like, their favorite colors, what they’re planning to do tomorrow…pretty much anything you might want to know is available. This of course
  10. 10. Paul Price ANA Final Page 10 places a great responsibility on us to be respectful of people’s privacy. But it also gives us the ability to establish better, more satisfying, more loyal and profitable relationships between consumers and our brands. When we combine this raging tide of online data with more traditional forms of consumer research, we gain a level of depth and richness that was unimaginable just a few years ago. And this is no idle exercise. It’s a discipline that’s already bearing fruit for our strategy teams and their clients. Slide 14: Mercedes-Benz Here’s a quick example involving our Mercedes-Benz client. Our company routinely analyzes 100 or more variables for Mercedes-Benz — things like home value, age and gender and even preferences in music and pets. This gives us insights we can act upon. And, I confess, it also gives us facts we find amusing — things like luxury SUV owners are likely to wear scrubs and dislike cats and classical music!
  11. 11. Paul Price ANA Final Page 11 For Mercedes-Benz’s new clean diesel SUV line, we recently evaluated a range of attitudes and behaviors that indicate whether someone is, or is not, likely to be a luxury SUV buyer. Taking this to a more granular level, we ran our SUV model on top of Forrester data to identify SUV buyers with the right attitudes towards technology and the environment. This allowed us to develop specific targeting recommendations for a well-defined audience of about 1 million U.S. households. Drew will get into the implications of this later. For now let’s just say this is one of the ways data is helping us find growth for our clients. Slide 15: Microsocial Segmentation Our strategic planners are also developing a new area we call microsocial segmentation. Stated simply, it is the study of the online community’s fantastically dynamic consumer segments and cohorts. People belong to many online communities at once. They move around, they drop in and drop out. It’s all completely fluid. But that does not mean it’s unpredictable. We are now beginning to identify and study segments in this always-changing social setting, looking for the best ways to tap into consumer advocacy.
  12. 12. Paul Price ANA Final Page 12 Imagine the possibilities. One day we will be able to identify the most powerful social influencers and advocates for our clients’ specific brands. And we will be able to leverage their network influence. Imagine your brand instantly appearing in global conversations — persuasively, for free, with the degree of momentum that could be the difference that creates a market leader. That’s what we’re going for. We’re developing and testing new analytical models right now. Slide 16: What’s in it for me? In the broad area of predictive modeling, we have already achieved a level of sophistication that yields measurable marketplace improvements. Let’s take a look at a few real-world examples. Slide 17: Seeing the future One of the most fascinating and powerful skills we’re developing with all this data is the ability to predict what real people — individual customers — are going to do next. That’s right — we can see the
  13. 13. Paul Price ANA Final Page 13 future! But instead of gazing into a crystal ball, we use advanced modeling tools that allow us to analyze data in completely new ways. Here’s an example. For a marketer of big-ticket durable goods, we had to consolidate data from 65 different sources to find a way to make the sales process more predictable. It took us about four weeks. When we were done, we were able to tell the marketer precisely which customers were loyal to its brand and which were not. More amazingly, we were able to predict — within a 30-day window — when a past customer was likely to make another purchase. This meant we could forecast with the highest degree of probability both who was likely to repurchase, and when. Just imagine yourself sitting in your living room, and you’re looking at your TV and thinking, “Monday Night Football starts next month. I want one of those huge new flat screens.” So you go to your mailbox, and there’s a brochure all about flat screens made by a brand you like. You might think, wow, that’s a little spooky! But you also might do what the customers we targeted in our program did: purchase at a rate almost three times higher than other customers — because our data told us you probably would.
