A european perspective on contextual marketing

An executive summary from The Economist Intelligence Unit

BEYOND PERSONALISATION
A European perspective on
contextual marketing

The rapid progress of digital technology has
allowed marketers to build an intimate picture
of their customers and prospects. Since the very
early days of the Internet, digital channels have
gradually revealed who they are, where they live,
what they like—and more besides.

According to Bill Brand, president of the US
retailer HSN, contextual marketing is “the next
step in a progression from mass marketing
to segmentation, personalisation and finally
contextual, or what I call in-the-moment
marketing.”

Now these channels are providing additional,
more transient contextual information. Where
are customers and prospects right now? What
are they doing? And what are they interested in
buying?

A recent survey by The Economist Intelligence
Unit (EIU), sponsored by SAP, reveals that west
European marketers are already collecting a large
quantity of contextual information about their
customers and prospects. Two-thirds are using

some of that information to help them identify
and communicate with prospects, among other
marketing objectives.

Using this kind of information for marketing is
called contextual marketing. Examples range
from established practices such as search-engine
marketing, which allows companies to reach
prospects based on their current interests, to
more cutting-edge approaches such as social
media advertising that responds to the weather.
Lipton Iced Tea used Facebook to advertise its
drink in areas in the UK with warm temperatures,
for example.

However, much of the contextual information
that companies collect is currently not used for
marketing purposes. This reflects, among other
concerns, a lack of understanding of how to
communicate with customers and prospects most
effectively in a given context.

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Beyond personalisation: A European perspective on contextual marketing

Meanwhile, the most prominent sources of
contextual information that west European
marketers use today are the first-generation

digital channels: email and the company website.
This suggests that they are not using more recent
innovations such as mobile technology and social
media—which have the potential to provide
deeper contextual insights—as much as they
could.

understand their customers in greater detail
and are beginning to apply that understanding
to their marketing efforts. However, just as
personalised marketing required new approaches
to messages and campaign management, so too
will contextual marketing. Marketers who wish to
exploit contextual marketing must learn how to
use it to offer genuine value in order to win their
customers’ consent.

In short, west European marketers have made
a start with using contextual information to

About the survey
This executive summary draws on a survey of
165 chief marketing officers conducted by The
Economist Intelligence Unit (EIU) in the summer
of 2015. Survey respondents were drawn from
France, Italy, the Netherlands, Scandinavia
and the UK. One-half of respondents represent

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© The Economist Intelligence Unit Limited 2015

organisations in the retail sector, with the
remainder drawn from a range of industries.
Of these, just under one-half (47%) represent
companies with US$100m-500m in annual
revenue, the remainder companies with
US$500m and above.


Beyond personalisation: A European perspective on contextual marketing

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Engaging customers and prospects

In the last 20 years most companies have
accumulated considerable volumes of
information about their customers. As a result,
marketers feel they have a good understanding
of their customer base. For example, the majority
of west European marketers surveyed by The EIU
believe they are able to identify when customers
intend to switch to a competitor and how satisfied
their customers are, thanks to insights gleaned
from their current marketing channels.
Nevertheless, there is always room for
improvement, and there is demand for even
deeper understanding: 41% of respondents list
gaining a better understanding of customers

among their strategic marketing priorities.
Furthermore, there is a difference between
understanding customers and engaging them:
the same proportion (41%) say that improving

customer engagement through social media, for
example, is a top priority too.
Marketers in western Europe are mostly confident
that their interactions with existing customers
are well received: over half (51%) say customers
“are satisfied with the way we interact with
them”. But it is a different story when it comes
to prospective customers. Over one-third (35%)
say their prospects would like their interactions
to be more relevant, compared with just 22% who
say prospects “are happy with their interaction
today”.
These findings show that despite the considerable
amount of information that marketers have
about their customers, there is still a need both
to improve their interactions with existing
customers and to communicate more effectively
with their prospects.

