How to do marketing in the age of big data?
How to do marketing in the age of big data? Companies are out in force when it comes to big data. TheCMOSurvey.com reports that about 5.5% of marketing budgets are currently spent on marketing analytics, a number that will increase to 8.7% over the next three years. Expectations are high, and many companies are trying to figure out how to decipher the data and derive superior strategic insights from it.
I'm a big proponent of this trend of accessing and utilizing data to drive decisions. However, that's where the problem lies. As the volume of data grows, organizations are utilizing it less and less. I began by asking the following question in February 2012, "What percentage of projects utilize existing or requested marketing analytics data before your company makes a decision?" The result I got was 37%, which at the time I thought was too low. But when I asked the same question in August 2013, the percentage dropped to 29%. Figure 1 shows how this percentage has continued to decline over the past 18 months.
But the findings are not entirely surprising. Looking back over the 30-year history of relevant surveys, data utilization has always been low for many kinds of marketing information, including marketing research, advertising research and now social media research. This low marketing analytics data utilization hinders the contribution of big data to profits.
How big is the hindrance? Some might argue that the ultimate measure of market intelligence of all kinds, such as marketing analytics, is whether it improves a company's understanding of its customers. The Chief Marketing Officer survey site asked top marketers to rate their companies' performance in "gaining and utilizing deep customer insights. On a scale of 5, 1 is bad, 2 is fair, 3 is average, 4 is good, and 5 is excellent. A review of past scores shows that they are still average (3.4 in August 2013, 3.5 in February 2012 and 3.5 in August 2009). So even though spending on marketing analytics has increased, we have not seen an improvement in deeper customer insights.
What should companies do? First, managers must start with the end in mind. Go-to-market plans, demand creation campaigns and sales activities must include specific instructions on what data should be collected and how it will be utilized. Underutilization may rise when big data solutions are embedded in plans and strategies.
Secondly, organizations must spend money to train executives on how to use marketing analytics to gain insights, drive decisions, implement strategies and evaluate the actions they have taken. It is for this reason that we teach a "Market Intelligence" course at Fuqua that focuses on the "use" of information rather than the "creation" of it. Companies must pay more attention to the application part of market analysis. Institutions and consulting firms can provide such training.
Third, companies must find and retain the right people who can make the most of market analysis. When asked, "To what extent does your company have the right people who can fully utilize market analysis?" (with 1 being a score of not having the right talent and 7 being a score of having the right talent), just 3.4% of respondents gave their company a score of 7, and 56% gave a below average score. Figure 2 shows the full distribution of scores (mean score of 3.4 with a standard deviation of 1.7).