Neighbourhood Watch

Imagine you have two pieces of a jigsaw puzzle. One represents a set of data, the other the geography affecting your business. To get the two to fit together, they need to be cut into compatible shapes. If you call the outline of those shapes an interface, then the concept of geographical information systems (GIS) becomes easy to grasp. They are the connector which allows you to map data or to reorganise information by moving things on a map.

Now there is a stronger likelihood than ever, that as a marketer, you will have had some experience of this process. Sales of GIS are surging. According to Frost & Sullivan, the market research company, in 1995 European sales were worth $431m (275m). It predicts a rise to $1,081.1m (690m) by 2002.

There is growing recognition of what GIS can deliver to support the decision-making process. “There are five ways of looking at data: alphabetically; by magnitude; by category; in time series; or through geography,” says Mark Cattini, managing director of MapInfo, the most widely used desktop GIS software. “Eighty per cent of worldwide data has a geographical element.”

What has been less well understood is the commonality between the different geographies used by separate departments within the same company. For production, distribution centres may be critical to achieve late manufacturing and delivery targets. The accounts department will hold address information for billing, but is unlikely to be predicting behaviour on the basis of it, yet this will be normal in the marketing department.

The uniting factor is that if these different concerns can be mapped, they will be easier to interpret than as dull ranks of figures. Cattini notes that one of MapInfo’s value-added resellers is working on a GIS module for accountancy software that will draw out valuable information from a previously inaccessible source. The purchasing cycle, including the value of first and second purchases, the length between them, and the paying history, can be cross-tabulated with location to show the sales and marketing department where to focus their efforts.

What is also pulling these different interests together is Windows 95. Virtually every mapping package is designed to run under Windows, either in its standalone PC version, or in the Windows NT client-server model. And just as the Microsoft operating software has made many other applications easier to understand, it is now the turn of spatial analysis to become a “point and click” option.

Microsoft is now shipping its spreadsheet package, Excel, with a DataMap button which is likely to give thousands more users their first taste of how GIS can be used. Behind the button is an object version of MapInfo that delivers much-simplified GIS capabilities.

One of the limitations of DataMap, which users quickly come up against, is the low-resolution geographical data loaded into it. A quick map of a promotional leaflet distribution by postcode sector might be fine, but calculating drivetimes is out – many of the UK’s motorways are not included.

This is the feature of GIS software which is difficult to grasp until you try to use it. On its own it can’t tell you anything – you have to load it with data, including maps of the right level of resolution, first. “The cost of a system is made up of software, data, training and in-house resources. At least 50 per cent of the price will be externally purchased data,” says Bryan Wade, managing director of Data Consultancy.

His company specialises in supplying GIS software and data and spends a lot of time with clients helping them to define their data needs, as well as their application requirements. This includes showing them all the levels of geographical data available and discussing the cost implications of each.

“If you are a retailer opening stores, you can get good results on catchment areas by using data at postcode sector level, which covers about 1,500 homes. But if you are looking at out-of-town stores, and want to do analysis by drivetime, that requires data at enumeration district or postcode level, which covers about 15 homes. Postcode sector level will not provide enough detail,” he says.

Put simply, an assumption about the distance people will travel to a store is worthless if it does not take into account traffic conditions, or geographical obstacles like motorways, bridges and hills.

Peter Bell, marketing manager of CDMS, which offers a system called Prospex, says: “If you are a car dealership, you want to look at what type of business you can support in an outlet. You may do that on drive-time as the crow flies, but that is not the whole story. For example, five minutes’ drive from the centre of Leeds covers a lot of houses, but five minutes’ drive in London doesn’t get you very far at all.” Therefore, most GIS packages operate at several levels, giving the user the ability to “zoom” in and out of each layer.

The consequence of this need for layers of geographical data is that while the software may be relatively cheap – MapInfo sells for just over 1,000 – it will cost 3,000 to 4,000 to build in postcode sector level data. High-end systems cost tens and even hundreds of thousands. This is not to say that there aren’t cheap, quick-fix options. For 90, users of Excel DataMap can buy a set of map data from marketing consultancy Kingswood which will fill in many of the gaps.

It is not just location data which has to be considered – demographic and lifestyle information is also necessary. “If you target your best prospects on the basis of traditional direct marketing, you do quite well. If you target purely on geography, you do reasonably well, but not as well as if you work at individual level. If you combine selection of the best geography with a selection of the best people within that, you get the best results,” says David Grafton, managing director of Equifax Europe Decision Solutions.

His company markets a system called MicroVision, which combines data from its Dimensions database aggregated to postcode level with GIS software. “This is where market analysis companies have stolen a march on GIS suppliers. Marketers are looking for a solution to target a market problem that involves data and software. We supply a package which makes that easy. We believe that data is important, software is a means to an end, whereas GIS suppliers see software as an end in itself.”

This is clearly changing. According to Frost & Sullivan, software currently accounts for 52.2 per cent of sales value, with services

accounting for the remainder. It predicts most growth in systems integration, training and help desk support. That comes as no surprise to Wade, who comments that, “these types of systems sell themselves – once you have got one in, people come back for more systems and data”. He stresses that training is crucial for the effective use of these complex tools.

Systems suppliers have also recognised that GIS will not grow if it remains a black box solution, or requires an expert to operate it. In the same way as customer databases have moved out of the air-conditioned IT environment onto marketers’ desktops, GIS will become more widely distributed.

“It has to be simple to set up for people to use it,” says Mary Short, managing director of Kingswood, which markets Geo Concept. “What is happening behind the scenes may be complex, – for example giving a catchment area a weighting factor – but you can make it simple.”

Her company’s system is designed to offer an expert client-server or browsing version which allows each user to work at whatever level is most comfortable. Since marketers tend to have standard ways in which they view data, these can be pre-set so they are already available from the screen. The user does not need to run through SQL query routines to set up a data analysis and then map it.

Users need to have an idea of what is going on underneath the clever graphics. And this is what will really push GIS into the marketing arena. The fact is, the nature of what marketers have to do and how they justify it is changing, and they need the tools to adapt to that.

“They are being asked to solve more quantitative business problems, and that wasn’t part of what they were asked to do,” says Gerald Chertavian, managing director of Conduit Communications. “Previously, they had a marketing budget for pre-defined activities in the year. Now, the speed of the market means it is difficult to predict things.”

This is driving a need to demonstrate return on investment. GIS has long been used by other departments, such as market analysis or property, to work out the best use of their budgets. If marketing can adapt the same tool to its ends, it will be able to present its case within the same environment.

“Historically, what has been valued in business is land, labour and capital. Now you have to add information. It was easy to argue the importance of the first three, but how do you justify improving information as an asset?” asks Chertavian.

The answer might just lie in showing how that information is realised in sales terms using a digital map.

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