Episode 32: Movable Middles

Allyson Dietz:

Welcome back to No Hype. Today we're covering Brave New Worlds 2024. If you don't know Brave New Worlds, it's an exclusive thought leadership and networking event for TransUnion clients. I personally love Brave New Worlds because it's a fantastic opportunity to be in the same room as some of the sharpest minds in our industry, covering everything from the future of addressability to advances in measurement, targeting, identity resolution and beyond. In this particular episode, we're featuring a full recording of one of the keynotes from the 2024 show, titled Movable Middles, featuring Marc Vermut, one of my colleagues here at TransUnion, and the famous Vas, who heads up industry research at MMA Global. Don't let the simple title of this session fool you. Over about 15 minutes, Marc and Vas dive into the years of research that coalesced into the idea of the movable middles audience, people who are neither loyal nor disloyal to a particular brand, and are therefore most responsive to advertising. Vas and Marc also touch on how an audience strategy focused on movable middles translates through to real-world performance. The results are pretty astonishing, but I'll maintain a little suspense here and will let you hear the rest straight from the source. So without much further ado, here's their session on movable middles from Brave New Worlds 2024. I hope you enjoy.

Vas Bakopoulous:

So I'm Vas, this is Marc. We've never been on stage together before, so that's going to be a first.

Marc Vermut:

That's true. Right?

Vas Bakopoulous:

Yeah. So the other thing that I want to say is that I work for the MMA: MMA Global. There are a number of MMAs, so I just feel that I have to explain a little bit who we are. So we are an association, a marketing association, and what we do is that we focus on some of the biggest challenges that we identify in marketing. And we try to develop initiatives that increase the productivity and the accountability of marketing. And I'm glad that I can say that all. It's the mission. But that's what we do. To give you a perspective in terms of my role as the head of research, what this usually comes down to is that I get to talk to a lot of very interesting people. I get to talk to a lot of CMOs, I get to talk to a lot of heads of media, I get to talk to a lot of heads of analytics.

I respond, and I'm trying to get all those different things that are circulated in their minds, and then translate them into problem statements. And then prioritize the problem statements. And then eventually create consortiums of companies that come together to raise resources and do something new. Right? Now in this process, that sometimes takes a while. And I think that's a superpower as well, because none of you probably has the time to take a year to kind of focus on one problem, right? You have a business run. But in that process, I get to work with some very smart people like Marc, and we kind of create new things. So today, for this specific exercise, I want to talk to you about this. I want to talk to you about one of the biggest challenges that we're seeing, but also one of the biggest opportunities. This chart comes from a very, very first study that we just released this morning, and it talks about the state of marketing and measurement attribution, and we've been doing that for eight years.

So what you can see on this slide is the answer to the question, how do you go about planning your media? And on the one side, you see we aim to maximize risk in the most cost-effective way. On the other side, you see, we focus on outcomes, and there was more to that…ROAS, lifetime value, there's a number of things there. And in the middle, you kind of try to mix both. Now it's very clear that we're moving from this side to this side gradually and then suddenly. And I think that's good to be intentional about driving outcomes. There's nothing wrong. It's a good thing to be, I mean, we are in the business to drive outcomes anyway. So being outcomes-driven, it's a very good thing. I see that as a sign of maturity for the industry. But it does come with a set of challenges that I want to kind of talk about.

And the first one is that there is a lot of different approaches out there. There's a lot of audience targeting strategies approaches there. I was talking to another CMO last week, and she was telling me, “Listen Vas, you don't get it. I mean, my business is very, very different, right?” This is right. And she kind of validated that by saying, “Listen, we don't have first-party data.” There's a lot of things why the business was different. But she also went on to say, “There's so many different approaches out there. How do I know that I'm using the right audience targeting strategy? How do I know that I'm getting the best results possible? Is there a way to do this in a repeatable way to have repeatable success? Is there a way to be able to have some sort of prediction in terms of what results you're going to get?”

And these are all valid questions right? Now, the second question that I'm hearing a lot is this. And this comes usually from a CMO talking to a CFO, and then the CMO taking a step back and saying, “Are we doing too much of this? Are we overdoing this on this outcome thing? Are we mortgaging the future of our business because we're focusing on outcomes too much?” Now, at this point, I hope you're all thinking, “I think these are great questions. I hope that Marc is going to jump into these questions.” And the answer is yes, that's what he's going to talk about. But before he does, I mean this has been a journey between the MMA and TransUnion for the last five years. And we started five years ago. We spent about a year developing a framework that we call the Movable Middles Growth Framework. Initially, that was based on synthetic data and a lot of mathematics. And then we spent the next three or four years doing more case studies. Now we have 11 case studies to validate the framework. So I'm going to hand it over now to Marc to talk to much more about the framework, how it works and why.

Marc Vermut:

Okay, so we have to start with something that's fundamental that everyone is aware of, which is that all consumers respond differently to brand marketing, right? Some consumers respond after a little bit of advertising, and we're talking about paid media is what we're talking about today. Some require a lot, some are never going to respond. And so the question that we had was, “Is there a design into the spectrum of which consumers fall to the left-hand side, to the middle, to the right-hand side, really who do we avoid, and who do we focus on?” And so the work that we did with MMA Global in the original whitepaper that we put together four years ago, we concluded on it, is the Movable Middle framework where we actually determined that there's a marketing law that relates to understanding which consumers are going to be most responsive to your marketing. And it's predictive, and it's repeatable.

