The real, much-overlooked value of data for marketing
Data is the new gold, but how come that marketing departments are still having trouble turning data into real business value? According to a 2018 Wunderman study, three out of four marketing decision-makers say that they employ data-driven marketing technologies – but 62 percent also say that they do not actually derive any actionable insights or concrete activities from them. In other words: they are wasting their money on tools and services that provide little to no return. This in turn means that in terms of business importance, despite all the media hype, data continuous to plays little role. But why is that the case?
My experience of devising, pitching, and leading data-driven projects tells me that a prevailing misconception within marketing departments about the actual value of data for marketing are to blame.
A paradigm shift
There is a staunch belief across industries, even within agencies, that great ideas first and foremost come from the minds of great creatives and strategists – as pictured in “Mad Men.” Yet this belief runs contrary to the premise of customer-centricity that underlies data-driven marketing. In fact, data brings with itself a paradigm shift: the imperative to listen, rather than to survey.
For most of the world’s population, the web has already long become the primary medium for obtaining and exchanging information, entertainment, and shopping. And much as if they were treading on snow, they leave footprints, which can be used to analyze their behavior, motivations, preferences, and needs.
Take online comments and search terms. Their wording, tonality, length, and syntax offer invaluable insights into what the customers really think about a brand and want from it. These insights can be extracted utilising modern AI-powered technologies such as Natural Language Processing (NLP), tracked and analyzed in real-time. Technology finally makes it possible for companies to listento the customers’ thoughts and wishes, the prerequisite for a customer-centric marketing strategy. But how can this be converted into real business value?
Beauty of real-time tracking
One of the ways to achieve this is by establishing detailed casual relations between specific marketing actions and sales success – which is something that has been virtually impossible to accomplish using popular campaign measurement methods. Even with the help of the most sophisticated marketing mix models, their results will only be available weeks or months after a campaign has ended, leaving marketers without levers to correct the course during action.
Only data can enable real-time campaign success tracking, predictive live ROI calculation, and brand steering. With remarkable effects: L’Oréal, one of our clients, was able to quadruple the sales impact of its video content with this approach. This example also points to one of the most important values data-driven marketing offers to businesses, namely the integration of marketing and sales.
Neglected strategic potential
But given all these opportunities, why are they rarely used in comparison to common brand management tools, such as surveys? In my experience, this has to do with the fact that the evolution of data-driven technologies strongly outpaces the growth of the corresponding expertise within companies. Currently, many companies have just reached the level of being able to integrate social media likes, shares and other engagements into their marketing strategy via social listening tools. Insights based on things such as tonality and wording reflect the future-oriented, explorative, and strategic potential of data that new technologies have only recently been able to unearth. Of course, using these technologies requires a whole other level of expertise and resources.
Yet in the long-term, neglecting that potential means risking falling far behind companies that are already investing a lot of resources in it – companies such as L’Oréal. With the goal of providing “personalized content” and “the right message at the right time” to its customers, the group already decided two years ago to move towards a “digital-first paradigm.” By building up multiple in-house data expert teams, the cosmetics giant is now capitalizing on the possibilities provided by new technologies and accumulating new knowledge that will help to secure its number one position in personal care for years to come. Notably, L’Oréal’s brand value according to the BrandZ ranking increased by nine percent from 2017-2018, and again by nine percent from 2018-2019. In 2018, the makers of the report attributed this explicitly to “successful strategies to build loyalty and become more customer-centric.”
Data-driven marketing has enabled that success, but it is also important to note that it was based on more than just the introduction of modern tools. L’Oréal adopted a whole new “digital-first” grand strategy, and it strongly increased its internal data expertise. These two things make all the difference in determining who will be able to derive business value from data and who won’t.
Niklas Stog, associate partner at TD Reply.