• by Karlene Lukovitz  @KLmarketdaily, December 3, 2015

Even in large consumer brands companies, most CMOs aren't yet capitalizing on some of the biggest advantages of a digital-first approach, according to a new survey by The CMO Club, in partnership with digital advertising management company SocialCode.

Those advantages include using rich consumer data for advanced audience segmentation and targeting, accelerated learning through low-cost creative testing to targeted segments, and accurate message sequencing and cross-device analysis. 

But among the 80 CMOs surveyed — most of whom spend more than $25 million per year on paid media — 61% reported that they're not testing creative and audience combinations with digital/social advertising to identify and better understand customer segments.

In addition, 66% aren't yet testing creative and audience combinations with digital advertising in order to improve results in traditional media channels such as television, radio and print.

In large CPG companies, it's often been challenging to marshal the corporate focus and resources to develop the marketing technology and teams needed to develop a digital-first strategy, note the researchers. 

Just 24% of CMO respondents reported that they currently have an internal data-management platform (DMP) — the type of platform that enables comprehensive data access by integrating online and offline first-party data from retail, the Web, email and CRM; second-party data from partnerships; and anonymized third-party data from sources including social platforms and retail data intermediaries.
However, nearly 60% of CMOs said that their companies are planning to have a DMP in place in 2016 or subsequent years. 

And the researchers' interviews with CMOs who are already engaged in executing digital-first strategies confirmed that even in the early stages, the benefits can be substantial.

Full-On Push at Clorox

One of those CMOs, Eric Reynolds of Clorox, shared more specifics on his company's efforts and results to date with Marketing Daily.

Clorox developed a DMP to improve targeting and better understand the performance and value of its campaigns, and has an advanced analytics team dedicated to testing and extracting insights.

Testing varied creative — including different copy themes with the same images — and analyzing the responses has enabled the team to identify and then continue to hone core audience segments. 

For example, whereas the Brita water filtration brand's core audience was once defined as "happy, healthy water drinkers," digital ad insights and subsequent modeling of first-party data within the DMP has enabled identifying seven main audience segments defined by values such as health, taste and environmental consciousness (creative examples shown above), and factors such as whether or not consumers are coffee or tea drinkers, explains Reynolds. 

"It's still early days," he says, noting, for instance, that digital testing is currently focused on email, CRM on brands' owned Web sites and digital display and banner ads (video will be added to the mix going forward). The ad buys are being done both through programmatic and  private networks owned by media partners.  

A/B testing is also being used to analyze the effects of various campaigns in digital versus traditional media — for instance, the responses of control groups of consumers who are exposed only to a traditional media mix, versus those who are exposed to a traditional mix plus digital, Reynolds says.

With digital, early performance indicators often enable answers and insights within about two weeks. Key performance metrics are, of course, also being tracked over the long term.

Currently, the same basic systems and processes are also being applied for Clorox Disinfecting Wipes and the company's Hidden Valley brand.

In Brita's case, nearly a third of creative is already being "personalized" to one of the identified core segments. Segmentation is expected to continue to become more granular as the brands continue testing and modifying targeting algorithms. "There are an enormous number of ways that you can cut the data meaningfully, once you link data, technology and creative together intelligently," Reynolds observes.

However, he stresses that Clorox continues to believe in the benefits of focusing on strategic segments that "inform the brand's identity and marketing," and that he believes that Clorox, like other large CPG marketers, will ultimately not find it effective to pursue literally one-on-one creative targeting.

As for results to date, Reynolds reports that Clorox is not only seeing statistically significant differences in response to targeted, customized creative, but lifts in actual purchasing or conversion rates (trackable through matching test subjects' performance against retail data obtainable through sources such as Datalogix). The cost efficiency or return on investment is superior even at the higher CPM rates applicable when buying media for segmented creative, he says.

In fact, Reynolds reports that the results in the last year supported hiring 24 more people to do "test and learns." 

While about 42% to 45% of Clorox brands' media budgets are being invested in digital media, traditional media continue to be very important to the company, and again, the overall objectives are to benefit the entire integrated marketing strategy, he emphasizes. 

"Before digital came along, we could model about 95% of media spend; now we'll spend the next several years getting just as smart about digital," says Reynolds, who adds that the full support of Benno Dorer, who became Clorox's CEO a year ago, has been the foundation for all of the work.

While Clorox is of course still concerned about its traditional, large competitors, focusing on getting to the point where digital-first is fully integrated into the marketing strategy is also crucial because "more and more, upstart competitors who are digitally savvy can slip their way into the lives of desirable customers," Reynolds says.

A PDF of the full report, "Digital Advertising Insights: A Treasure Chest for CMOs to Open," is downloaded from SocialCode's site.