  14. 14. Paul Price ANA Final Page 14 Here’s another example, in this case a retailer. Purchase Pathways is a new analytical tool that allows us to predict with great accuracy when our client’s customers are likely to make their next high-margin purchase. To figure this out, we slice and dice massive amounts of data from 80,000-plus SKUs covering more than 20 standard product paths. When we’re done, we have a very good idea of what a given customer will buy next. It works like this. Let’s say a customer has just bought a new suit. Purchase Pathways tells us what the next purchase is likely to be — a wristwatch, perhaps. Based on this information, our client starts sending that customer offers and messages for watches well in advance of the purchase. And every communication is personal. We leverage attitudinal segments and value models to deliver targeted messages online, offline and in-store. Since Purchase Pathways was introduced in 2006, incremental sales to customers involved in the program have totaled nearly $1 billion. This is what I mean when I say we can now make growth more controllable and more predictable.
  15. 15. Paul Price ANA Final Page 15 Slide 18: Increasing customer loyalty and involvement We’re also using today’s data and analytical tools to increase customer loyalty with more engaging and individualized solutions. Let me give you an example from the tourism and travel category. For one client, cutting data in non-traditional ways allows us to see which customers will spend enough to qualify for the chain’s highest loyalty tier. We then assign customers to “value tiers” and increase investment with profitable segments, and reduce spending in the non- productive ones. The chain’s most loyal customers earn rewards based on points and transactions, but those incentives can only go so far. To truly transform the loyalty platform, we wanted to create a real sense of community around the brand. We’ve helped our client do this by developing a consumer-driven online service. Customers themselves provide travel tips and then other members rate them. As they exchange information and content, users are building loyalty and simultaneously creating new data sets that we can put to work in other
  16. 16. Paul Price ANA Final Page 16 member communication. To date, over 20,000 customers are working with this program. Slide 19: Neighborhood-level solutions A third really cool thing we can now do with data is figure out what’s going on with a specific consumer segment and even daypart in a given neighborhood. We’re doing that right now for a major grocery chain. And along with studying behavior patterns at a really granular level, we’re also tapping into the local insights of front-line employees and store managers. This particular client had seen its market share erode even though they had increased advertising spending. The loyalty program they’d created to help combat the erosion wasn’t doing the job. Our role was to reduce costs with smarter marketing, use existing and ongoing loyalty data to create more effective offers, and design specific solutions for different customer segments. Our initial analysis put the focus on two basic groups — people whose spending was on the rise but sub-par in certain product categories,
  17. 17. Paul Price ANA Final Page 17 and people whose spending was declining. By exploring and analyzing data in new ways, we were able to develop a multilayered program with tailored solutions for each group. One of our innovations was hour-by-hour day-parting of shopping trends in specific stores. This allows store staff to maximize sales by setting up appropriate displays and offers at particular times of the day. Similarly, our analysis addressed customer segmentation by identifying the most effective triggers and offers for different groups on a store-by-store level. The results: Streamlined communications, more relevant offers, a reduced bonus and incentive structure, greater focus on profitable private label products and, best of all, growth — a 10 percent increase in year-on-year sales and a 40 percent reduction in costs! Slide 20: Mercedes-Benz One of our most outstanding success stories is with Mercedes-Benz. Working closely with our clients, we have used data, analytics and modeling to improve Mercedes-Benz’s direct marketing sales rate by
  18. 18. Paul Price ANA Final Page 18 50 percent. And at this point I’m going to ask our Mercedes client, Drew Slaven, to tell you what we’ve done. Drew… (Drew takes the stage, Paul leaves) Slide 21: Drew Slaven General Manager, Marketing, MBUSA Good morning everyone. And thanks Paul, for inviting me here. I don’t have many rules that I hold true to when it comes to public speaking. I do, however, have a few that I never break. And the one at the top of that list is to be sure I never… ever, under no circumstances, follow a speaker who has either a British or Australian accent. Because no matter what I say or how well I say it I will always come off as a complete bore in comparison. However, because both Paul personally and Rapp Collin as an agency have been so helpful to Mercedes-Benz I really couldn’t refuse. So forgive me, I’ll try to do my best.
