Data, Analytics & Metrics: 7 Trends That Will Shape Marketing - and Business

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1 Data, Analytics & Metrics: 7 Trends That Will Shape Marketing - and Business By David Head, Marketshare Marketers have been using tools to collect data and make sense of it for decades, but in the last few years we've seen major breakthroughs in powerful new tools measuring, analyzing and managing marketing performance (data, analytics and metrics). Using these, we can now chew through terabytes of data, and analyze and package them in a way to dramatically improve the way we target our marketing efforts. Call it "big data" or "the science of analytics"- but we're talking about major forces that will increasingly shape marketing, drive revenue and spur new innovation, changing the way we do business. These advances will accelerate this year and beyond. They're driven by the rise in digital web marketing and social media activities - and more recently, mobile marketing - which is fueling an explosion in data. The result: unprecedented opportunities to study, engage and influence consumers, along with massive new challenges for companies. In fact we are in the early stages of a new era of data-driven marketing. Marketers will be under increasing pressure to embrace these new tools and technologies, while meeting rising expectations, both from customers and senior management. Chief marketing officers (CMOs) realize that their future success will be judged on return on investment (ROI) performance, according to recent surveys by IBM and Forrester. The IBM study1 interviewed 1,734 CMOs spanning 19 industries in 64 countries and concluded that: Marketers success will be increasingly judged on their ability to deliver tangible financial return, clear marketing ROI, predictive performance models and improved spend allocation and strategy. In the Forrester report2 half (51%) of marketers say marketing is holding itself more accountable to value, with B2C marketers feeling the most pressure. Yet most senior marketers admit they feel overwhelmed, and they're not fully equipped to tackle the new challenges; in other words, there's a lot of work to be done. All of this has set the stage for major advances in how companies collect, manage and measure marketing data. The following are the seven key trends we see shaping the industry for at least the next three years. 1

2 1. Smart marketers go granular for deeper insights Imagine you re studying a leaf, its surface features. Then you take another look under a microscope. Suddenly, a new world emerges - tiny details you couldn't see with the naked eye. Similarly, powerful new data tools now allow companies to delve deeper, generate richer data, make more accurate assessments - and adjust as needed. For companies that already gather and study their data, it'll be like using a CAT scan versus an X-ray. Going forward, marketing metrics will become even more granular, providing deeper insights and analysis. New data will allow companies to pinpoint areas of strength and weakness. So now, say, goods producers can gather data down to the SKU level. With the increasing prevalence of online tracking tools, companies can gather information down to the individual customer level. Data is being gathered in daily, even hourly, increments. Massive new increases in data quality will be changing the marketing landscape. Marketers who before could only see bottom line and top line impacts of a campaign will increasingly be able to see why, and how it worked. This will provide an edge over competitors, while helping them better focus their product and brand priorities. 2. The bridge between online and offline measurement is built Offline activities have always influenced online behaviors, and vice versa - but most companies acted as if they were two separate, independent universes. Online marketing and offline marketing efforts were managed and measured separately. But consumers are madly navigating between online and offline sources all the time. For instance, someone might see a car ad, and it raises their interest. So they check with friends online and offline, read online reviews, pick up a copy of AutoTrader (or Consumer Reports), do searches for price comparisons, and so on. Increasingly powerful new analytic capabilities will merge all of these activities to take a holistic look at the new sales funnel, one richer, more dynamic, more fluid. The result will be a much more accurate, vivid snapshot of today s consumer. 3. Social media impact finally becomes measurable We know that even a mere utterance from a public opinion leader can quickly go viral just as quickly as a two minute YouTube video shot by a teenager using a webcam. But just how do those comments, ideas and videos influence and go viral? New measurement tools cut through the fog to provide a clearer picture. They allow us to see how a message spreads virally and influences behavior - or "diffuses," according to Dominique M. Hanssens, a UCLA Marketing Professor and founding partner of MarketShare. 2

