Here To Stay

The road to digital media ROI begins with metrics.

Today, digital marketing is — or should be — a critical element of any CPG or retail marketer's plans.

Three-quarters of CPG manufacturers report they will leverage social media for brand promotion over the next 12 months, according to Profitable Growth: Driving the Demand Chain, June 2012, published by the Grocery Manufacturers Association (GMA) in Washington, D.C., and New York-based PricewaterhouseCoopers (PwC).

As the amount of time, resources and funding devoted to digital marketing have grown, so has scrutiny from senior management, who now expect the same rigorous ROI analysis for digital marketing as they do for other significant expenditures.

Benefits of Digital Marketing

It's critical that marketing teams engage shoppers at various points in their paths to purchase. Digital marketing adds significant new capabilities to reach shoppers in the home and at the store, but also interjects a third way to engage shoppers: on the road. The vastly increased functionality of smart-phones and faster cellular networks facilitates "on the road" connections. Think about a commuter exiting her train and receiving a text message from the grocery store across the street that her favorite wine is on sale this week, for example.

Another critical capability of digital marketing is enhancing the 1:1 relationship between a manufacturer or retailer and the shopper. Syndicated content and branded websites are effective at reaching mass audiences and retailer websites; smartphone apps and social media help create community. But digital marketing has the unique ability to present shoppers with offers and information tailored to their specific interests.

Maximizing the impact of digital marketing campaigns requires two essential ingredients: targeting and measurement. Effective targeting enables CPG decision-makers to identify high-opportunity consumers and high-opportunity markets. Accurate measurement allows decision-makers to determine the incremental sales uplift resulting from the campaign. This measurement can take the form of comprehensive and detailed ROI analysis at the end of a campaign, as well as rapid and directional analysis of specific tactics during a campaign, which allows for mid-campaign strategy adjustment.

Identifying High-opportunity Consumers

There are near-limitless ways to segment shoppers. Among the most common are by purchase behavior (a heavy buyer of coffee, for example); by lifestyle (buyer of organic foods); demographics (income, employment status, education level); and by channel (heavy Walmart shopper). In each of these categories and in categories that integrate two or more of these segments, marketers have the ability to identify high-opportunity shoppers. Household-level targeting identifies consumers within neighborhoods and geographies who are high-potential buyers.

Improved targeting allows marketers to focus campaigns on highly specific target audiences to achieve highly specific results. These campaigns can include increasing sales among existing brand buyers, attracting buyers of competitive brands and/or attracting buyers not currently purchasing within the category.

To measure the validity of the targeted audience, marketers can conduct tests, starting with building lookalike models based on the digital and shopper target, and tag shoppers who fit the target profile. The team can then develop campaigns that are tagged and matched between the "test" group of shoppers and a set of "control" shoppers.

When the test is completed, the marketers can analyze results and determine correlation between the digital campaign and changes in in-store sales and volume.

Measurement Imperative

Chicago-based SymphonyIRI evaluated a year's worth of data from a worldwide leading snack food manufacturer to analyze the correlation between social media activity and sales uplift. The team focused on five social media metrics that demonstrate the impact of social media on sales: volume, the number of aggregate mentions of the brand across all social media channels; frequency, the pace of references to the brand; influence, the potential impact of the individual and groups driving conversation about the brand; reach, the penetration of the brand and engagement efforts into the target audience; and sentiment, the tone of influence reactions to the brand.

SymphonyIRI found that changes in the products' sales correlated positively with the social media surrounding that brand.

As part of the initiative, the brand sponsored a Farmville game on Facebook that allowed players to harvest the snack food company's branded crops, create new products and earn virtual goods. Buzz and sales both increased in the month after the campaign started. Research found a spike in sales occurred during the third month of the campaign, and then again after the introduction of Farmville during the 10th month. The estimated social media volume created by the Farmville sponsorship (though by no means limited to Facebook activity) contributed to as much as 12.4 percent of incremental sales volume.

It's important to measure the various components and tactics that support and promote new products and to be able to isolate their individual impacts as well as the synergistic effects of multiple marketing channels. Recognize that there isn't a distinct line between paid, owned and earned media. For product launches, it's important to measure the discrete and combined effects of the media and marketing tactics, including gauging how consumers are reacting to the product in real time. This allows marketers to adjust campaign strategies even while the campaign is underway.

Understanding Customers First

Four important activities will yield important information and value to marketers as they navigate the digital marketing strategies best for them:

1. Improved segmentation to ensure campaigns reach the optimal number of targeted shoppers
2. Effective measurement at the end of the campaign to determine the impact on sales, as well as during the campaign to enable adjustments to strategy
3. Selection of the digital platforms that will best impact the targeted group(s) of shoppers
4. A 360-degree sales impact view enabling greater insight as to what channels will deliver the greatest impact to sales by brand

Marketers who recognize digital marketing is here to stay and leverage its vast opportunities will reap the greatest benefits going forward.

Phil Ripperger is VP of new media solutions at SymphonyIRI Group Inc.

Marketers who recognize digital marketing is here to stay and leverage its vast opportunities will reap the greatest benefits going forward.