  19. 19. Paul Price ANA Final Page 19 Mercedes-Benz, no doubt, stands as one of the world’s great luxury brands. But we like to think that beyond the luxury status we are also an authentic brand. And at its core is a foundation based on over a hundred years of manufacturing excellence and automotive innovation. After all, it was Carl Benz, who in 1886 invented and then patented the very first car. Since then Mercedes-Benz has led the industry in automotive innovations. From developing the first crumple zones, to being the first to install seat belts, to more advanced technologies like inventing the air bags, anti-lock brakes and stability control systems you will find on most cars sold today. And that very same tradition continues to live on. Earlier this month, for example, Mercedes-Benz introduced BlueTEC, the first clean diesel system to meet all 50 states’ emissions standards.
  20. 20. Paul Price ANA Final Page 20 You can then imagine that with such an emphasis on developing automotive technologies and maintaining state of the art manufacturing standards that it is those very departments, research & development and production that receive our greatest financial commitments year over year. Now, the upside to this as a marketer of Mercedes-Benz is that we are in the fortunate position to leverage an incredibly powerful brand in communications. The flip side, however, is that we often find ourselves competing against brands from Tokyo and Detroit that have significantly more marketing budget than we do. The result of this fact has meant that we have had to adapt our marketing strategy to overcome this deficit... Said another way, we simply have to be smarter than our competitors. And at the core of that strategy is what we believe to be a far greater emphasis on data.
  21. 21. Paul Price ANA Final Page 21 Data is our competitive advantage… and as a result we know a great deal about our customers and prospects. Now to illustrate this I was going to say, purely as an example, that if you were to step into on coming traffic at the corner of North Rodeo Drive and Wilshire Blvd in Beverly Hills California you would stand about a 60% greater likelihood of being run over by a Mercedes-Benz than any other single luxury make. But in reviewing my presentation with my PR department they became tremendously unnerved by mentioning being run over by a Mercedes. So they took the speech to the legal department and the attorney’s agreed citing California’s motor vehicle laws which mandate drivers yield to pedestrians even when those pedestrians are not crossing at crosswalks. This all became far too much for me so I offered up an alternative scenario and said, well, what if someone is stepping onto West Grand Avenue in Haysville Kansas. You see, we haven’t sold a car that was registered in Haysville Kansas in over seven years. Therefore someone would stand only a 1 in 6,542 chance of being hit by a Mercedes.
  22. 22. Paul Price ANA Final Page 22 They thought about that for a while but ultimately concluded that this was also risky because the average life cycle of a Mercedes-Benz is ten years and what if, just what if that very same driver happened to be driving down West Grand Avenue at the time you stepped into traffic…. It was at that point I decided a new approach was necessary and that I would be better off sticking to some real life examples of how richer data is helping my company sell more cars more efficiently. Slide 22: Image of C-Class My first example relates to the launch of the all-new C-Class, which we introduced to the public last September. This was a pivotal launch for Mercedes because the car was designed to expand our owner base by bringing younger consumers into the brand. With the help of Paul’s data and analytics, we were able to launch an integrated communications campaign across print, TV, direct, online and event marketing that yielded not only a 44% sales increase overall, but critically a 32 percent sales rate increase with prospects 30 to 34 above and beyond our more traditional 35-to-49-year-old customer.
  23. 23. Paul Price ANA Final Page 23 Slide 23: Mercedes-Benz Fashion Week image A second example relates to Fashion Week. As many of you are probably aware, Mercedes-Benz is the proud sponsor of Fashion Week. We wanted to leverage this event to increase our share of female car buyers. Through the use of data analytics we were able to reach a large group of what we call “fashion-focused females” to position Mercedes-Benz as the automotive leader in style and design. The result of our targeted communications… Mercedes-Benz sold 5,263 vehicles to women. Slide 24: AMG Performance Tour My final example is around a distinct brand within the Mercedes-Benz line up called AMG. Known for ultra-high performance and racing heritage, AMG follows the philosophy of “one man, one engine,” meaning each engine is literally hand assembled by a single engineer that then signs and numbers a plate that is welded onto the engine block.
