The idea of contextual marketing has been around for a few years now, but has steadily risen in importance as the challenges organisations face in maintaining competitive advantage continue to mount.
A key issue is that technology is making it ever easier for new players to enter the market and chip away at the business of even the most established incumbents. Therefore, contextual marketing has grown and developed to become “the next evolution in understanding your customer” as companies try to stay one step ahead of their rivals.
Rhiannon Prothero, marketing director for the UK and Ireland for SAP, is well-versed in the subject and shares with MyCustomer what contextual marketing is, who is adopting and, most importantly of all, how to get it right:
MyC: What is contextual marketing?
RP: Technology has made it much easier for companies to collect information about their customers in order to understand them better. So contextual marketing is about using more of that data to target people effectively.
This data can include technical things like location, and how much difference that makes to what you’re doing or buying. But it’s also about personal preferences such as where you like to go, what you like to do and the people you like to hang out with.
In some ways, things are not really that much different from 10 years ago, except the channel is much wider. So contextual marketing is all about at what point people’s interests change today from what they were yesterday, and what they reveal about themselves so you can respond to them rapidly. And social media is the richest source of such information by a country mile.
As an example, a friend of mine got a new job as a marketing director. She went onto LinkedIn and said ‘my boss wants me to do this and that in 30 days, can anyone help?’ and she was instantly flooded with responses from hundreds of companies.
But while her situation may have been very reactive, if you’d been executing contextual marketing, you would still know what her situation was and whether you could help her even if she hadn’t put out a request. It’s about the context and all the clues that people give out about themselves, like multi-dimensional Rubik’s Cubes of data.
In fact, contextual marketing is no different to any segmentation basis. But in the past, you’d target, say, males under 25 based in London and indicate you had a differentiated proposition for them - and happy days. Now it’s much more specific - you’d be looking at unmarried males with a dog who live in an urban area and like marmite. Now you can be the ONLY one with a completely relevant proposition..
So contextual marketing is a way of segmenting data better and using more factors to put a laser focus on a smaller, more specific group of people and identify their needs. You can even speak to them at an individual level if you analyse the data carefully and use appropriate software tools.
MyC: Is contextual marketing just about data analysis or is there more to it than that?
RP: Data analysis is an important component and it’s complex. You have to deal with massive amounts of intelligence to understand each segment and what is super-relevant to the people in it, and how you should tweak your proposition for them. So ultimately, it’s about creating less wastage in the segmentation process.
But you also have to have commercial and business acumen to create opportunities that work for your customers, and you need extraordinarily competent tools to support both sides of the equation.
We talk about ‘beyond CRM’, and it’s the process of engaging customers or prospects in a long chain of events from the point where interest is registered through to communications and engagement activities, of which contextual marketing is a huge part. Then you move from lead to buy and follow up with services. ‘Tweet to receipt’ is a long chain of customer activity, which is about more than just CRM. There has to be a seamless way of doing it to gain competitive advantage.
MyC: Where is contextual marketing at in adoption terms?
RP: Adoption is more mainstream in consumer markets than in business-to-business.. The reason is that there’s typically a much higher volume of people in the consumer space so segmenting them using a number of factors becomes way more relevant.
Those that do it well generally have access to a lot of customer data – telcos, for example, know a lot about you through your phone and what you use it for. So a high proportion of companies in the consumer space have started on the journey. There’s a question mark over how many have nailed it, but it’s an evolution and it takes time.
On the business-to-business side, the same process is relevant, but it’s slightly more complex as you’re looking at both individuals and the business they work for. This means that you need two layers of contextual data, not all of which is easy to find.
It’s about the context and all the clues that people give out about themselves, like multi-dimensional Rubik’s Cubes of data.
But we’re starting to see a convergence of these capabilities and technologies. Ultimately, it all comes down to what bryan Kramer calls the ‘human-to-human’ marketing approach. If you take all the noise away, it’s just about one person identifying what makes another tick and finding out what help they need..
MyC: What key challenges do organisations face in getting contextual marketing right?
RP: One challenge is a lack of skills, You need to be able to capture the data, of which there’s plenty, and filter it in a way that’s useful.. So you need expertise in areas such as:
- analytics, which includes gaining customer insights and predicting outcomes.
- customer intimacy.
- proposition development.
But agility and speed of execution are also critical. To operate successfully, you have to be able to respond immediately to any event. It’s about context, so if something happens, you can’t wait two weeks to respond.
This situation is challenging for some companies as they work to strict governance guidelines. But it all comes down to finding competitive advantage and execution. So if you’ve done the work on identifying your contextual data, come up with a differentiated proposition but then can’t get it out of the door, it’s still a competitive fail.
MyC: How much of an issue is privacy?
RP: With great power comes great responsibility and it’s important to use that power for good! It’s a genuine challenge to walkthe line between being genuinely helpful to customers and things starting to feel a little creepy like you’re following them around.
But to have an ongoing, lasting relationship with customers, they musttrust you and know that you’ll do the right thing with their information. So people are anxious about stepping over the line if they don’t manage the situation properly, which is absolutely right.
Companies need to be aware of the potential impact they have on someone being targeted and so another addition to the skillset is empathy. Therefore, if you’re setting up a new team, you need someone to keep you honest, ensure you don’t overdo things and that you behave in the best interest of the customer.
MyC: What advice could you provide to help tackle these challenges?
RP: Manage that empathy and trust balance well by being appropriately cautious. While automated marketing may feel like it takes you further from customers as you’re dealing with data rather than conversations, remember that you constantly need customer insights as to whether or not you are getting it right. .
You can do things like run focus groups, ask people directly and use social media to check that everything’s on track. But you should also use your common sense – would you like to be notified by text about an offer every two minutes if you were near a certain store, or would one be OK?
As for things like privacy, data protection legislation exists to provide a base line on what’s acceptable. But there is a risk that you can interpret things to the letter of the law and still upset your customers.
Companies that use common sense make fewer mistakes , but there must be a base level of governance too. So businesses must set their own ethical standards on what is acceptable for their brand and, if they make a commitment on how they intend to behave, they’d better stick to it.
In a nutshell, if all you’re doing is working from data and neglecting common sense and the business and commercial integrity side of things, you’re going to get it wrong. So behave ethically, ensure standards are set that work for your brand and customers, and get the right skills and technology in.
Having a set of tools that brings both the data and insight, and the execution side together in one place is vital. It’s about a combination of solid robust technology and skills if you’re going to manage this to best effect.
I’d say the market is moving to contextual marketing so it’s something you have to get on board with to stay competitive. But do it both with vigour and with care. Agree among yourselves and your customers how you’re going to employ it but do it quickly – and get help. There’s no reason to do this alone.