The December 2015-released “The Value of Data 2015: Consequences for Insight, Innovation & Efficiency in the U.S. Economy” commissioned by the Direct Marketing Association (DMA) revealed that the Data-Driven Marketing Economy (DDME) contributed nearly 1 million jobs to the United States in 2014, and added $202 billion in revenue to the U.S. economy, up from $150 billion in 2012. This is a clear indication that data-driven marketing is thriving and that marketers need to join the revolution or be left in its wake.
How can marketers benefit from Data-Driven Marketing?
Marketers benefit from data-driven marketing because it is math – it’s not intuition. You have to use your intuition and instinct and knowledge to figure out what to try – then you need to use the data to do the math to see what works and how well it works, and quantify the results. Then you take that and use it to tune and improve your efforts going forward.
Data-driven marketing on the front end is really all about targeting and understanding who you are interacting with so that you can make different decisions in different segments. All of which is meant to be accretive to the return on the investment that you are making. You might invest less in certain segments or in others because those others performed better. You can use data to figure out if your hypotheses are right or wrong, or where they are right or wrong and then continue to tune accordingly.
Data-driven marketing is clearly effective and bringing success to marketing organizations. The Forbes Insights’ September 2015 report “Data Driven and Customer Centric: Marketers Turning Insights into Impact” revealed that 64% of survey respondents “strongly agree” that data-driven marketing is crucial to success in a hyper-competitive global economy.
So, what is the problem that no one is talking about?
The problem is that marketers are overwhelmed by data-driven marketing. You can see the crux of the issue by looking at the hypothesis. You have to go into it with the hypothesis that if you treat everyone the same and don’t use any data at all, then you are going to end up at the mean performance and you will have no way to differentiate my performance.
So, you start using data to differentiate across different segments, which means you have to now decide:
- What data do I use?
- How do I use it?
- How do I test it?
You can build these hypotheses and tests and there are so many things to try, and so many companies—more and more every day—that you could partner with. Look at the LUMAscape and the MarTech Technology Landscape Supergraphic – just looking at these graphics you can see why marketers are overwhelmed by this level of saturation.
The problem is exacerbated by all these MarTech and AdTech companies all wanting to grow, and they are learning that the secrets of how to grow are investing in a scalable sales and marketing machine. What happens is that they are all screaming and yelling and it just becomes a cacophony that ultimately turns into white noise.
You can’t just ignore it all – that would be turning the clock backward. You have to try something. But, it’s hard to figure out what to do. How do you determine who to listen to? Who to try? How to try it? It’s overwhelming!
In fact, the same Forbes Insights report revealed that when asked how well prepared they are to take a data-driven approach to marketing, 33 percent of respondents said they are struggling with “a mix of technologies available to various lines of business, with little coordination”. The survey additionally revealed that sixty-one percent of respondents cite “breaking down the silos of data between internal departments to ensure the successful flow of information” as the biggest challenge of developing data-driven marketing initiatives.
Another concern some marketers experience is a fear about consumer privacy in regards to lines of delineation regarding what’s okay and what’s not. Most people don’t really understand the privacy issues or the lack thereof. Without a clear understanding of where those lines are drawn, it adds a layer of complexity and friction to the already overwhelming list of questions.
Now that we’ve reviewed the benefits of data-driven marketing and the current challenge it proposes to marketers, visit here next week to read Part 2 , where I will talk about where you can start to make sense of the landscape and start making data-driven marketing work for you.