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How Marketers Can Avoid Big Data Blind Spots

How Marketers Can Avoid Big Data Blind Spots

If you were looking for a theme song that captures marketing today, you could do worse than pick Queen’s anthem “Under Pressure.” Marketing is under pressure to show results, cut costs, and drive growth. Marketers should welcome it. That’s because marketing has a big opportunity to drive above-market growth and demonstrate its value to the C-suite and the boardroom. In our experience, marketing can increase marketing ROI (MROI) by 15 – 20 percent. That kind of value can turn plenty of heads in the C-suite.

How? The explosion of data about consumers and the analytics techniques now available have made marketing a much more precise science.

All this wonderful Big Data created by the digital revolution, however, has created a serious problem for marketers. Just because the data and analytical techniques are available doesn’t mean they provide complete insights. This is very much what Albert Einstein meant when he said, “Not everything that can be counted counts.”

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Consumer decisions are driven also by many stimuli outside the digital realm (e.g. TV ads). This results in a number of issues, not the least of which is misattribution of cause and effect based on a tendency to measure what is easy to measure, ie. giving credit where credit isn’t necessarily due.

One energy company, for example, observed that their customer losses were closely correlated to the intensity of customers’ Google searches for an energy supplier. They built a customer churn econometric model in which search was responsible for 65% of churn. However, in-depth analytics revealed that customers’ decisions to switch energy providers were driven by their and competitors’ prices, advertising and company’s position in in social media, TV, print and other mass media. When all these additional explanatory factors were included in the customer churn model, search was not the cause of customer churn since people had already made up their minds by the time they were searching.

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Most recently we’ve seen a lot of companies with claims about the ability of their analytical tools to provide a silver bullet set of answers to any marketing question. In our experience, those claims are hard to back up in the real world. What we see that’s most effective is having the right combination of tools and capabilities with as clear a sense of what they cannot do as what they can.

One major blind spot for marketers to be aware of is “short-term-ism” that most analytics engender. The reality is that the majority of marketing activities have both a short- and long-term impact on sales. The short-term impact is typically responsible for 10-30 percent of total sales while the long-term impact (called also the “base” or brand-building impact) is 1-3 times greater than the short-term effect. Big data-based analytical approaches, however, such as econometric and digital attribution modeling, for example, can detect only the short-term impact of marketing.

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