Chart 1
In your opinion, how do your customers feel about the way your organisation interacts
with them?
(% of respondents)

Customers

Prospects

They have no opinion about how we interact with them
1
4

They are happy with the way we interact with them
51
22

They would like to have fewer interactions with us
14
18

They would like to have more interactions with us
13
17

They would like our interactions with them to be more relevant
21
35

They would like us to stop interacting with them altogether
0
1
Source: The Economist Intelligence Unit.
© The Economist Intelligence Unit Limited 2015

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Beyond personalisation: A European perspective on contextual marketing

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Putting contextual information to use

These objectives—deepening customer
engagement and improving interactions with
prospects—have driven many organisations to
investigate the use of contextual information for
marketing purposes.
In fact, two-thirds (66%) of west European
marketing executives surveyed incorporate
contextual information into their
communications with prospective customers.
Nearly as many (58%) use contextual information
for communicating with existing customers.
One such company is Italian telecommunications
provider Wind. “Contextual marketing is the
way we reinforce our relationship with our
customers,” says customer relationship manager
Elvira Petaroscia. “We provide a superior user
experience with tailor-made selling propositions
and understanding of our customers’ needs.”

There is some variation between countries. For
example, Nordic respondents are more likely to
use contextual information to communicate with

existing customers (72%) and to issue special
offers (66%) than identifying or communicating
with prospective customers. Respondents from
the UK are equally likely to use contextual
information to build customer loyalty as they are
to interact with prospects.
But while the proportion of marketers making
some use of contextual information is high, much
of the information that is collected goes unused.
For example, nearly three-quarters of survey
respondents (73%) say they routinely collect
information about customers’ current behaviour,
but only half of them (37%) use this information
for marketing purposes.
Location is the most widely collected form of

Chart 2
Which of the following marketing practices at your organisation currently incorporates
contextual information?
(% of respondents)

Communicating with prospective customers
66

Identifying prospective customers
59

Communicating with existing customers
58

Issuing special offers
56

Alerting customers to new products and services
52

Building customer loyalty
50

Building brand recognition
50
Source: The Economist Intelligence Unit.

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© The Economist Intelligence Unit Limited 2015


Beyond personalisation: A European perspective on contextual marketing

contextual information, according to 91% of
respondents. “Location is most important to us,”
explains Laurent Geffroy, digital performance
director at telecoms provider Orange. “That is
where we can really serve our customers and
provide them with a benefit.”
“We are working internally on proof of concept
for an opt-in app. If customers allow us to do so,
we can collect their location information and use
that to communicate with them. For example,

if they are travelling abroad we can offer them
special services, such as automatically updating
their Facebook status.”
But despite its value as a source of contextual
insight, one-third of respondents whose
companies collect location data say they are not
using them for marketing purposes. Evidently,
something is holding them back from making
greater use of the contextual information they
already collect.

© The Economist Intelligence Unit Limited 2015

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Beyond personalisation: A European perspective on contextual marketing

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The challenges of contextual marketing

It may be one thing to be able to identify a
prospective customer’s current situation, but it
is an altogether different challenge to be able to
respond to that insight with a relevant offer or a
marketing message which works for that precise
context. Producing messages that are effective in
a particular context is one of the most common

challenges that west European marketing
executives associate with contextual marketing.
For Johan Grundin, EMEA director of digital
marketing at electrical appliances manufacturer
Electrolux, the definition of effective contextual
marketing is “being in the right place at the right
time with relevant messages”.
He argues that messaging in context requires
a greater degree of subtlety that conventional
marketing channels, in part because of the

greater intimacy involved. “With contextual
marketing you try to choose a marketing message
that appeals in a more subtle way, rather than
being intrusive.”
Another common challenge is the availability
of people with the necessary skills: 47% of
respondents identify finding staff with the
required technical skills as a key challenge, while
45% say the same of creative skills.
According to Mr Grundin, the real challenge is not
just finding recruits with the necessary digital
skills, but finding a combination of the technical
talent and business acumen. “You typically find
these skills among young people, fresh out of
school,” he says. “They have the skills, but
not the business knowledge or the contextual
marketing mindset.”

Chart 3

Which of the following, if any, do you consider to be the greatest challenges to using
contextual information?
(% of respondents)

Producing messages that are effective in particular contexts
50

Encouraging customers and prospects to share contextual information
50

Hiring the technical skills required by contextual marketing
47

Identifying relevant contexts in which to target customers
45

Hiring the creative skills required by contextual marketing
45

Respecting customer privacy
34

Measuring the success of contextual marketing campaigns
15

Adapting our marketing/campaign processes to incorporate contextual marketing
8
Source: The Economist Intelligence Unit.

