A Forrester Consulting

Thought Leadership Paper

Commissioned By MediaMath

Advancing Practices In
Real-Time Marketing
A Status Report On Progress Toward
A New Marketing Paradigm

July 2014

Table Of Contents
Executive Summary ........................................................................................... 1
Marketers Envision A Real-Time, One-To-One Future .................................. 2
Moving From Vision To Execution Is Challenging ........................................ 3
Evolve To A New Marketing Approach ............................................................ 6
Key Recommendations ..................................................................................... 8
Appendix A: Methodology ................................................................................ 9

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Executive Summary
In March 2014, MediaMath commissioned Forrester
Consulting to evaluate marketers progress toward
delivering more targeted, relevant communications and the
challenges they face on this journey.
Companies described investments in data
collection, insight development, and campaign
activation to advance toward a new vision of
marketing over the next one to three years.
In conducting in-depth interviews with 18 senior marketers
in North America, Europe, and Asia Pacific in the retail,
financial services, and consumer packaged goods
industries, Forrester found that organizations are ready for a
world where personalized one-to-one interactions close to
real time are available.
KEY FINDINGS
Forresters study yielded three key findings:

Marketers are taking demonstrable, concrete actions

to enable one-to-one marketing. Companies we spoke
with articulated a vision of marketing that is more relevant
to customers and adapts as additional insights into their
needs are revealed by each interaction. But we saw this is
more than a future vision, as these companies described
investments in data collection, insight development, and
campaign activation to advance toward this future state
over the next one to three years.
More advanced marketers are being more customercentric. Having better customer knowledge enables
delivery of more relevant products, offers, and messages.
But the most sophisticated marketers we spoke to are
moving beyond a transactional mindset and think about
how to also enhance the customer relationship. They mix
in brand and customer service messages that dont lead
to immediate sales, but build longer-term loyalty that will
enhance customer lifetime value.
Data and the ability to change campaigns mid-flight
enable a test-and-learn approach. Beyond having better
insight into customers needs to match the right message
and offer, marketers increasingly let live, in-market results
guide the directions campaigns take. While they use the
best available data and their best insights about their

business, they recognize that their decision may not be

correct. With systems that report customer responses on
a frequent (often daily) basis, and digital channels where
changing messages and offers is relatively low cost,
marketers consider their initial campaign plans as only
hypotheses, planning to read results and make changes
quickly as early results reveal what delivers the desired
business impacts.

Marketers Envision A Real-Time,

One-To-One Future
Consumers increasing engagement with myriad digital
devices and channels makes it harder to design the right
media mix and create the possibility of connecting with
consumers at each stage along their purchase journey.
Marketers envision delivering marketing messages that
synch with each consumers needs at each specific point
and are informed by knowledge of the individual from prior
interactions. In the Forrester Research Business
Technographics Global Data and Analytics Survey, 2014,
improving customer interaction and satisfaction was cited as
the second most important driver behind analytics initiatives
(see Figure 1).

FIGURE 1
Firms See Analytics As Key To Improving Customer
Interactions

What are the most important goals/drivers your

organization considers when planning or
orchestrating your business intelligence strategy?
Make better-informed
business decisions
Improve customer interaction
and satsifaction
Monitor, improve, and optimize
process performance
Improve data quality
and consistency

51%

42%
38%
34%

Base: 268 global data and analytics technology decision-makers and users
Source: Forresters Business Technographics Global Data and Analytics
Survey, 2014

Is this idea of delivering relevant, tailored experiences just a

far-off vision, or are marketers taking concrete steps to
make this vision real?
Our interviews confirmed that this vision is much on
marketers minds, as they described providing customers a
more consistent, personalized, and relevant experience
informed by a unified cross-channel view of the customers
relationship with the firm and its products. This vision is
beginning to take shape as firms take concrete actions to
collect the data, build the systems, and create the
processes to support this new approach. Several themes
emerged in our discussions:

