The marketing industry is witnessing a flood of research and events outlining the importance of having an effective big data strategy. According to a report by the McKinsey Global Institute (MGI) – ‘Big Data: The next frontier for innovation, competition and productivity’ – it is becoming the key basis of growth for brand owners.
Big data is widely defined as datasets that are too large for typical database software tools to capture, store, manage and analyse, and MGI estimates the amount of data being generated is growing by 40 per cent a year.
Yet according to MGI, IT spending by organisations around the world is rising by just 5 per cent a year and there remains a massive skills shortage. The US alone urgently needs an additional 1.5m data analysts and managers.
But many chief marketing officers feel confused by big data. According to a survey by BSkyB’s subsidiary Sky IQ which helps brands track their customer data, at least one in seven admitted to feeling overwhelmed by the sheer volume of customer data available to them.
They are, however, starting to take action with 47 per cent claiming they will spend more time on this area throughout 2012. This is partly because one third of CMOs believes other organisations are making more of their big data than they are – which could ultimately be costing their companies money.
The Creativity Marketing Centre at ESCP Europe business school explored the big data strategy question at its June conference, entitled ‘Big Data and Marketing: from analytics to creativity’. Laure Reillier, director of seller propositions at eBay, acknowledged how important it is to find the right people with the right skills, because analytics cannot be divorced from marketing skills and marketing strategy.
The Creativity Marketing Centre’s associate professor Marie Taillard agrees big data must be integrated at every step. She says it should inform all aspects of the marketing strategy from analysing the market, gathering the consumer insights necessary for segmentation, brand positioning, pricing and distribution decisions. It should also help to build the communication strategy as marketers dive deeply into the sales numbers and decipher post-purchase data.
“This integration of big data means every part of the marketing strategy should be rethought in a way that allows the relevant data to be collected, queried, interpreted and considered in the decision making process,” says Taillard.
One company following this approach is the discount codes and vouchers website discountvouchers.co.uk. It has a database of more than 6m UK consumers and began its big data project last October.
Chief executive Gerard Doyle says the aim is to collect as much consumer intelligence as possible. “We have a team of people collecting data and storing it in different parts of the business and we are gradually interrogating every piece of data ourselves. This is about testing and learning to discover what is useful.”
Discountvouchers.co.uk is currently undertaking a detailed analysis of the deals it runs so it can further segment its audience not only by age, gender, income and marital status but also by the web browser someone uses and by their ISP and email provider.
Doyle admits that integrating data from social media is difficult. “Facebook is both fantastic and scary for brands. It has myriad of valuable information but we can interrogate only about 10 per cent of it in a meaningful way. The rest we hope to get to look at in the future,” he says. “However, despite all the additional big data available, gender, age and postcode remains the most powerful information you can have.”
The Direct Marketing Association ran a ‘Take Control of Big Data’ event in London in July, and among the speakers was Honda’s CRM and database manager Rachel Hall. She believes brands must not get obsessed with or distracted by social media data if it is not right for their brand. “I don’t want that data in my database because people won’t engage with a car manufacturer on Facebook. These sites can be inappropriate for some brands. It is important to reference social media but don’t try to shoe-horn it into your database.”
Honda claims it has actually had a single customer view since 2005 but the brand has only implemented an effective big data strategy to exploit it in the past 18 months since Hall came on board.
“The database sat within the customer department not marketing and no-one knew the real value of our data,” says Hall. “It was being built and maintained but what was actually in it was not being publicised internally.”
She said that there was too much reliance on third party agencies and the culture internally had to change to persuade the management that the database should sit in marketing where it could be analysed more effectively and the insight it generated acted upon quickly.
“We used to measure each piece of activity but not assess the cumulative effect of various campaigns,” says Hall. “We have 390m rows of data from 1.5m individuals including transactional data, inbound and outbound data, touch-point data from dealers and more.”
Another company investing in a big data strategy in 2012, is the trends-based social shopping site Shopcade. Chief technology officer Evan Adelman says the site, which enables users to share and discover products and earn rewards, generates huge quantities of unstructured data. Consumers comment on around 70m products from different retail sources and data feeds across the world.
The company has a four-pronged strategy around big data and uses 10gen’s MongoDB NoSQL (non-relational) open source database which is also used by brands such as Disney, O2, AOL and The National Archives.
“You need to understand your data source then work out how to consolidate it,” says Adelman. “The next step is a clear strategy around how you are going to analyse it and then act upon what the analysis tells you. We are micro-targeting retailers’ customers with relevant live feeds based on a user’s interests which they share with their followers.”
