10 Minutes With Andy Frawley

Zach Brooke
Marketing News
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Key Takeaways
​What? Andy Frawley is the CEO of Irving, Texas-based marketing partner agency Epsilon.

So what? Epsilon handles 70 billion digital interactions per day in display, delivers more than 50 billion e-mail messages a year and is responsible for helping 15 of the top 20 global brands identify their customers. 

Now what? Marketers need to use customer data to foster emotional connections between brands and consumers.

To say Epsilon is a premier agency is an understatement. Among the world’s leading marketing agencies, Irving, Texas-based Epsilon handles 70 billion digital interactions per day in display, delivers more than 50 billion e-mail messages a year and is responsible for helping 15 of the top 2 0 global brands identify their customers. In 2015, the company tapped then-company president Andy Frawley as its new CEO.

Now on his second tour of duty with the company, Frawley’s tech roots run deep. He’s written extensively on growing customer experience and engagement in his 2014 book Igniting Customer Connections. Since taking the helm at Epsilon, Frawley has focused on steering the company toward becoming a global marketing powerhouse by tapping into the deep data it’s gathered for brands. While most of Madison Avenue talks a big game about building out their data components, Epsilon has done it, and is now reaping the rewards for its clients. 

Q. You have an impressive marketing pedigree. How did you get there? 

A. I like to think that it was a brilliant strategy but, the thing that’s interesting about my background is I actually went to work at Epsilon in the mid-80s, right out of university, and did my basic training there. Epsilon was, and still is, a great place to learn about Big Data, analytics and how to do highly targeted marketing. Obviously the tools and techniques we have today are very different than they were in the mid-80s, but a lot of principles are the same. That sort of basic training enabled me to do a lot of different things in the 20-odd years when I left Epsilon the first time and when I came back seven years ago. The notion of how you apply technology, data and creative to improve the business performance of brands by marketing to their clients—I’ve done that from a management-consulting standpoint, I’ve done that from an enterprise-software standpoint and then obviously here at Epsilon in the last seven years bringing all that together along with content creative agency services. It wasn’t my plan 30 years ago, but it’s worked out really well.

Q. A lot of agencies are playing catch-up with building their data components. Epsilon is in a good position, having the resources it needs when it comes to data. What can a data-rich marketing department do that others cannot?

A. There’s a lot of evolution going on, but we believe that Epsilon can understand consumers better than anybody else in the world. That comes from our very rich set of third-party data, which marries classic demographics and psychographics with a lot of cross-category purchase behavior that we’ve simulated. It obviously leverages our very unique competency, particularly versus agencies, to build and manage first-party data, which is critical to this new world. Through our conversant assets we have more and more understanding of how consumers are consuming media—you  know what they’re seeing as they traverse the mobile and social web channels. You put that together and it allows you to complete the process. 

Over the past five or 10 years, there’s been a lot of talk of engagement [and] how we engage with our customers. Our view is that engagement is table stakes now. The ability to engage, make those connections with customers in a cross-device, multi-screen environment. I won’t say it’s easy, but it’s very possible. The question is, once you’re engaged with them, how do you activate them? How do you get them to do the thing you want them to do, whether it’s open, buy, click, re-buy or refer? That’s a lot more about emotions than it is about engagement. How do we create that emotional connection between a brand and a consumer at that moment in time that they’re more likely to respond or act the way you want them to? That’s what the data allows us to do. It allows us to understand contextually how people are feeling about a brand, what is the thing that–whether it’s rich content or some sort of an offer, or some sort of prestige that comes out of a loyalty program–what is the thing that’s going to make them activate? 

The other thing it lets us do, versus a traditional agency model, is when we deliver a creative brief, we do research like other agencies. But because we have this large third-party data asset, when we deliver a creative brief, we also deliver the three million who are most likely to respond to that message. It’s a very different approach. Being able to actually produce analytically driven audiences that go with each creative strategy is a critical differentiator we have versus other agencies.  

Q. In your book, you talk about a formula: return on experience times engagement, or ROE2. What does this formula mean and how is it important to marketers?

A. When [I] wrote the book [with Epsilon] we set out to try to understand experience. What we learned as we went through the process of experience is it equals emotions and, in many ways, engagement. If you have people who are very engaged with a brand—for  example very active with the brand, but also very emotionally connected with the brand—how do those customers behave versus other customers? 

We did a bunch of primary research specifically for the book that really looked at the relationship and the ability in the correlation between those two things and your ability to predict brand or business equity. We measured it across a number of different financial measures. What we saw was this very compelling two- or three-times correlation between somebody who is engaged with the brand—which a lot of companies measure—and emotionally connected to a brand—which fewer customers measure at the consumer level. Those are people you really want to spend time and energy marketing to. 

The other thing that we exposed is how you create those connections. What are the steps you can do to create an emotionally connected consumer and that we feel should really guide a lot of marketing strategy as people or brands think through the audiences or segments of consumers they want to spend time and money on? Ultimately it’s a question of where you spend your marketing dollars and how you move them through this high level of engagement and experience. And the squared [in ROE2 equals] the return on engagement experience.  