Marketers make real progress on building one-to-one

relationships. Many of the companies we interviewed
described not only a vision of real-time, one-to-one
marketing, but also detailed existing programs and areas
in which they have implemented it today, mainly in digital
marketing, website, and customer service interactions.
Others, such as a North American retailer we interviewed,
are completing foundational projects that will give them
the more complete view of the customer: We are in the
middle of a project to migrate from disparate customer
relationship management (CRM) databases to a central
repository of all our customer touchpoints. We will be inmarket by the holidays to test new marketing
approaches.
But there is a spectrum, not a single end point.
Several companies described how they progressed from
mass marketing all the way to highly personalized, one-toone marketing as they became more sophisticated. The
degree of customization hinged on both the economics of
their business and the capabilities of their systems. The
North American retailer quoted above went on to say, I
can see having hundreds, even thousands, of segments,
and get smarter about which drive the most value, then
market to each differently according to their value.
Financial services lead the way. With multiple products,
frequent contact with consumers in diverse channels, and
potential for high lifetime value, financial services firms
are furthest along. A European firm described its systems
functionality this way: Every night we rank 250 messages
and offers for each of our customers based on propensity
models. Then, if a customer has an inbound contact, he
receives a personalized offer. That night, we take the
results, refine the models, and re-rank the messages and
offers.
Retail shows mixed progress. Retailers in different
categories face different challenges that determine their
ability to execute one-to-one. A European retailer
described a tactical application of using real-time data to
clear overstocked inventory, while a North American
retailer spoke of its desire to use data to duplicate the
personal recommendations its store associates provide to
shoppers.
Consumer packaged goods (CPG) has a different
vision. CPG marketers understand the concept and
believe it is the future, but struggle to understand how to
apply it to their products. These brands have less direct
contact with consumers, so they see less ability to

personalize ads and offers. But they are actively exploring

collaborations with grocery retailers, seeing the potential
to tap the grocers loyalty program data for joint marketing
programs delivering relevant messages via mobile
devices.

On one end, there is mass marketing,

and at the other end of the extreme is
one-to-one marketing. I think we can
all agree that we want to move closer
to one-to-one but how far within
that range do you go down?
Financial services marketer, North America

Moving From Vision To Execution Is

Challenging
While marketers see the potential of more personalized,
relevant messages and are beginning to move toward it,
they told us of many challenges and barriers. They
described issues with collecting a comprehensive data set,
extracting insights, activating those insights to achieve
marketing goals, and changing the skills, processes, and
organizational structures to enable their future vision.
DATA IS THE FOUNDATION
Business leaders have told Forrester Research that the
quality of data is more important than the quantity, and they
lack full confidence in their data quality (see Figure 2).
Interviewees widely agreed that data is the foundation of a
real-time, one-to-one approach. While some encounter
issues with data quality, the bigger issues are around
connecting disparate online and offline sources, extracting
insights, and connecting the data to systems that activate it
in the marketplace. Specifically, business leaders described
challenges with:

FIGURE 2
Data Is The Foundation, But It Must Be Strengthened

Data quality more than data volume is the most

important feature that makes data valuable
for analytics innovation.

How much do you trust in the data quality and

results analysis of your organization's
business intelligence applications?

Disagree/strongly disagree
7%

Have little trust

7%

Don't have any trust

1%

Neither agree nor

disagree
24%
Agree/strongly agree
69%

Trust completely
31%

Trust somewhat
61%

Base: 775 global data and analytics technology users

Source: Forresters Business Technographics Global Data and Analytics Survey, 2014

Bridging silos. In the interviews, firms acknowledged

they already have a lot of data, but often it sits in different
databases, different business units, or both. Bringing this

data together into a single repository is the first challenge

many firms face. An Asian retailer noted, For each of our
divisions, registration for the eCommerce site is a

separate customer name and address than the loyalty

program. I can quickly count six different databases
across our company.

Connecting data. Even putting all the data in a single,

centralized database still leaves the challenge of
matching the different sources and types of data to a
single individual. Matching online and offline sources is
particularly difficult, as a North American financial
services marketer explained: When you are trying to
overlay demographic data on top of cookies, at best you
get a 30% to 40% match rate.
Knowing what data is meaningful. With the large
volumes of data being generated, our interviewees
struggle to find the critical data that will lead to valuable
insights. We heard two contrasting approaches: capture
everything, then apply analytics to uncover the insights
versus being more selective about what data is kept and
what is ignored. Companies with more sophisticated
marketing analytics functions were more willing to collect
a broad data set, confident that they could extract
actionable insights. The head of marketing analytics for a
European financial services firm told us: We have a data
lake to bring all the data across the enterprise together.
Then we have the analytics tools and approach. This
gives us the means to explore new insights.
Unlocking social datas value. The interview subjects
face a dilemma with the information from social networks:
On the one hand, the depth and personal nature of the
information is extremely rich, but on the other hand, both
the volume and format of the data make it difficult to work
with. An Asian financial services marketer told us: The
appetite to integrate social media into marketing
communication is there. We have been challenged with
how we add value and derive a relevant conversation.
Finding new kinds of data. In order to serve individual
customers in a highly customized fashion, firms look for
new kinds of data to build services around. An Asian
retailer told us: We now capture vehicle identification
numbers (VINs) because, for example, the same year and
model car may use one of four different fuel pumps. The
VIN tells you which is right for that specific car. Linking
this data in-store and on our website, weve brought our
return rate down from 20% to 1%, but more importantly,
the customer gets the right part the first time.

