Data-Driven Marketing: a new era of consumer brand communication

Brand marketing is a field of practice that has offered remarkable benefits to modern society. As Bronnenberg and Dubé (2017, p.368) write, it has allowed consumers to live more efficient lives, enabling us to make quicker decisions while being assured of quality through the brands we trust. Brands also enhance the consumer experience, in which a positive perception of a brand can elevate the enjoyment of a product (Bronnenberg & Dubé, 2017, p.362).

Several brands we know today belong to the Fast-Moving Consumer Goods industry (FMCG), which Bronnenberg and Dubé (2017, p.355) define as products that are consumed and replaced in a regular manner. This sector includes consumer good categories such as food, laundry, household cleaning, and personal care.

It was in the late 1920's when brand management as we know it was originated by Procter & Gamble, an FMCG global powerhouse even today (Aime et al., 2018, p. 422). Since then, FMCG companies have thrived in globally expansive growth, with their long history of marketing within traditional media such as television, radio, and print (Jaray, 2005, p.23).

Recently however, the industry has been disrupted by the shift of consumer media behavior towards channels accessed via the internet. Predictably, brands followed suit. In 2017, digital marketing spend finally surpassed television for the first time, generating $209 billion globally versus television’s $178 billion (MAGNA, 2017).

With this move towards digital comes an unprecedented amount of consumer data previously inaccessible with traditional media. And for the first time, FMCG companies have found themselves with a deluge of new consumer information that they need to find ways to innovate on to stay relevant.

The race to win the digital consumer

When we analyze factors accelerating innovation within FMCG marketing, we find that it revolves mostly around the digital consumer, who are today’s consumers possessing a different set of behaviors and more demanding needs compared to consumers of the pre-digital era (Belingher & Călin, 2011, p.26).

As a result of this consumer evolution, the following factors emerged that are now compelling FMCG marketers to innovate within this new reality.

Richer consumer insights

Digital media channels have unlocked a goldmine of data for today’s brand marketers.

Before, the only data obtained from airing a television advertisement was if your ad aired and when. Today, digital channels allow you to dig into a rich data source about who saw your ad, how they interacted with it, and even purchase behavior after exposure to the material (Wolk, 2018).

The appeal of this is unmistakable, as it allows brand marketers to augment their understanding of their consumers on a deeper level. Consumer media behavior is now quantifiable to a level that was impossible with media of the past.

More efficient costs to connect

Previously, launching a marketing campaign required a significant investment in mass-marketing channels such as television and radio. With digital media however, you can spend almost as little as you like. This is a distinctive feature of online advertising given its ability to price advertisements based on campaign metrics such as click-throughs or viewing time (Hu, 2004, p.3).

With measurement data enabling flexible options on costs, brands have an added incentive to invest in these data-driven channels to control expenses and improve profits.

Competition from smaller players

As a result of the digital consumer’s rise, and with online media’s accommodating costs, FMCG industries which were formerly considered impenetrable have seen their barriers-to-entry severely lowered.

A prime example is the success of Dollar Shave Club, a shaving razor brand whose online video advertisement has reached consumers through widespread sharing on social media, mainly because of its humorous appeal. Unsurprisingly, the market leader Gillette saw its brand share suffer, and in 2016, Dollar Shave Club was acquired by Unilever for $1 billion, only five years from the brand’s inception (McGrath, 2020, p.30).

FMCG companies, who already have stiff competition from their corporate counterparts, have been put to even more pressure to modernize because of this novel threat from smaller players.

Opportunities to innovate: the birth of Data-Driven Marketing

With their consumers evolving, FMCG companies are now pushing to adopt what the industry is calling data-driven marketing, in which consumer data plays a pivotal role in all forms of brand communication. Firms who employ data-driven marketing are seen to “have significantly better financial performance than that of their competitors” (Jeffery, 2017 p. 4), explaining its appeal.

The opportunities that data-driven marketing presents are wide-ranging, and the following are just some of its primary examples.

Precision marketing

For today’s digital consumers, relevance and context of communications are crucial. Brands cannot expect to remain competitive with just one-size-fits-all campaigns; they must know their consumer’s behavior based on the data available, and be there to communicate with them within their current context (Zoratti & Gallagher, 2012, p.3).

Precision marketing is utilizing consumer data, primarily available with digital media, to deliver “the right message at the right time through the right channel to the right people” (Zabin & Brebach, 2004, p.47). Data allows brands to talk to their audience not just with one all-encompassing message, but with tailored communications for subsets of their target demographic.

An example of how this is being implemented is with Unilever’s skin care category. Through usage of consumer data, Unilever was able to segment the skin care market into six buyer categories, not just depending on their age and geography, but also their ethnicity and medical conditions. With data allowing this precise segmentation, Unilever was able to tailor its campaign materials to show messages specific for each of those consumer profiles (Zabin & Brebach, 2004, p.100).