What we’ve really found is that if you look at marketing through this lens, you do very different things than if you look at it in terms of how we connect with companies and consumers and become engaged with them. 

Q. What’s the biggest misconception brands tend to have about their customers?

A. It comes in a couple different categories. One is, it still amazes me the urban legends that persist based on some set of data that’s been exposed over five, 10, 20 years. When you apply real hard data to it, it’s almost always wrong. 

I was with a retailer not long ago talking about how to apply some of these concepts to merchandising. The realities that things like men’s clothing are often not bought by men was a fact that the merchandisers hadn’t fully internalized as a very basic thing.

I think the other misconception today is, the brands don’t control the flow of communication with the customers; the consumers do. But most brands’ marketing programs still act like it’s a very campaign-centric model where the brands act like they control the cadence of offers, messages, communications and incentives. It’s very different now. The consumers control that.

Another term we use in the book is “atomic moments of truth,” which is being able to understand and predict when the consumer is going to be accessible and, in the atomic moment of truth, find the most appropriate communications strategy. It’s a complete shift in the balance of power. But until brands recognize that, they [think,] here’s my campaign calendar, and I’m going to do TV, and then I’m going to follow it up with some experiential stuff and I’ve got a direct stream. It’s completely opposite of how consumers view things these days.    

Q. Today’s consumers have a lot of options and are exposed to a ton of targeted messaging. There’s also a certain level of sophistication and immunity to overt marketing. How loyal can today’s customer truly be?

A. I’m probably a little biased because we run some of the largest loyalty programs in North America. We run the Walgreens program, we run the Hilton Honors program. The principle of loyalty is still very powerful and works well. And again, it ties back to that emotional connection. The reason people are loyal is honestly less about offers about communications, and it’s more about creating the emotional connection with a brand. In a loyalty program, that’s why you have different levels of prestige—in the airline programs, that’s why you get upgraded to first class if you’re very loyal. It’s those sorts of emotive things that are actually much more powerful in creating a long-term connection with a brand. … Once you get there, the value of those customers is dramatically higher. Loyalty is still out there and you can pierce the veil, so to speak, but there’s a certain amount of immunity to the communication that’s there. The way you break through that from a communications standpoint is [by delivering] communications at the right time that are relevant and activate that emotion connection. 

Q. We talk a lot about the growing dominance of mobile, the right way to run e-mail or social media and traditional marketing fundamentals. It can seem like you’re going in a lot of directions at once with no center. How do you incorporate balance into your marketing?

A. Measurement, honestly. We work with our clients to really have that core point of view around, as best we can, what’s performing and what’s not. From our point of view, a lot of marketing is around how the budget gets allocated, whether that’s allocated by segments, whether that’s allocated by channels or whether that’s allocated by products. We have points of view around the best ways to do that, but we try to bring it back to how you’re spending the money. If you had another dollar to spend, which customer would you spend that on, which channel would you deliver that through, what would you want them to do? If you bring it back to that, it’s a very unifying concept. Where it fragmented is where there are 23 different budgets that are allocated differently and they don’t ever come back to some level of truth around what’s working and what’s not working?    

Q. How can you create personalized marketing messages to customers without scaring them or turning them off in some way?

A. There’s no single answer to that. The reality is every consumer has a different level of tolerance to that. Having a single canonical rule won’t work. There are people who will take every message that you give them and look at it, and there are people who will opt out the first chance that they get. The first part is to have some point of view around segments of your consumers, developing audiences with the recognition that people will have different tolerances, and that can only be determined through test, lure and measurement strategies. 

The other part is you’ve got to send them something they’re interested in. If I’m on the web comparison-shopping for golf clubs and I see a banner ad that talks about a deal on the new Calloway hybrids, that’s something that’s probably interesting me. It’s probably even more interesting to me if you know I’m a golf enthusiast and I play more than 50 rounds of golf a year. It really is about that notion of audience development at a very fine-grain level paired with content that’s interesting. The place that I think the really creepy factor comes in is some of the retargeting that’s done these days where, once I click on that golf club banner, it follows me around the digital world for several days. Clients are realizing that that sort of strategy really doesn’t work.

Q. How should brands talk to their customers about data collection?

A. With full transparency. We recommend all clients have a very open and transparent data policy where we tell them how we use the data. We only do permission-based work, so anytime we’re sending you an e-mail, for example, it’s a permission-based e-mail. Anytime we show a display ad, you can click on it and understand why you got it. Companies can do a certain amount of that themselves, and they absolutely should. I think as an industry there will be more of that: More standards and more ways to provide transparent use and access to the data. We’re fully transparent with our consumers around our third-party data and what information we have. They’re able to get it and see and correct and opt out of it if they want to. We think regulating that is a hard thing to do and not something we would like to see, but transparency is our view of the way to go.

This article was originally published in the May 2016 issue of Marketing News .

Author Bio:

Zach Brooke
Zach Brooke is a staff writer with the American Marketing Association. He can be reached at zbrooke@ama.org
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