For every customer, we have every

product and every transaction
monetary and nonmonetary going
back 10 years. That gives us a great
deal of understanding of what the
customer is doing, what is his value,
and how he is interacting with our
channels.
Asian financial services marketer

ACTIVATION REQUIRES A BALANCE OF

TECHNOLOGY AND PLANNING
Collecting, organizing, and extracting insights from data is
just the first step. The next challenging step is connecting
the data to systems and strategies that will use it to create
business value. Companies told us that building the right
technology base is important, but alone it isnt enough.
Real-time presentation of relevant offers requires a different
way of planning message creation, including:

Connecting insights to customer-facing systems.

Marketers today are focused on delivering customized
experience through digital touchpoints, customer service
contacts, and stores. Legacy technology systems often
separate databases from delivery systems like CRM and
email services. Moving the data and insights from one to
the other hampers marketers ability to execute their
customization strategies. An Asian retailer told us: We
use Oracle SQL Developer to pull campaign lists, then
use Responsys to deliver email communication. It is quite
cumbersome and we are piloting redevelopment of that
whole platform.
Planning for real time. Marketers told us about a hybrid
approach that can be used to help these systems function
effectively. In this approach, planning is still a critical
element to create a range of potential offers, but the
actual decision of which specific message or offers to
present happens in the moment of interaction. An Asian
financial services marketers explained it this way: You do
planning at a segment level, and when someone in a
particular segment comes in, you have a shelf of offers

someones probability of getting married, for example, that

might impact my marketing decisions.

available. Then, based on the individual nature of the

interaction, one particular offer is presented.

Using ever smaller segments. Interviewees said that,

practically speaking, true one-to-one marketing may not
be feasible today, but they have found segmenting
customers into smaller groups moves them closer to that
ideal. Several firms told us how their data fuels models
that create an increasing number of segments, each with
fewer customers. These smaller groups act similarly
enough to achieve the desired boost. An Asian financial
services provider explained: A lot of the activity is going
to be based more on segments. They might be quite
refined segments but theyll still be bigger than one.
Diversifying offers and messages. These different
segments by their nature have different needs, which in
turn require different offers and messages. So, as the
number of segments increases, the volume of potential
messages increases proportionally. A European financial
services marketer told us: We currently have 250
messages and offers, up from 91 at the end of last year.
We will have 350 by years end. It is self-increasing
because product managers must have a very good offer
that is ranked highly.
Incorporating brand and service messages. Much of
the thought about real-time messages revolves around
presenting a product and value proposition that spurs an
immediate sale. The more advanced companies we
spoke to realize, though, that customers arent always inmarket and that messages about other aspects of the
relationship have an important place as well. Not all our
club communication is about loyalty. If you get stuck on
that you miss the wider opportunity. Our highest clickthrough ever was not a product and price message; it was
a how-to guide on using a particular product, An Asian
retailer told us.
Applying data in acquisition and branding. Marketers
have the most data and the greatest potential for realtime, one-to-one communications with existing customers
interacting in their owned channels. But that doesnt mean
upsell, loyalty, and retention are the only areas where this
kind of application of data has value. In fact, a North
American financial services marketer sees data as the
key to differentiation in acquiring customers: When I think
about how we can win, its not reaching the consumer
when hes already far into the purchase process. Its
figuring out how you can reach him right before he is
about to start thinking about a purchase. If I knew

Protecting the customer relationship. Privacy is an

increasing concern as data volumes increase, because
the kinds of data collected become more sensitive, and
connecting different sources can make some consumers
feel uncomfortable. Most companies are aware of the
potential damage this could bring to customer
relationships and consciously try to minimize this risk, as
this European retailer described: You cannot afford to
damage the customer relationship through
communication. We have to make sure we have
permission to talk to them, we give them opportunities to
opt out, [and] we have the hygiene factor right so we have
good data that is properly managed.