And so Vas talked about the fact that we created this great math. It was very intellectually satisfying for me. That's part of my role, but that's not helpful. You have to prove that it actually happens out in the wild, right? That it's repeatable. And so MMA global, working across their membership base and across the work we do with them, found 11 case studies across retail, CPG, and financial services – we're going to talk about that in a second – where they were able to quantify the impact of a Movable Middles targeting strategy versus a general business-as-usual targeting strategy. So you move left-hand side from a high-share brand, right-hand side to a low-share brand. Top row: what's the multiplier? How much of a greater revenue on ad spend? So this is the outcome we're focusing on here, how well your media dollars are working for a movable middle consumer, versus an average consumer.

And it ranges from double to up to 23 times if you look at Ally. And what you see there is a relationship between smaller multiples for higher-share brands, to bigger multiples for lower-share brands. Because as your brand grows, your movable middles grow as a portion of your overall consumer base. And so you're going to shrink the delta of effectiveness that you can get. The second line is really important for all the media planners out here in terms of your audience targeting strategy. If you ran a campaign that focused on Movable Middle rich audiences, you will increase the performance of the campaign we observed between 20% and 80%. So, significant. So it is predictive, it is repeatable across industries, and it is quantifiable. But is it better, right? Because lots of different targeting strategies work.

So before we confirm that or not, let's talk what are the Movable Middles. What's the relationship we found between predicting and understanding a consumer's responsiveness to marketing and how we identify them? And it comes down to behavior. So I feel very validated about this morning's keynote, right? It relates to the probability that the next purchase or decision a consumer makes is to choose your brand, your product, your app, your website. And so on the right-hand side, we call this audience the High Loyals. They're 80% or more likely to choose your brand next. They're pretty fixed in their behaviors. Maybe they're thinking of one other brand, but they're pretty much your customer. It would take a significant amount of volume, weight, advertising in order to get them to change their behaviors and purchase you more or more frequently.

And if you look to the left-hand side, those are what we call the Low Loyals. Effectively, it's conquesting, right? Those are your competitor High Loyals and your competitor Movable Middles. They may be thinking about a few other brands, but they're not likely thinking about your brand. So you would have to advertise a lot to them for them even to pay attention to you. “Attention” is only the second time “attention” was mentioned at a 2024 marketing conference. But they may not pay attention to you. So you have to spend a lot of money to advertise, a lot to move them from awareness to consideration to intent to purchase. It's the middle. That's your sweet spot. These are consumers that are between 20% and 80% likely to choose your brand next. They may be considering a few other brands, but that's where your marketing is going to influence their decision, where your dollars going to go further. And it's repeatable because you can build and identify these audiences using industry sales data, survey data, which we're going to talk about in a second, or third-party audience attributes.

It is predictive, repeatable, quantifiable. Is it actually outperforming? So here, we were really fortunate. We did award-winning work with Ally Bank, who's actually here today called Brand is Performance. And we created an 850,000-household backbone. We served 10,000 surveys. So we used surveys to identify Movable Middle consumers. We served ads and suppressed ads, and then we tracked account opens over a longitudinal period of time. That was all enabled by that identity that we've been talking about all day. It's persistent, it's authoritative, and you can track it over a long period of time. And what we found, was incremental account opens outperform with a Movable Middles targeting strategy 3.5 times a demo strategy (demos aren't enough), 2.6 times a broad reach strategy, 2.2 times a category buyer strategy. So by focusing on consumers’ likelihood of behavior of choosing you next, you're going to outperform. So we know it's superior in the short term.

So the next question is, “Is it superior in the long term?” Well, the first thing we looked at was, “Does it drive more incremental accounts in the long term?” And on the left-hand side, you'll see that versus category buyers, it is 2.6 times greater in terms of performance. And a Moveable Middles audience is 4.5 times greater than a demos targeting strategy. That's great. It means I'm growing my business as a brand, but am I really growing my business? Am I just getting a larger share of wallet? Am I expanding my garage for my existing customers, or am I actually growing my base over time? When we looked 18 months out at what the incremental customer acquisition per dollar spent looked like, the Movable Middles audiences also outdelivered. So these are consumers who are Movable Middles or who look like Movable Middles from a behavioral psychographic perspective, not age, income. And again, nearly two times a category buyer's approach.

Vas Bakopoulous:

Yeah. So thank you, Marc. So I hope that, in this sort of presentation, we did a good job at communicating that we have something in our hands that is uniquely new and different in a good way. I mean, Marc kind of ran through the results in terms of the components of this and why it's repeatable and why it's predictable. And we talked about the results in the short term and in the long term.

But I want to go back to what the previous panel said at some point about change management. I think it's important to kind of think about that because a lot of times we do see something new, and probably you all have a lot on your plate. So driving kind of change and taking, adopting something new is hard. And as an association, I see that all the time. And I talk to, again, all our members, and we see that all the time. So my hope, the last thing that we're probably going to say to you today, is that we hope that we spark something or we kind of plant a seed. There is a paper here that I would like to ask you to download. And I think that is probably the first step. And I think going back into your office, and as you're reading the paper, probably that's going to trigger a number of questions. And some of those questions are going to have to do with, “Let me take a step back and probably do an audit and see how I go about audit strategy today,” which is probably what you're already doing. But do that also kind of more intentionally with some of the questions that we try to answer today. “Am I having repeatable success in some of those? Do I even have the data to prove that? And how is that my strategy working in the short term and in the long term?” And if you realize that you don't have some of the answers to those questions, probably you're going to need to do some additional tests. And if you do that, maybe you can add Movable Middles as well. So thank you, and if you do that, we're happy to help.

Marc Vermut:

And we're here all day. If you have questions about this, you want to know, “How do I implement this or evaluate it?” You can find either of us, and we're happy to talk to you about it. Thank you.

Allyson Dietz:

Once again, that was Marc and Vas at Brave New Worlds 2024. If you'd like to explore more of what Brave New Worlds has to offer, you can listen to all the sessions on demand at bravenewworlds.transunion.com. Thank you for listening.