Programmatic media optimization

Marketing with media optimization is the process of constantly improving your materials through analysis of performance metrics. This allows digital media campaigns to use the data from subsequent runs of the advertisement to refine their targeting, resulting to better effectiveness (Dempster & Lee, 2015, Chapter 7).

This is usually done programmatically through an algorithm that seeks to maximize ad performance for a specified metric, like clicks or views. These algorithms, employed by social media giants such as Facebook and Twitter, are powerful optimizers due to their capability to operate in real-time without any human intervention (Dempster & Lee, 2015, Chapter 7).

Data-driven traditional marketing

Although digital media instigated the emergence of data-driven marketing, the underlying principle of using data to make marketing campaigns more effective is actually being applied for traditional channels as well.

Within television for example, innovations on smart TVs are allowing the industry to get “second-by-second metrics as to which shows and ads viewers are watching” (Wolk, 2018). Because of this new phenomenon, pioneering platforms have launched several ways to use data to modernize television advertising. Among these is to target brand-defined audience clusters within the smart TV network of users, and the capability to perform A/B testing wherein viewers are shown different advertisements to determine which is more effective (Wolk, 2018).

Issues facing FMCG marketers

Despite the multitude of opportunities that data-driven marketing presents, an industry with deep roots in traditional marketing can only be expected to have a complex transition towards this new culture. With the revolutionary amount of data that FMCG marketers now have access to, modern challenges have also come into light.

Brand safety

Programmatic digital advertising utilizes algorithms that perform only what is coded by the one who engineered them. Because these algorithms are not perfect, some advertisements are being placed on websites that are damaging to the brand, giving rise to the concern of brand safety.

In 2018, over 300 companies, FMCG brands included, started pulling advertising from YouTube after discovering that their ads were placed on neo-Nazi videos and other inappropriate content (Murphy et al., 2018). This has caused big names on digital advertising, notably P&G’s CMO Mark Pritchard to call for the industry to unanimously require auditing on these digital channels (Baillie, 2017).

While brand unsafe incidence cannot be fully avoided, mitigation is still possible. Brands are now being advised to have a takedown policy with their media partners, wherein advertisements delivered in an unsafe context will need to be removed within a specified time period (Crittenden et al., 2017, p.6).

Non-ownership of data

Unlike a health institution with access to their patients’ data, or a bank who holds their customers’ financial information, a unique conundrum for FMCG marketers is their reliance on external parties for the data that they use.

Because digital media is powered by companies such as Facebook and Google, the unfortunate reality for FMCGs is that the wealth of data about their consumers are data that they do not own. When a brand targets an audience within Facebook, they are merely leasing that data from the platform. Marketers cannot derive further insight from it apart from what Facebook allows them to see.

This dilemma has urged FMCG companies to collect their own consumer data. According to Unilever ex-CMO Keith Weed, the company has a commitment to create a billion “one-to-one relationships” with consumers by collecting their own first-party data (Stewart, 2018). With this agenda, Unilever has invested with cloud providers to store that data for its over 400 brands (du Preez, 2019).

Data privacy and security

With global advertising spenders moving towards collecting data in a massive scale, it is evident that a major consideration will be data privacy and security.

Concerns on misuse of marketing-related information have been an ongoing concern, with violations on privacy and sentiments of vulnerability expressed as worries by consumers (Martin & Murphy, 2017, p.150).

In this regard, marketers are advised to include customers in data privacy dialogues whenever possible, and to commit to security practices over the long-term to gain consumer trust (Martin & Murphy, 2017, p.152).

Conclusion: The future of FMCG marketing and its impact on the world

The impact that data is ushering within this field is two-way: as it affects not just the FMCG companies, but also the consumers whom ultimately the products in this industry are for.

FMCG companies who successfully utilize data to market their brands will obtain a competitive advantage versus those who don’t. They will gain preference from today’s digital consumers, while enjoying the benefit of cost efficiencies through smarter data-driven spending.

Consumers, on the other hand, will benefit from the ability to communicate with these global brands in a closer context than ever before. In this age where every digital interaction is captured and regarded by marketers in company decision-making, consumers have a significant role to play by virtually voting through their clicks, watch-time, and purchases on which products they want to signal FMCG companies to invest in. If consumers seek a world where influential brands are committed not just to data concerns such as privacy and security, but also other global issues such as environmental sustainability, then they must demonstrate this with their data.

As much as consumer lifestyles have been shaped by traditional media forms of the past, more so can we expect modern data-driven channels to make an impact on today’s world. Ultimately, whether that shift will be beneficial to society or not will be determined largely by the demand that consumers signal with their data, and the ability of FMCG marketers to read those signals and make informed, ethical, and data-driven decisions.

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