Contextual marketing – when personalization is not enough
In marketing, personalization is all about answering the question: “who is my customer”? Contextual marketing, in turn, aims to enrich that knowledge with information about where, when and why a purchase is made by a consumer.
According to recent Gartner report, marketing departments’ spending continues to rise – in 2015, companies were earmarking approximately 11% of their turnover for that specific purpose. In 2016, the share increased to 12%, and nothing indicates that the trend is about to change.
As much as 27% of that budget is spent on procuring technology - mainly automation marketing systems and analytic tools. These are used to personalize a marketing message and to reach the customer with content that is suited, to the greatest extent possible, to their individual needs and requirements.
“The Contextual Marketing Imperative” report drawn up by Forrester for SAP Hybris indicates that personalization is of key importance for marketing experts – 91% of them stress that they intend to rely on deeper personalization and better relevance of the message to boost the customer’s brand experience.
Currently, segmentation is one of the most popular personalization tools. As many as 66% of marketers differentiate their messages depending on the demographic data held, 52% acquire more precise information based on loyalty programs, while 48% rely on behavioral data. In light of the above, situations in which a given message is aimed for everyone are ever more scarce. Instead, ads are more frequently targeted to a specific audience; “women aged 25-35”, for instance.
The report also states that proper interpretation of the consumer’s intentions becomes more important as the personalization of the message deepens. Although marketers are very optimistic about their achievements in this specific area (66% consider the results of their work to be “very good” or “exceptional”), the feelings of consumers are completely different. According to 40% of consumers, promotions and dedicated proposals offer no interesting value at all.
The problem is that marketers often limit personalization to target group segmentation. Such an approach is very much correct - communications aimed at teenage boys should differ from those intended for women aged 30-35 and holding managerial positions. However, the practice fails to solve another key problem: wrong timing of the message. A woman who has just bought a new pair of shoes is not interested, in most cases, in acquiring another pair. Similarly, a teenager who is a great fan of console racing games will not necessarily be interested in a strategic game. This means what without coordinating a number of independent factors, message personalization achieved by precise segmentation will not be fully effective as well.
Context - what is it and how has it changed the rules of the game
That is where contextual marketing steps in - a natural successor of personalized marketing.
The term means enriching information about “who” is making the purchase (i.e. personalized marketing), with data about the context, i.e. “what, when, where, how” and “for what purpose”. What does it look like in practice?
A situation in which ads are targeted specifically for people who have shared, with their product or service supplier, information about an important moment in their life is a good example of a case in which segmentation is enriched with a demographic data-based context. Such customers may have just bought a new home, may have gotten married or have welcomed a newborn baby. Contrary to what one might expect, obtaining such information does not always require a miracle involving magic and cookie-matching.
The chain of Rossmann drugstores is obtaining data required for its contextual marketing campaigns in an elegant and efficient manner, by relying on its Rossnę loyalty program targeted specifically for young parents. The loyalty card may be issued as early as during pregnancy, and it authorizes the user (with family members included) to receive discounts on cosmetics for pregnant women.
Once information about the child is provided (sex, date of birth), the store may send highly context-matched (age of the child and its current needs) information about promotional campaigns, stating for instance “your child has just turned six months old. Take advantage of a special discount for porridges for children who are more than six months old.” The longer a given user is taking advantage of the card, the higher the discounts they receive on child products; furthermore, card holders may take advantage of dedicated promotions as well. That is how the brand is rewarding its loyal customers, at the same time satisfying their specific needs.
Information required to conduct similar promotional campaigns is also collected during wedding or educational fairs.
In the claws of micro-moments
But in addition to life-changing moments such as a wedding or the arrival of a baby, hundreds of less significant moments take place every day that make the user susceptible to an advertising message. These are the moments when they think “I am hungry”, “I am bored”, “I feel like something” or “I’d like to buy this”. In this case, it is much more difficult to match the message to the moment, as time plays a more important role here - many of the desires are only temporary, resulting in chances being missed by marketers. That is why Google has coined the term “micro-moments” to describe such situations.
According to Google, the opportunity to reach a customer during a micro-moment (i.e. at a time when the context is right to sell a product that satisfies an everyday need) has arrived along with the dawn of mobile devices. 65% of users are using their smartphones to look for what they need at a specific moment. The greater and the more urgent the need is, the lesser importance is attached to the brand of the product and to previous experience involving that brand.
The mechanism of micro-moments is relied upon by the chain of Red Roof Inn hotels. Each day of the disastrous winter of 2013, 90,000 American passengers were spending a night at airports due to delayed flights. With those passengers in mind, Red Roof experts developed an app that tracked flight delays at airports close to the company’s hotels. The passengers of delayed flights received ads with discounts for a night’s stay and with information about the hotel’s location - exactly at a time when they needed this kind of a proposal. The technology implemented has resulted in a 60% increase in the number of bookings based on searches that are not related with the brand, and the conversion rate has increased by 375%.
"Nowadays, companies collect large quantities of distributed data on their prospects and customers. This brings a significant challenge of consolidating data and, at the same time, catering to customers as individuals".
- Knowing this, marketers are able to understand the needs of users as well as their motivation and readiness to act, and can communicate with them whenever it is most suitable for customers. In fact, with advanced contextual marketing platforms (e.g. SAP Hybris Marketing), we can provide customers with real-time contextual and consistent experience in the course of their buying path, regardless of the medium and device - he says.
Technology - the fuel of creativity
Shifting the focus from the brand and its offering to the consumer’s needs, and to serving the customers at locations where specific products or services may be required, is a key to understanding the mechanism of contextual marketing. The challenge is much more complicated than just developing a coherent image for the company, or than building ever more advanced segmentation schemes, as the emphasis is shifted to user interaction. That is why most businesses will require an experienced partner, such as e-point, in order to effectively implement advanced tools capable not only of automating, but of contextualizing their marketing effort. Future marketing efforts require combining the opportunities offered by technology with the creativity of marketing experts to leverage data to put their messages in the proper context.