What do AdLand and Loyalty Programs Have in Common?

Dec 5, 2013

More than two millennia have passed since the philosopher Socrates declared “know thyself,” arguing that in order to gain wisdom one must first understand himself.

In today’s marketing world another maxim, “know thy customer,” holds true. For loyalty program managers and anyone involved in the business of customer engagement, “knowing thy customer” matters even more. In fact, the discipline behind this phrase has long sustained the advertising world, where the concept of knowing the customer has driven some of the most successful ad campaigns.

The parallels between the advertising and loyalty worlds are striking. Both are undergoing profound changes: fragmentation, reduced engagement, corporate mergers, etc. And as a recent Adweek article – Yahoo, Starcom Ink Video Series Partnership – reminded me, both are on a mission to deliver personalized experiences.

The headline, however, is a misnomer: it’s no ordinary partnership. The two media behemoths have agreed to share their respective user information and combine these rich datasets into a single resource.

The end result? Online and video advertising that’s been customized to the individual viewer’s interests.

From Yahoo’s perspective that means analyzing users’ search engine queries and clicked-on links as well as data collected from its email program and all its editorial properties. Starcom (Mediavest), whose clients include Allstate, Kraft, Kellogg’s, Hallmark and Beam, among others, will also be sharing data from its clients and their customers.

The goal here is simple but critically important: to drive higher click-through rates and, hopefully, conversions through pre-roll video ads on web-only programming or client-produced content tailored to viewers’ specific interests. Ideally, as more customers have enhanced user experiences, Yahoo will enjoy a corresponding increase in its own web traffic and Starcom’s clients will grow their membership bases. 

Are We Approaching the Golden Age of Personalization?

Starcom’s CEO Lisa Donohue, certainly thinks so. “This partnership puts the power of data to work to ensure that the right content and brand message finds the right consumers. More targeted experiences offer stronger online storytelling opportunities for our clients, and in turn, smarter content investments.”

If that’s how adland and big media feel about personalization, it’s also what most loyalty program managers are saying and seeking to achieve. Granular data fused into single, coherent datasets is the latest innovation unfolding in part as a response to a shared industry challenge – fragmentation. There’s no avoiding the fact that the loyalty industry – like the advertising industry – is extremely fragmented, with a hundreds of nearly-interchangeable programs vying for consumers’ attention.

Considering these similarities, what can Madison Avenue and Sunnyvale teach the loyalty industry? One of the biggest lessons concerns the nature of partnership itself. Too often brands – even partnering brands – remain siloed from one another. Granted, we’ve seen airlines and hotels craft joint loyalty programs where members can pool miles and points. But to what extent are retailers, for example, truly aware of their customers’ flying or travel habits? Chances are, very little.

Think how much more effective a retailer could be if diverse datasets were combined. There’s no reason why loyalty programs can’t take a cue from advertising and media and consider pooling their data resources.

Whether it’s adland or loyalty land, “knowing thy customer,” is both industries’ most essential goal. And there’s no doubt that insights gained by analyzing data are key to powerful member engagement and indispensable for successful loyalty management. If brands can unify their internal departments, they can cross verticals too. Just maybe, Yahoo and Starcom’s partnership will set a tone that loyalty program providers will be inspired to emulate.

Are you a loyalty program manager? In this golden age of customer engagement, what is your brand doing to know its customers better? How are you tackling data analysis and personalization? Share your stories with the Kobie community below.