3 Someone sees a movie they enjoy, then goes on Facebook and talks about it; their friends may be spurred to see it, and then discuss it offline/online. The buzz created is like a pebble thrown into a pond, creating ripples that actually amplify the effect of the pebble. Hanssens points out that companies will be able to increasingly measure those waves, the impact - and determine how to adjust their strategies and media mix to capitalize on it. Marketers will also be able to better measure if people are actually buying the product because of the buzz - if it's really driving sales. This is just the beginning. Companies will finally be able to precisely measure the impacts of their social media programs - and manage them effectively. New analytics tools will eventually make it as easy to measure a social media program as a direct mail campaign - as well as their effects on each other. 4. Transcending "last click" and "averaging" attribution methods Many companies attribute success to the last stages of a website visitor s behavior: they may know they clicked on two or three links, and then the buy button - the last click. This is akin to attributing a football game victory to a "game-winning" field goal. It ignores all of the activities that happened before to lead up to the win. Now, we are able to increasingly capture all of the marketing activities and touch points along the way. This will provide a much more complete picture of the consumer. Let s say you take out an ad in a specialty magazine - you can track how it leads to online behaviors, reviews, etc., eventually showing how it influences the click/web behavior and ultimately purchase. Don t confuse this with averaging techniques, which try to average attribution across all of the known marketing touch points: the new metrics models will provide for dramatically better precision. So if one channel like TV is getting more traction than, say, the Internet, it will be given more weight. Marketers will be able to allocate resources accordingly. Think of an analytics scalpel instead of a sledge hammer. 5. "Swim lane" measurement replaced by "big pool" models Many marketers launch, manage and measure marketing efforts in silos or swim lanes : I sent out X mailers, and got Y response/results. Those results are measured against other direct mail campaigns, but never truly correlated with parallel marketing efforts across other channels; at best, a senior manager may review the overall results and make rough calculations. Like swimmers, marketers are furiously paddling with their heads down in their own lanes. 3

4 Now you'll see powerful new holistic models that look and measure activities across all of the swim lanes. We call this the "big pool" approach. With their eye on the total pool or picture, marketers will have a better grasp on which activities are contributing the most, and how they interrelate. This will allow them to shift (and better target) budgets as needed, effectively directing funds to channels so that all are contributing more equally. 6. Cross media attribution models spread beyond the big brands Big companies for years have employed cross media attribution models that analyze/establishes the link between spend in various channels, geographies, etc. with incremental sales (example: the consumer packaged goods (CPG) industry). This year cross media attribution will become more widespread, evening the playing field for the smaller company. New, more affordable tools will provide even companies with modest budgets the ability to compare, analyze and act using massive amounts of existing market data across media channels, according to UCLA's Hanssens. One benefit: smaller companies will be able to get almost immediate results instead of waiting two months for a full analysis. While these tools won't be as robust as the more sophisticated versions, they'll still provide invaluable directional insights for many companies that need answers quickly. 7. Brands invest in complete holistic views of their marketing ecosystem Swim lanes and piecemeal marketing approaches will no longer work as companies demand more program accountability and results. But this is only part of a much broader drive for a complete holistic view of the marketing ecosystem. Many factors affect marketing, such as distribution, sales calls, and innovation to just name three. Strong performance in these areas will naturally help your marketing efforts. Your brand overall has an enormous impact on your marketing (Apple is a premier example). Yet companies have done a poor job in calculating these as part of their marketing model. That will be rapidly changing. Companies will increasingly be able to identify these key drivers and allocate funds accordingly. They'll be able to evaluate exactly how much affect customer service, for one, has on marketing success. If it's large, they might decide to allocate funds now being funneled into marketing programs, into the customer experience. Conclusion: Marketers are facing unprecedented challenges with the fast evolution of new digital channels and the resulting deluge of data. Add to that, the increasing pressure to justify their value and they are moving into a world that is much "more volatile, uncertain and complex," as the IBM CMO Council report points out. 4

5 This paves the way for acceleration in the deployment and adoption of new advanced analytics over the next three years, making sense of big data and providing new insights into companies' markets and customers. In fact, analytics will increasingly become a powerful weapon in gaining a competitive advantage. Marketers will build customized models to see how the market, their actions, and those of their competitors are working and interacting. Transparency in marketing will become an attainable goal. Marketers will be able to fine tune their product portfolio investments across different markets and media vehicles. They will even simulate the impact of changes in investment, market situation or competitive threats, allowing them to quickly react and adjust strategically. These are just a few examples of advances, but the message for the next few years is clear: understanding, managing and analyzing "big data" is coming of age. Ignore it at your own risk Forrester s October 2011 Global Marketing Leadership Online Survey About the author: David Head is senior vice president marketing for Marketshare, where he directs and manages all marketing functions, including strategy, branding, product marketing, corporate communications, Web, channels and field marketing. He specializes in enterprise sales and marketing, social media marketing, revenue optimization and several other key areas of marketing. 5