In 2006, loyalty marketer Clive Humby declared data “the new oil” – a resource with the same transformative, wealth-creating power associated with the fossil fuel. It’s an analogy that has only grown more appropriate over the intervening five years, although today we know that data differs from oil in one important way: The world’s supply of information is anything but scarce.
Where Humby spoke simply of data, today’s marketers must consider Big Data – a deluge of information of such unprecedented volume, variety and velocity that it strains even the largest enterprise’s capacity to extract deep insights and actionable understanding. Consider that many large corporations already sit on vast, fragmented, often underutilized storehouses of information gleaned from past ad campaigns, retail POS systems, product registrations, customer service call logs, and the like. Now add the exabytes of real-time data generated as consumers engage with our brands and (more importantly) each other across countless digital, social and mobile touch points and you start to get a true sense for the volume of unfiltered, unstructured, and some would argue unmanageable information that threatens to overwhelm us.
That’s a lot of data, but for marketers it’s not especially useful in its crude form. Big Data is not valuable for what it is but for what it makes possible. Like oil, which in its refined form makes its way into everything from adhesives to aspirin, lipstick to linoleum, plastic to parachutes, and of course into the gasoline that fills our tanks, it’s the insights we glean from Big Data that will have unprecedented influence on both consumer culture and the corporate growth agenda.
Let’s explore just five key ways Big Data can be mined to create value.
Big Data Tears Down Media Silos
Many marketers continue to evaluate the performance of their television, radio, print, search, social and display tactics as if each functions independently, when in fact they interact with one another dynamically – and in a nearly limitless number of combinations – to produce the outcomes by which we measure success. Simply put, the consumer doesn’t engage with your brand on a single channel; they engage with it across many – sometimes sequentially but often, as in the case of second screen behaviors, simultaneously. In adopting a Big Data approach to advertising analytics – one that joins already large and previously disparate data sets that report on everything from clicks to conversations, commerce to customer support inquiries, and even environmental factors such as changes in weather and shifts in sentiment; then processes them all together in near real-time to find previously hidden patterns – marketers gain a newfound ability to attribute, allocate and optimize their media investments with a greater level of confidence.
Big Data Gets You Closer to Your Customer
The vast amount of data consumers generate lets marketers understand them not just as broad target audiences, rough demographic segments or even elaborate albeit fuzzy personas, but as truly distinct individuals. Connecting the universe of transactional, service, social, search and mobile data to establish a greater understanding of your customers will provide you with the knowledge you need to make precise decisions about which individuals to engage, where, when and how. Deep understanding of how your customer actually behaves – from purchases to patterns in what they check-into and share, like and tweet – trumps any notions you may have of how consumers might behave. It provides a fact-based foundation for the rich, individualized storytelling made necessary by a highly fragmented marketplace; the hyper-relevant services and experiences that today’s connected consumer demands; and even the mass customization of products.
Big Data Lets Marketers Predict the Future
Peter Drucker once said, “The best way to predict the future is to create it.” For marketers, it is not only difficult to predict the future based on data that reflects nothing but the past; it is foolhardy to base future-oriented decisions on historical data that is rendered unreliable (if not outright irrelevant) by the accelerated pace of change. Researchers have employed predictive analytics for some time, but the exponential rise in the amount of up-to-the-minute data from web logs, RFID and sensor data, GPS location data, social networks, mobile apps, desktop and mobile search, and even traditional call center records allow us to sharpen our futures focus and anticipate consumer demand with greater confidence. While Big Data-driven anticipatory thinking might shape your communications plan, its greater value lies in its influence over product and pricing, service and staffing, distribution and delivery models ready-made to better meet the needs of your new and next generations of customers. Where once marketers hoped to influence future consumer desires and behaviors, now marketers gain a chance to predict them.
Big Data Makes More Powerful Partnerships Possible
The social era forces businesses to think beyond sustained competitive advantage and discover their sustainable collaborative advantage. Big Data allows companies to position themselves within vital business ecosystems, and shift their focus from the things they can achieve toward the even greater things they and their partners can achieve together. I recently had the opportunity to listen to American Express chairman Ken Chenault talk about the role data plays in the evolution of his organization’s growth strategy. AmEx is somewhat uniquely positioned to own the data that comes from what he calls a “digital closed loop.” Because AmEx operates with both an extensive consumer network and an extensive merchant network they can derive powerful insights about attitudes and actions throughout the entire buy/sell process. The resulting Big Data asset American Express brings to bear in discussions with everyone from Walmart to Twitter paves the way for game changing opportunities to merge internal and external data to deliver clear-cut wins for both parties along with compelling value to their mutual customers.
Big Data Is the Guide That Lets Your Gut Decide
Smart marketing has always relied upon a delicate balance of the left-brain and the right. However, a recent study by the Corporate Executive Board Company found that Fortune 1000 marketers depend on data for just 11% of all customer-related decisions. Clearly, any organization with a robust Big Data competency can improve upon that track record, and in doing so bring front-end insights and back-end accountability to its decision-making process. That said, Big Data does more than reduce marketing to a formulaic numbers game. By serving up substantive and previously hidden insights, Big Data may actually allow marketers to become more creative, to embrace innovation more wholeheartedly, and to understand the consumer so fully that even right brain-generated breakthrough ideas carry less risk and promise more reward than ever before.
By this point, one thing should be clear: Big Data holds the potential to transform the way you market, the way you connect with consumers and business partners, and the way you create and capture value in the post-digital age. In the end, your ultimate payoff will come not from the fact that you’ve mastered Big Data but in the reality that you’ve achieved Big Understanding.
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This blog post was originally published on the Spinnakr website, and was extracted from an article that appeared in Marketing Insights, a quarterly magazine published by the American Marketing Association. For more information about the AMA and Marketing Insights, visit MarketingPower.com.