Segmentation techniques have changed, how about you?

Amelia+WaddingtonThe major changes in consumer behaviour, driven by the increasing influence of new technology, continue to precipitate a massive shift in marketing technology as brands attempt to retain customers who are spoilt for choice.
But while advertising has evolved tremendously in recent years, and the digital revolution has transformed how we buy, execute and measure advertising efficacy, the question brands should be asking is whether it has also transformed how they or their agencies learn more their customers?
Market research has been an important tool used by brands to understand the impact of their advertising for almost a hundred years. In the Forties, alongside the rising popularity of psychology and introspection, market researchers were starting to ask customers what they thought, what they liked, what they didn’t and why? This helped brands anticipate and meet their customers’ needs and plan advertising strategies that would appeal to their core demographics.
By the Fifties brands and their agencies realised that they didn’t just have one core customer, they have distinct customer segments that share characteristics and options and behave in similar ways. Customer segmentation was born. The personas created in a segmentation project were used to help, inspire creative and plan buying strategies. In particular, they were informed by age, sex and once in a while, lifestyle or vocation criteria. For example, twenty years ago, a nappy company would target stay-at-home mums in their mid-20s. And that’s where their market segmentation ended. While these generalisations are helpful for creative development and sufficient for planning and buying of ad space on linear TV and radio, they fall short in today’s digital age.
Thanks to the proliferation of data available regarding today’s consumers, brands can now link the attitudes and opinions gathered using traditional market techniques to other known data. These include: location; an individual’s interactions with a brand; their device of choice; relevant buying history; credit score; social media activity; the need or challenge that the brand in question can remedy, and more.
Identity resolution has made it possible to execute one to one marketing, reach consumers wherever they are, on a range of devices and deliver an individual message. The reality of creative production and planning means that in practice, advertising campaigns are still targeted at a relatively small number of key audience groups, so segmentation is still one of the most important parts of the planning process. But, it is now possible to take research conducted on sometimes only hundreds of participants and link into market data-sets, extending the reach of the segmentation and creating actual audiences of millions of individuals that share those characteristics.
Brands and their agencies have more data than ever before which enables them to build a rich and detailed portrait of their customers and potential customers. More and more transactions are tracked to an individual either because they happen online or with a loyalty card, third party data is available on demographics, affluence and interests and market research panels continue to be a great source of attitudinal and preference data. The best segmentations will use all available data to truly understand your customer.
Even more important than how you build your segmentation is how you use it, however. The creative process hasn’t changed that much, creatives need a muse and segmentations old and new can provide this inspiration. But ad buying is now a completely different game. I can put an ad in front of exactly the customers that make up my segment. Not people who look like them, not people who share similar characteristics. Exactly those consumers. To do that the segmentation needs to be built at scale on real customer data and then activated at an individual level either using the capabilities of platforms like Facebook or Google, or across the digital ecosystem via an onboarding company.
Treating each person as a unique individual means understanding their preferences, needs and current priorities. A person is targeted if, and only if, all of their behaviour and current events of relevance indicate that the campaign would be of interest. Focused targeting like this therefore needs flexible and dynamic segmentation for each marketing campaign, built by taking into account all of the customer’s transactions across channels.
The way we think about audience segmentation is constantly changing and the quicker we embrace this evolution, the quicker we will be able to get our data to work for us in creating and delivering true personalisation at scale at an individual level. For the most expansive and effective targeting approach, brands should use a company that can blend the data, create the segmentation, develop the personas and activate them across all the digital channels. This is customer research for the digital age.

Amelia Waddington is director of data science and analytics at Acxiom

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