A cure for the big-data headache
Editor's note: Damon Ragusa is chairman and chief strategy officer at ThinkVine, a Cincinnati software firm.
We live in a highly connected world where real-time access to news, data and information has transformed the way both people and businesses make decisions. With real-time bidding systems, ad exchanges and big-data projects, just to name a few, the focus of the marketer’s job is blurring with that of the CIO.
The explosion in digital and emerging media channels has brought a huge volume of rich-but-complex data sources. With big data comes the promise of better information for making decisions and measurement of marketing performance. A recent study by the Columbia Business School and the New York American Marketing Association found that 91 percent of senior corporate marketers believe that successful brands use customer data to drive marketing decisions, improve marketing performance and increase customer acquisition.
The same study reported that “39 percent of marketing executives confess that they have lots of customer data but don’t know what to do with it.” Data projects are expensive and time-consuming and often leave marketers without answers to foundational marketing questions, including “How can I use this data to deliver better results and improved ROI?”
CMOs believe data can enable smart marketing decisions but many companies only end up with big-data headaches. Another survey, by 33Across, found that 70 percent of U.S. brand marketers and agencies are concerned with making sense of all the data. In fact, it can actually get in the way of improving performance when viewed in the wrong context. So where does big data really fit into the mix?
Traditionally, marketers plan annually, aligned with the cycle of TV and print media-buying. The planning time frame would typically address only the following year. The key stakeholders form an executive committee where the marketer makes recommendations based on insights and analytics of historical spend data and aggregations of consumer data, which become foundational to the plan. In a stable marketplace, this backward-looking approach has been an acceptable method because of the assumption that the future will be much the same as the past. In today’s rapidly changing marketplace, it’s increasingly difficult for marketers to continue to eliminate risks through traditional planning methods for four critical reasons:
The proliferation of consumer devices and emerging media channels has dramatically increased the number of options marketers have for investments.
The barriers for people to switch from one medium to another and adopt new technologies are disappearing. People are no longer consuming information in a vacuum but across channels and, oftentimes, simultaneously; they have more choice and more voice than ever.
The marketer has become inundated with the explosion of rich but complex data sources. From a world where only GRPs mattered, marketers are now overwhelmed with impressions, mentions, Likes, clicks, etc.
Marketing planning committees are becoming overcrowded with stakeholders, each working in their own silos and each acting as an advocate for the tactic they represent.
Shift the focus
To navigate the ever-increasing complexity, marketers must shift the focus from data-intensive tactical planning to a smart data approach for strategic planning that is centered on the real people they are targeting. As a result, planning will be more focused on linking the brand directly with consumers to positively impact sales, market share and financial performance in a transparent and measurable way.
Many of the insights, analytics and processes used to inform marketers today are based on aggregations of consumer data, boiling all the diverse demographics, media consumption and behaviors into one average consumer. This makes it impossible to connect the very people they target to specific marketing activities and messages. For example, marketers have relied on classical marketing-mix models for decades to provide insights on marketing effectiveness. These models have never provided insight as to how different marketing plans can activate different people, especially new media with no historical data. These approaches analyze marketing effectiveness in the past marketplace rather than what the marketplace will look like moving forward.
A consumer-centric approach to marketing requires a more data-agnostic way to measuring and forecasting the ROI across channels, tactics and consumers to make more informed marketing decisions. It ensures that, when making key marketing decisions on how and when to spend marketing dollars, those dollars will have the greatest possibility of positively impacting performance. The planning process must be able to synthesize the audience estimates commonly used to make media buying decisions (GRPs, AQHs, circulation) with emerging digital measurements (CTR, impressions, mentions, Likes, conversions, etc.) and reconcile all these against how people behave.
A greater variety of data
Rather than aggregating all of the data into a single source, a consumer-centric approach to planning starts from the bottom up and requires a greater variety of data and information. To be effective in an evolving marketplace, marketers must take an objective and detailed view of the makeup of their consumer targets and the relationship between different consumers and how they use media. For example, older people may be more likely to watch TV and read magazines and younger people may be more likely to use mobile phones and social media. Once this foundation is laid, standard marketing science rules around how people buy products over time become more practical because it’s not just about how people consume media but about being able to align marketing with how and when consumers purchase products and services.
Marketers across industries are already adopting a consumer-driven approach to planning as a more sustainable and effective method. Some examples:
A market-leading pharmaceutical company was looking to optimize its direct-to-consumer marketing plan for the launch of its new product, while maintaining constant flexibility to implement post-launch adjustments in real time. Because of strict FDA regulations around approved consumer targets and a lack of historical data, the company turned to a consumer-centric approach to plan and optimize its go-to-market plan. Leading up to the launch, the company was able to simulate patient responses in varying targets and geographical markets to measure how each tactic influences patient adoption and purchase behavior to accurately reflect and improve the ROI of its plan. It was also able to incorporate external influences such as health care professionals and doctors and how these would influence short- and long-term product sales volume.
A provider of automotive products wanted to forecast and measure all of its marketing activities against its consumer segments for the greatest return on investment. Additionally, the company was focused on growing sales within the Hispanic population. Not all of its marketing activities could be tracked back to specific consumer demographics. By adopting a consumer-centric planning model that focused less on collecting massive amounts of data and more on identifying the most relevant data for individual channels, the company was able to measure and compare more than 200 marketing activities across four of its product lines to forecast consumer purchases within its demographic-specific segments.
Completely shifting the foundation from where marketers have traditionally built their plans can be a huge undertaking. They are still left with piles of data from traditional as well as emerging media and digital channels that they must analyze to extract value through a smart-data approach. The advent of customer relationship management to support one-to-one marketing initiatives during the 1990s started with a lot of promises of sorting through huge amounts of data about consumers that would revolutionize the planning and execution of marketing. In time, the practical solutions emerged and were adopted after years of marketers complaining about being “data-rich but information-poor.”
As the marketplace continues to fragment, the risk is that the consumer is slipping through the cracks. Marketers spend too much time and resources investing in solutions to react to the change rather than embracing the fundamental shift that is occurring in the way they think about and approach marketing planning. They need to understand the information in front of them and put what’s most important – the consumer – at the forefront to drive technological advancement that integrates, automates and streamlines the marketing process from research and planning to collaboration and execution. An age of marketing empowerment has risen that will drive the evolution of the modern marketing world where every decision is accountable and starts and ends with the consumer.