Rakuten Marketing CEO: Knowing your audience three-dimensionally is the holy grail

Global CEO for integrated marketing solutions company shares his view on how AI is coming into marketing and advertising and where the big gaps are in the way brands still understand their audiences

Stuart Simms
Stuart Simms

Many companies across the marketing ecosystem, including private equity players, have been sold the dream marketing is now a science, Rakuten Marketing’s global CEO, Stuart Simms, says. But it’s not exactly true.   

“There’s this belief marketing has become a slot machine; a mathematical equation. If you put enough money in the top, it’s fairly predictable that a whole lot more will come out at the bottom and all will be fine,” Simms tells CMO during a recent interview while visiting Sydney.

“To a point that’s true, and over my career I’ve seen marketing become much more of a science. It is, to a degree, mathematical, assuming you can reach the right audiences. But you still have to have good brand, good product, know where to go and importantly, know who your audience is.”

It’s the audience modelling and analytics that’s still a big work-in-progress for many big companies. It’s also a key area of growth for Rakuten Marketing.

The marketing solutions business, which sits under the Japanese ecommerce giant, Rakuten, offers affiliate, performance and search marketing capabilities globally. Like many in the martech and adtech lumascape, it’s been acquiring to bolster its services offering, including campaign performance player, DC Storm (2014), data analytics engine vendor, PopShops (2013), programmatic buying tool, Deep Forest Media (2015) and machine learning retargeting provider, NextPerf (2016).

More recently, Rakuten Marketing developed a data division dedicated to identifying performance opportunities for clients across its own 70-strong network of digital businesses, reaching 1.2 billion consumers globally. It’s also hired upwards of 100 data scientists to support its AI ambitions and just launched a data prospecting tool outside of Australia off the back of these internal smarts, to help improve customer acquisition for its advertising clients.

Simms, who joined Rakuten Marketing in 2017 and became CEO in August, has born witness to the internal transformation over the past year as well as the challenges facing its customer base. A key vertical for the business is retailers, along with financial services. Both in theory are sitting on rich internal data sets about their customers, he notes.

“Yet when you ask them how they’re going to further personalise campaigns, they’ll say they want to use third-party data because their CRM data is not where it should be,”  Simms comments.  

“Knowing who your audience is, is the holy grail. If you can really understand who it is you’re trying to target, and understand your customer really well, you’re probably going to find more of them. But it’s amazing how many companies don’t understand who their customer is – they don’t understand their value proposition, or they’ve outsourced it to an agency to figure out. Which is madness, in my opinion.” 

The 3D view

Other ways Simms sees brands failing on the audience front is by deciding aspirationally who their customer is, or by purely basing insights on behaviour viewed in-store.

“Data on audiences is three dimensional, you can’t look at it in isolation,” he warns.

“One such company told me about the personas they worked with, all oriented around 18-25 year olds. We looked online and could see the size, shape, age and demographic and it was 40-45 years old buying hoodies. I’m not saying the marketing is wrong, because aspirationally that might have been engaging those older men, but the stock and inventory wasn’t lining up to that. You could argue if you carried different SKUs you would have sold out of stock and not have to discount.

“There are huge amounts of data available online that can give you very accurate information about who is buying your products and what decisions you should be making around inventory, design and what to carry for the next year.”

As an example of a retailer who did it right, Simms then pointed to a plus-sized clothing retailer that started shutting stores in favour of putting it all online.

“Yield was falling despite spending money on improving performance. They overlaid that data against physical stores, and when they overlaid location of online shoppers against stores they saw they were losing those shoppers relative to store,” he says. “When you look at all the data, it was very obvious their particular market was reliant upon having a physical store presence to build a relationship and gain the confidence to buy the clothes they needed. Stores were helping those customers finalise what sizes they needed to go online and buy.”

Ultimately, looking at customer data in a multi-dimensional way is crucial in truly understanding the audience and experiences you need to create.

 “Sure, have an aspiration view of the customers you think you should be appealing to, but layering that physical and online data is also critical. You need aspiration, plus practical data of who is shopping and how you serve them correctly, then apply that along with the data you see online,” Simms says.

“Then it’s about tuning and optimising marketing activities to drive a similar customer experience online. A brand should be doing all of this.”  

Because if you don’t get the audience piece right, you could waste a lot of money shooting marketing in the wrong direction, Simms says. Which is also why he describes customer journey mapping as “rubbish”.

“It comes across as some linear journey you go on and it’s just not true,” he says. “There isn’t a uniform customer journey and you have to think more serendipitously about how you engage with consumers and mobile is a key touchpoint in that. There are no personas anymore or one customer journey; think of things in a much more holistic way. It’s an right time to the right person depending on the previous touchpoints you’ve had.

“Rather than the journey, what’s the start point and end point. Attribution can help you fill the gaps in the middle of how consumers got there and where you should dial up and dial down depending on common behaviours around your audience.”

Building audience knowledge and importantly, acting on it, is where Simms sees data and artificial intelligence (AI) having a profound effect on what marketers do. He claims we’re not even in the race yet when it comes to AI and the effect it’ll have on advertising, for example.

“The reason GDPR came up is because of consumer backlash against some of the way programmatic techniques are being used, which don’t give a great customer experience. Just think of lawnmowers chasing you around the Web,” he says. “The level of sophistication around use of AI will dramatically rise.”

Another compelling use case for AI is in helping media companies monetise their content more successfully, Simms says.

“A hurricane goes through the Caribbean yet at the same time a holiday company is offering consumers a trip to the Caribbean. That jarring experience can be fixed by AI but is also created by programmatic,” Simms says. “That’s where we are seeing some advances in terms of content, image and textual recognition with AI.  

“AI will also improve the advertising experience by not only understanding the consumer and making sure the ads are relevant, but by understanding the content in the moment the consumer is in, to make sure the ads being shown are more relevant at that point in time. For me that presents a great opportunity to deliver experiences people love.”

In Rakuten Marketing’s case, the job is then to harness AI and data to help brands understand the value of those audience insights and drive improved marketing performance.  

“We shouldn’t be the company telling them who their customer is; we shouldn’t be telling them how to build their story; we should be the guys that deliver their story to market across all the channels available to them in the most high-performing way they can,” Simms adds.

Follow CMO on Twitter: @CMOAustralia, take part in the CMO conversation on LinkedIn: CMO ANZ, join us on Facebook: https://www.facebook.com/CMOAustralia, or check us out on Google+:google.com/+CmoAu   

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