  24. 24. Paul Price ANA Final Page 24 The AMG Performance Tour is a unique way to introduce and demonstrate the exceptional attributes of the AMG brand to customers and prospects alike. The Performance Tour includes things like test drives, an interactive history of our racing lineage, an acceleration simulator and other features designed to get top prospects behind the wheels of our cars. Based on our targeted data, we created an invitation tailored to a highly qualified segment of affluent individuals who have shown a propensity to shop for brands like Porsche, Ferrari and Lamborghini. The success of this program can be seen in the results. AMG sales increased nine-fold among event attendees who purchased a vehicle. As different as each of the three aforementioned groups are (e.g.,), what all three of these examples have in common – aside from impressive ROI – is the ability to use data to reach people with messages that are relevant to them, and, in the process, the ability to reduce cost and waste.
  25. 25. Paul Price ANA Final Page 25 Okay Paul, back to you. (Paul returns, shakes Drew’s hand and takes the stage) (to Drew) Thank you, Drew. (to audience) You know, one of the main reasons why we’re able to produce results like that for Mercedes-Benz is because we have Drew for a client. (something personal about working with Drew) At this point, let’s sum up and, at the same time, take a little glimpse at some of the ways data will shape the future of marketing. The first thought I want to leave you with is this one: Slide 25: Torture the data and it will confess! Torture the data and it will confess! I realize that may sound a bit harsh, but it’s true. With the amount of up-to-the-moment data that is now available to us, there is almost no question about consumer behavior that cannot be answered with a fair degree of accuracy. All it takes is the right model and the right analysis.
  26. 26. Paul Price ANA Final Page 26 Slide 26: The human machine Those human machines I spoke about are giving up their secrets. Every day we are identifying more and more of those little switches on an individual level. Slide 27: Predictable steps toward brand loyalty More and more, we not only know what consumers did yesterday, we know what they are doing at this moment and what they are likely to do tomorrow. This is huge. It means we can map out the most likely and effective steps to move the consumer from ignorance about our products to trial, adoption, loyalty and predictable growth. Slide 28: Marketing budget allocation demystified And how about this: We are finally solving the mystery of marketing budget and resource allocation. In fact, with that goal in mind, our agency is developing a new platform for marketing integration. It’s what we call the targeting
  27. 27. Paul Price ANA Final Page 27 agency. The targeting agency is the marketing partner with advanced data tools. Behavioral and attitude data, analyzed by anthropologists and strategists, can already tell us with extraordinary precision what mix of apertures and content has the best chance of engaging consumers with your brands. This means that well before any campaign elements are developed, the targeting agency can help marketers accurately estimate how to allocate their budgets. We’re talking about replacing hunches with science. And this means we can now begin to recover that missing half of the marketing budget! Slide 29: True Accountability This also means that, once and for all, we can bring true accountability to the marketing profession. When TV campaigns are no longer asked to do jobs shopper marketing can accomplish more effectively, and when each agency is given the right budget to accomplish its specific objectives, effectiveness will speak for itself, loud and clear.
  28. 28. Paul Price ANA Final Page 28 Finally, at this turbulent moment in time, every one of us is facing more challenges than ever before in driving the growth our stakeholders demand. As I hope I have demonstrated, data is a critically important ally in this effort. But data alone is not enough. Slide 30: Data + Creativity = Growth Data, when teamed with creativity, is the real key to driving a degree of growth that once seemed impossible. Now, I know that for some, data and creativity don’t appear to be natural allies. Up until now data, has generally been viewed as a sort of creative straightjacket. But that’s not the case today — or, at least, it shouldn’t be. The intimate, granular revelations and insights that data provides today have the potential to act as creative rocket fuel. By unleashing these endlessly surprising insights with true creativity, we will have the power to drive growth in any climate. Thank you.

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