We display a personalized offer and

capture how the customer reacts.
Then we use this feedback to fuel
ranking the offers for the next day.
Right now we run about 400 million
calculations each night.
European financial services marketer

CHANGE MANAGEMENT IS AN ESSENTIAL ACTIVITY

Data, technology, and messages are important elements of
a real-time, one-to-one strategy. But many of the firms we
interviewed emphasized that without changes to
organizational structures, processes, and mindsets, results
will fall far short of their full potential. Four themes emerged
from our interviews with business leaders:

Senior management must be on board. As with any

significant new initiative, leadership from the top is critical
as a signal to the organization that change is not optional.
One way to gain this support is to ensure executives
experience new technology. The analytics director for an
Asian retailer described his approach: The managing
director was on board from day one. Then we got the rest
of the leadership team iPhones, and it really opened them
up to the world of the smartphone. One had this revelation
and came in one day and said, I bought a car on my

iPhone. They really saw how the world is changing and

that helped get us on this journey.

Shifting marketings mindset from instinct to data.

Marketing is accustomed to applying significant amounts
of judgment, experience, and instinct to its strategies and
tactics. With increasingly accurate data, sometimes those
instincts are correct, but often they are proven wrong.
Several of our interviewees told us that effecting this
mindset shift requires even greater care and effort than
building the technology, including a North American retail
firm that confided, Our merchandisers believe in the art
of it. It will take time to build credibility. Data and
technology you can throw money at and fix. You cant
throw money at fixing culture.
Customer centricity is at odds with organizational
structure. At the heart of real-time, one-to-one marketing
is a philosophy that makes customer needs paramount,
trumping corporate strategies and priorities historically
built around specific products or business units. Several
firms we spoke to noted how large a shift this will require,
including this Asian financial services firm: The product
areas pretty much drive the agenda, and therefore most
of the conversations with customers are product-centric. It
is an extremely huge mind shift going to a customercentric world. Id say it is a two- or three-year journey, but
it is exactly where we want to be.
Accepting experiments and risk. For the decades of the
mass marketing era, marketing had proven frameworks
and rules of thumb that delivered predictable results.
Firms employed them in order to limit downside risk, and
new employees were indoctrinated in them. As those
guidelines lose effectiveness in the face of technological
and consumer change, firms must be willing to let go of
them and adopt a test-and-learn attitude. Organizations
now need to have the openness and the willingness to
experiment, stated a North American consumer
packaged goods marketer. Companies that dedicate
themselves to learning will inevitably make mistakes but
will have an advantage over competitors.

Technology is not really a barrier,

and if its a barrier today, it wont be
in six months. The biggest challenge is
how you equip an organization with
the skills, knowledge, tools, and
confidence to move forward.
Consumer packaged goods marketer with global
responsibility

Evolve To A New Marketing

Approach
Our interviews clearly indicate that the shift to real-time,
one-to-one marketing is no longer a far-off vision but is
underway broadly across industries and different areas of
the world. This change requires more of marketers and their
firms than simply learning a few new technologies; it
demands reframing the role of marketing and redesigning
the processes that support it. The companies we spoke to
for this report represent a range of firms at different stages
in this evolution, but their experience reveals a common
sequence of steps marketers can anticipate as their
organizations navigate this journey:

Invest in data quality. While it is tempting to try to

operate in the one-to-one world as fast as possible, the
right foundation must be built to support it. Almost all of
our interviewees described a period of discovering,
cleaning, and consolidating customer data as an essential
early step in this process. An Asian retailer told us: We
have about 24 disparate customer databases that we are
currently pulling together. Assuming we get adequate
funding, it will probably come to fruition in three to four
years.
Build a data-centric culture. Individuals and companies
have been successful in the past relying on experience
and instinct, and it is human nature to stick with the tried
and true. Proving that data-driven decisions are more
successful and that the ability to deliver individually
tailored offers and messages deliver higher returns
requires a more robust approach. Realize that some staff
will feel uncomfortable with this change, and work hard to
win them over. Bring them into the data and analytics

process and show them their knowledge is valuable in

making the models more accurate. An Asian retailer
noted: Our buyers still bring a lot of value to source the
right products. But they need to let go of some areas and
use data to strengthen their decisions.

