Channeling Retail’s Inner Data Scientists

The quickest way to describe the difference between cooking and baking is as follows – cooking is in art, but baking is all science. Chefs known for instinctively adjusting their recipes and never making the same meal twice run five star Michelin restaurants. Bakers known for doing the same thing, often find themselves on the short end of that stick and are generally discouraged from even contributing to bake sale fundraisers at elementary schools.

Such is the divide that faces most modern marketers as they map out the still only partially charted territory of advertising to the online audience. Options abound – direct email marketing, display ads, search engine marketing (etc.) – leaving an astonishingly large number of potential user paths with an even greater number of potential outcomes.

Equally important though, according to Tony Zito, President of Rakuten Marketing, is the fact that online marketing is increasingly divided into two separate, though supportive, skill sets.

One is the artistic side of advertising – building ads and content that is appealing and draws in consumers. But the other side is all science and requires actually looking at how customers are responding to the ads across all of the channels named above and then developing content accordingly.

“I think there’s a next level of understanding that doesn’t’ quite exist yet. And the reason is that it is so data driven and scientific in nature and a little less about actual marketing,” observed Zito. “That’s where the instrument breaks down Our philosophy is that marketers should be focused on marketing and be able to hand that analysis off to others who can do the heavy lifting on the science and the data so they can focus on the insights and how to make it actionable. Otherwise it’s quite an endeavor for an individual ecommerce companies to build their own attribution model.”

Of course, if Zito has his druthers, at the top of the list of “the others” is Rakuten Marketing.

An attribution model is, simply explained, the manner in which an ecommerce advertiser tracks the efficiency or usefulness of its campaigns by tracking how many times an emal, display ad, etc. leads to a click or possibly a conversion. That very simple explanation for a process that’s actually quite complicated since there any many ways to build such a model. But Zito told PYMNTS in an exclusive interview, that it’s a market that Rakuten Marketing is in a uniquely good position to get into given their relationship to one of the world’s largest e-commerce marketplaces, Rakuten Marketing.

“Our roots are really in e-commerce,” Zito told PYMNTS. “The marketing services division that I run [at Rakuten Marketing] started when Rakuten Marketing acquired an affiliate network called LinkShare. The idea behind that acquisition was to provide marketing support for the e-commerce companies on Rakuten Marketing’s platform.”

Rakuten Marketing also soon grew to accommodate the acquisition of Media Forge, and ad display company and and paid search and PLA management optimization firm – giving it the “trifecta” of services the company needed, Zito explained, to really offer advertisers the right package of services to create and run effective ads. However, Zito said, merely offering the channels to advertisers isn’t enough – Rakuten Marketing can build it, advertisers can come – but if companies don’t really understand the information they’re getting about their ads correctly, the ROI on those ads will be low.

“Historically companies do not have a holistic view of what’s happening. They buy media that they are going to run a display campaign or spend money on an affiliate and pay money on paid search but they have no transparency into what what is happening across all three of those marketing channels,” Zito explained. “So they might spend more on display because it appears that it’s driving the most value. But when you look at it holistically at every touch point on the individual consumer level you might observe that ‘oh wow I didn’t see an affiliate was in the consumer path so many times,’ and find out you were undervaluing it because it wasn’t the last touch point.”

It was a difficulty that e.l.f. cosmetics was experiencing, according to its Vice President of e-Commerce. Megan O’Connor. e.l.f cosmetics is a value-based cosmetics company that for the eleven years of its operation has primarily sold its $10 or less cosmetics online – though its recently expanded into Target and into its own retail locations in New York.

“We were looking at each channel and optimizing it against the last click,” O’Connor said. “The problem is branded search will always win on that front and so you’re going to optimize in a silo.”

Which, she said was her company’s other problem – it had lots of consumer data coming in, but all siloed in different places with different data experts. Realizing that was not efficient, they found Rakuten Marketing to try to bring their channels together, and which point they realized they knew less than the thought they did about their customer’s buying habits.

“What we found when we stepped back and looked at the whole customer journey is how those touch points work together,” O’Connor observed. “We’re find that email has a critical piece, but not in a bunch of individual campaigns. Paired with every other paid channel, email works better than it does alone. While we had our action plan set up and thought we had the right mix of strategies and tactics, we have seen that taking a holistic view of what the consumer is doing is drawing a better picture for us.”

According to Zito, e.l.f. is one of many brands who’ve been working with Rakuten Marketing to prove the point that understanding and then taking action based on the entire consumer path is much more important than just looking at the last touch point to help them make “better choices on how they spend their money across the entire marketing ecosystem.”

That’s really the origin of Rakuten Marketing’s new attribution platform, dubbed Cadence Essential. Cadence Essential exists to provide participating marketers with a single picture of performance across all communication channels. It’s designed to monitor consumer behaviors across channels and then use that data to provide insight into how each channel individually and in specific combination contributes to conversion.

And Rakuten Marketing is offering this service to their marketing partners are no additional cost.

“It’s a very exciting and disruptive approach,” Zito said.

Why free? Because, Zito believes that that this will eventually be a standard service because essentially the advertisers have a right to this data – since it measures the efficacy of their ad spend. “We own the media channel and already have visibility into what is happening, they (marketers) deserve that transparency. They shouldn’t have to pay to see what we are doing with their money, it should be part of the package,” Zito explained.

Zito went on explain that from the user perspective, Cadence Essential is fairly straightforward. Initially the only technical work that has to be done by the advertiser is attaching Cadence tagging to their ad material, which from there starts measuring data on what consumers do – open emails, click ads, etc. From there the platform takes that data and correlates it – for example with data from the shop being advertised for – and then displays that on a dashboard that marketers have access to. At this phase, Zito noted, side-by-side ROI comparisons can be done and profiles of users who did convert and users who didn’t can also be drawn.

As the program gathers and compares more data, it can also start to run “basic” algorithm to determine what a company’s ideal marketing mix should be, Zito noted.

“By using accurate attributions we saw very quickly that the incremental value of having a consumer exposed to more than one channel was exponential. In fact having a consumer exposed to more than one channel that’s operating synergistically will drive a five times higher likelihood of that consumer converting.”

And the converting consumer is what is what online advertising is all about says Zito.

“At the end of all this it does boil down to who gets paid in the marketing ecosystem We are looking to drive conversions We are looking to help brands put the right message in front of the right people at the right time.”

The numbers alone won’t do it. After all, part of marketing is still cooking – and art form that requires subtle changes to be effective. But, says e.l.f.’s O’Connor, what Rakuten Marketing is offering businesses like hers is a better starting place when considering those ads.

“We’re sitting down and looking at the attribution tool really as the starting point from where we’re going to build our 2015 strategies but all really optimize our budget across the entire year.”

It can’t guarantee an ad will be a hit or that consumers will like the products, but it applied well, the right consumer data might give merchants the best they could ask for – an improved shot of getting the customer’s interest.