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© The Economist Intelligence Unit Limited 2015


Beyond personalisation: A European perspective on contextual marketing

Another challenge singled out by respondents is
the ability to identify relevant contexts in which
to target customers. This may reflect the narrow
range of contextual information sources that
companies are currently using.
The most common sources through which
organisations currently collect contextual
information are the first-generation digital
channels: their company website (used by 77% of
respondents) and email (61%).
Newer digital channels, including social media
and mobile applications, are used less frequently,

but these have the potential to offer more finegrained contextual insights than conventional
channels. Social media provide marketers with
unique insights into an individual’s mood and
their social network, while mobile applications
can reveal their precise location or current
activity.
The fact that marketers are not making as much
as they could of these rich sources of contextual
insight may reflect another common concern: the
fear of intruding on a customer’s privacy.

© The Economist Intelligence Unit Limited 2015

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Beyond personalisation: A European perspective on contextual marketing

4

The privacy issue

Relatively few of the marketing executives
surveyed by The EIU count “respecting customer
privacy” among the biggest challenges associated
with contextual marketing (34%).
However, 50% say that encouraging customers
and prospects to share contextual information is a
key challenge. And 28 believe that damaging the
brand by making customers feel uncomfortable is
the biggest risk associated with the practice.
This suggests that although they are confident
that they can apply contextual marketing while
complying with privacy and data protection rules,
marketers nevertheless acknowledge the risk
of hurting their brand by using it in a way that
customers are not happy with.
“One challenge we have is finding the balance
between customer promises and data privacy,”
says Orange’s Mr Geffroy. “We have to make sure
to protect data—we have a clear mandate from our

CEO to protect the personal data of our customers.
So when we look at launching new offers, we look
carefully to make sure we respect privacy.”

And it is not just the brand that is at risk.
Customers are increasingly empowered to control
the amount of information that marketers collect
about them, and if anything makes them feel
uncomfortable, they are likely to withdraw. As
Alex Bloemendal, e-commerce manager for Dutch
retailer Wehkamp.nl, explains: “The more people
opt out of cookies, the less information we have.”
At Wind Italy, these concerns are addressed by a
rigorous privacy regime. “Our privacy policy is very
transparent,” explains Ms Petaroscia. “We acquire
customer permission for marketing purposes with
an opt-in process, which can be revoked easily at
any time. Data are completely anonymised and
encrypted during profiling activities to comply
with privacy rules.”
As this suggests, such an approach requires a great
degree of organisational discipline. “The quality of
the entire process is a fundamental requirement of
success [for contextual marketing],” she adds.

Chart 4
Which of the following do you consider to be the greatest risk associated with contextual
marketing?
(% of respondents)

Collecting incorrect or misleading contextual information about customers or prospects
38

Damaging the brand by making customers feel uncomfortable
28

Making marketing processes too complex
14

Damaging the brand with unsophisticated experiences
10

Failing to make a return on investment
8

None of the above
2
Source: The Economist Intelligence Unit.

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© The Economist Intelligence Unit Limited 2015


Beyond personalisation: A European perspective on contextual marketing

Conclusion

Thanks to decades of innovation in digital
marketing, companies in western Europe already

have a well-developed understanding of their
customer base. But thanks to the same digital
innovation, competition for the attention of
customers and prospects is fierce. Marketing
executives therefore acknowledge a need for
closer engagement with customers and more
relevant interactions with prospects. Meanwhile,
companies are already collecting a fair degree of
contextual information and putting it to some
use.
However, a large proportion of the contextual
information that companies collect is not
being used for marketing purposes. A number
of challenges are holding them back, such
as producing messages that are effective in
particular contexts, hiring people with the
necessary technical and creative skills, and
understanding the relevant contexts in which to
target customers.

And while west European executives do not
consider privacy to be one of contextual
marketing’s greatest challenges, they do see
the risk of making customers and prospects feel
uncomfortable, and they appreciate the need to
encourage them to share contextual information.
The digital channels that make true contextual
marketing possible are relatively recent
innovations, and the cultural norms associated
with its use are still in development. Companies

are learning how to use contextual information
appropriately, which may explain their hesitation
to exploit what information they already collect
to the full.
This caution may be understandable, but if they
are to win the right to use customers’ contextual
information, they must offer value in return. If
they refrain from engaging with their customers
in context, they may never learn how to offer that
value.

© The Economist Intelligence Unit Limited 2015

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