Keep consumer privacy concerns in mind. While you

gather increasing amounts of data and use it to inform
new ways to market, dont overlook the people whom the
data represents and their sensitivities. The power of that
data can alienate customers if companies go too far. A
North American retailer takes this cautious approach:
Were combining direct mail and online customer data
and starting to get bigger and better insights about our
customers. The outlier is our rewards database, which is
driven by our credit offerings out of our internal bank. We
keep this data at arms length because we want to be in
the top decile of retailers when it comes to privacy.
Manage change with a hybrid organizational
structure. Product-centric organizational structures wont
disappear overnight, and firms must carefully manage the
transition to customer-centric structures. An Asian
financial services company described how it is overlaying
customer-centric thinking on existing structures with an
eye toward completing the shift as customer-centric
capabilities mature: I am building the data, technology,
and front-end systems for customer one-to-one
marketing, and we will test those in parallel with our
product marketing until we define customer-centric
processes and team instructions.
Use these capabilities for a more flexible campaign
approach. Marketers typically plan for a years activity,
then spend the year executing the plan. The more
advanced firms we talk to consider these plans only a
starting point, and their process allows for an early read of
results and optimization based on these results. A
European financial services marketer described his firms
system in which propensity models make offers and
message decisions. New offers and messages are added
on a daily basis, exposed to customers, and their
response is used nightly to refine the propensity models.
The following day, an individual message will get more or
fewer exposures based on the previous days results.

Key Recommendations
This report reveals marketers are in the early stages of building the kind of targeted, personalized marketing they see
as the future.

Having a plan for how you will use your big data. There is little dispute that more data is better, but without a
plan for what to do once you have amassed all that data, you could end up in the situation a North American
financial services marketer said he hears often from peers at other companies: We just spent a lot of money on
hardware because we know well need it eventually. But for what, I dont know. A European retailer advised
considering the flexibility of the system: What becomes very expensive is change. If you buy into a system or
infrastructure that is very hard to move away from, it gets complex. Its committing to business process and
business activity that is where the risk comes in.
Supporting your strategy with the right technology. Interviewees consistently told us about three critical
technology elements needed to operate in a real-time world: 1) systems to capture and centralize data; 2) tools to
turn raw data into insights about customer needs and preferences; and 3) cross-channel tools to use these
insights to present relevant products and offers. Companies need to start now to plan for a multiyear
implementation. As a North American retailer told us, On a scale of 5 being fully implemented, it will take us two
years to get to level 3, then another couple of years to get to the next level.
Making test and learn a key part of your strategy. Our interviewees told us that with the right data and
technology, they were able to track results more quickly and optimize their marketing based on those results. This
changes the nature of planning to focus more on defining the segments of customers you talk to and
understanding their needs, but not deciding each offer in each campaign. A European financial services firm
explained: We have extensive customer research to ask them what they think and what they like. But in the end
it is what they do that matters most.
Knowing that driving transactions is important, but not the sole application of one-to-one marketing.
Next best action is the watchword for many one-to-one marketing campaigns, but having a constant barrage of
offers risks alienating customers. We heard from several of our companies whose strategy deliberately mixes
sales offers with service, branding, and informational content. An Asian retailer stated: The trick is all this has to
be a value exchange. I will give you permission to have my data if there is something in it for me. We trade off
where we see a benefit for ourselves.
Hiring translators to create a stronger connection between analytics and business challenges.
Traditional marketers arent conversant with analytics, and an Asian financial services analytics director noted
that a lot of analytics requests he initially got from business groups in his firm were quite shallow. His remedy:
Create a team of relationship managers on his team who have in-depth knowledge of analytic capabilities but sit
in a business unit. By working day to day with the business unit and understanding their challenges, metrics, and
direction, they translate from the business problem to the analytics guys who will do the work. Until a new
generation of marketers has been raised with analytics as a core skill, these translators will be critical to unlocking
value in data.
Democratizing analytics and data access. Today, analytics skills are a rare commodity, and most of the firms
we spoke to use the center of excellence model to build a team of highly skilled specialists. The disadvantage is
that, in a market that is moving as rapidly as todays, this separation increases time-to-value and may miss
opportunities. The most advanced firms are already planning for a day when access to the models, tools, and
dashboards will be more widely distributed and the front-line managers will use them in day-to-day decisions.

Appendix A: Methodology
In this study, Forrester interviewed 18 organizations in a variety of industries in North America, Europe, and Asia Pacific to
evaluate the value and complexity of real-time, one-to-one marketing. Survey participants included decision-makers in
marketing who lead digital marketing or marketing analysis teams or projects. Questions provided to the participants asked
about the state of current data and marketing efforts and what their future plans and considerations might be. The study
began in March 2014.