We live in an age where data can be used to provide new value. How should marketers approach data?

In the wave of digitalization, even manufacturers with a BtoBtoC model can now directly connect with customers and understand them through data. So how can we create a customer-centric, holistically optimized experience scenario based on this data? And how should marketers deal with data? In the third installment of this series, Yoshiaki Hirao of XICA and Yu Hirosawa of Kao discuss the issue.

Will individual optimization not achieve global optimization?

Since January 2021, Hirosawa has been working at Kao's DX Strategy Promotion Center, in charge of promoting DX across the company's Consumer Products Business Division.

Hirosawa:Previously, our company had an organization called the Digital Marketing Center (DMC) that consolidated digital-related functions. Although consolidating functions facilitates collaboration in the digital field, a phenomenon occurred in which digital became something that didn't concern departments other than the DMC. The DMC was dissolved in order to increase each employee's interest in digital, but this resulted in an issue of knowledge being dispersed among various departments and working individually, making it difficult to grasp the actual situation, and so the DX Strategy Promotion Center, to which I belong, was established once again. The policy is to integrate the areas of customer contact, technology, and data across the entire company.

A big difference from the previous center is that the importance of EC and CRM has increased. In fact, at a seminar in 2018, I said something to the effect of "manufacturers do not need first-party data." At the time, I thought that even if manufacturers held the data, the risk of holding personal information was greater than the range of value proposals they could make to customers. However, as the importance of EC and CRM has increased recently, manufacturers are also required to use data to design ways of connecting with customers. In light of this trend, our company has also established the current organization in 1 under the name of DX.

Hirao:When acquiring first-party data, the growing awareness of privacy protection worldwide has made it difficult to utilize third-party data. In addition, when utilizing data, there is a trend toward using estimation rather than analysis that captures individuals. In the United States, there was a time when MTA (multi-touch attribution), which tracks people through logs, was popular, but now I feel that we are returning to MMM. I think one reason for this is that even if you optimize for individuals, you cannot achieve overall optimization.

The issue of "total optimization" is becoming more prominent in Japan as well. In particular, there is a growing sense of challenge in the overall optimization of advertising investment. As points of contact with customers have become so complex, and the media through which customers come into contact has become more diverse depending on their attributes and preferences, it is becoming increasingly difficult to optimize advertising investment.

Hirosawa:Customer touchpoints are increasing, and it is becoming increasingly necessary to design the combination of touchpoints and content in even more detail. For example, even if the content is about cosmetics, some people only get information from YouTube, while others mainly use TikTok. In addition, it is becoming more difficult to catch up because it is necessary to devise ways to provide information that are tailored to the characteristics of the place.

I also believe that collaboration between all departments within an organization is now necessary.

Hirosawa:I believe that customer-centric total optimization suited to the modern environment and collaboration between departments will be necessary going forward, but looking back at history, I believe that Kao has a culture that can realize such collaboration.

We have a sales company called Kao Group Customer Marketing that handles wholesale functions, and we have built relationships with retailers through the sales company. By having an in-house sales company, we have been able to create a virtuous cycle in which our sales staff can collect information from retailers through interviews and use that information in product development. In other words, Kao is a company that has historically built a culture and mechanisms for organizations with different functions to work together to get to know our customers and provide good products. During the period of high economic growth, one of the ways to do this was to establish sales companies, but we believe that our next challenge is to create a new form of collaboration that suits the current social environment while utilizing the culture that Kao has cultivated up to now.

Hirao:We live in an age where media contact and purchasing behavior are not only offline, but also online. This calls for unprecedented collaboration between departments. The challenge is that different evaluation indicators exist for offline and online channels. I believe that in order to smoothly operate an organization that is connected from the customer's perspective, it is necessary to integrate evaluation indicators. I think that this is where the creation of a system for collaboration begins.

For example, can marketers use data to generate hypotheses about future customers they don't yet know?

Hirao:I think this question depends not so much on what data to use, but on the marketer's ability to get suggestions from the data and build their own hypotheses. It may not be something a data analysis company like us should say, but while we can provide suggestions derived from the data, it is up to the marketer to decide what strategy to create from that. As data utilization progresses, I think the importance of hypothesis-setting skills, which are essential for marketing, is becoming more apparent.

Hirosawa:I think the process of deriving hypotheses may differ slightly depending on one's background and experience. Data scientists have a lot of experience dealing with data, so I think they are more likely to notice changes or anomalies when comparing data. On the other hand, marketers who are not as specialized as them are generally more sensitive to changes at the semantic level after interpreting the data than to the data itself. The problem is that many marketers are not even sensitive to changes at this semantic level. For example, even with a single search keyword, a marketer would normally think about the background and intention of the search, asking "why is the searcher of this keyword looking for something like this?" in addition to the keyword trend and the results of quantitative co-occurrence keywords. However, unfortunately, it seems that there are more and more people who do not even think about this normal thing. People who always think about the background of the phenomenon and the intention of the actor always approach the data with a hypothesis of a "tentative answer" in their mind, so they are more likely to notice changes in meaning, but I fear that there are many people who just look at the data without a "tentative answer".

How can external partners support advertisers?

Hirosawa:I don't think there is an advertiser who is familiar with all fields. That's why expert advice is important. Sometimes, some clients may leave everything to the experts. However, I think it's more appreciated to have a partner company that points out things like "this is your company's area beyond this point."

Hirao:You're right. As partners, we believe that our role is to professionally take on the parts that advertisers cannot provide due to cost or expertise.

[Data-driven Total Marketing Optimization] Series

• Vol. 1:Based on data, we understand customers in high resolution and use estimates to grasp the entire market
• Vol. 2:Improve your targeting power with estimations and improve the ROI of your overall marketing activities
• Vol. 3: This article

This article was published in the June 2022 issue of the monthly magazine "Sendenkaigi."