Adelman says every company needs some form of big data strategy. “Even if you are a hyper-local business, if you have the creativity to tap into the data that’s out there it will bring benefits. Whether the data is relevant to your brand or not is down to your willingness to think differently and creatively. We have just added Twitter trend information to our site, for instance.”
The brands getting control of their big data are succeeding because they are indeed focusing on what insight they really need.
Jane Frost is chief executive at the Market Research Society, she has also worked client side at Shell International and at the BBC. She says when it comes to having a data strategy, it is vital to remember that just because you can count something it doesn’t mean it matters.
Frost believes brands can waste time gathering and sorting multiple streams of confusing data and fall into the trap of measuring outputs rather than outcomes, such as click-throughs rather than sales. “A data strategy must support your customer understanding and include standards, ethics and be focused on the small number of indicators that really make a difference,” she explains.
The legal aspects of collecting and integrating big data can confuse marketers and the law is changing all the time. Privacy remains a massive issue for brands that need to be seen to be honest and transparent in how they are treating an individual’s data. Any big data strategy must ensure the processing of personal information complies with the law, but this can be challenging for a marketing team if the original intended use of the data changes.
European data protection laws require organisations to not collect more data than they require for the particular purpose for which they intend to use it. It must also not be kept for longer than necessary. The principle of data minimisation will be strengthened under proposed amendments to the current EU Data Protection Directive.
Bridget Treacy, data privacy expert and managing partner at law firm Hunton & Williams, says many consumers are surprised at the sheer volume and nature of the data about them that is available to brands. “Even if the legal requirements for collecting and using data have been met, customers’ perceptions of a brand can be directly and detrimentally affected when they realise how their personal information is being used,” warns Treacy.
The amount of data being created today can seem almost incomprehensible, but it provides brands with customer insights that marketers of the past could only dream about. The secret is to have a clear strategy where a less-is-more mindset remains so only data that is relevant and supports what you already know about your customers is analysed and acted upon.
Case study: The Caravan Club
Caravanning is big business with big data collected from The Caravan Club’s (CC) 1m members.
The CC generates £105m a year from its membership, its 160 campsites, an insurance division and a travel agency ‑ all of which produce data.
But the amount of data is causing a few headaches, says head of member marketing Tony Lewis. “We are collecting data from four sources but the databases are not linked,” says Lewis. “We mulch it together in a data warehouse and see what products and services people are buying but we need more consistency between how data is processed across the organisation.”
He adds that the CC is currently fine-tuning its big data strategy to ensure it focuses its limited marketing resources on analysing the data that has real value.
“Big Data is a way of articulating opportunities. Big Data itself is in some way nebulous and is like holding putty in your hands. It’s not until you work out what shape to mould it into does it take any shape and make sense,” says Lewis. “It is conceptual, which forces you to think about the possibilities of integrating more traditional sources of data with new sources such as web journey data.”
He believes companies will only be in control of their big data if they have agile processes and qualified data analysts that enable a business to react quickly.
“The IT function seems to have a stranglehold on data in many organisations and as a result data warehouse developers are the in thing. They will build you a great model but with no real understanding on how it will be used,” he says. “There is a massive skills gap for businesses to make sense of what the data is saying to essentially drive business value.”
Director of analytics and consulting
Experian Marketing Services
The discussions and media attention surrounding big data remind me of the hype the industry was having around CRM 10 or 15 years ago.
As marketers we can’t help getting excited about the potential of big data and it sounds fantastic to have such amazing insight to use in marketing decisions, behavioural targeting and campaigns.
But is big data the next CRM? Will it promise so much yet struggle to demonstrate the value due to IT and implementation challenges?
We have seen businesses invest significant amounts in CRM technology, with grand plans for consistent customer data at all touchpoints but they failed to deliver. Why? Largely because they became IT projects.
IT often led the CRM project and many believed that the software would solve their business issues. Failure to engage with marketing and other business end users led to a lack of buy in, disappointment and issues with functionality.
Big data projects must not fall into the same traps. With so many vendors pushing software which claims to help marketers get on top of big data, brands are quite rightly asking many questions not least how they don’t miss out on this. Ultimately a big data strategy will only be effective if the business takes ownership of it and then works in partnership with IT. Success in any big data strategy is reliant on planning.
You must look at where you are today as a business and think – realistically – what steps do you need to take with your data to get to where you want to go.
Focus on those new data initiatives with immediate commercial benefits and only after that consider a wider roll-out programme. The basics of test and learn also remain crucial within any big data strategy.
If you are clear about where you are as a business and your objectives, and are managing your data effectively to reduce any risks, then you will improve your ROI.
Some sectors such as financial services are used to working with huge amounts of structured data, but for many brands big data is something new and unfamiliar. They are unsure what they can and cannot do with it. Take a look at best practice in other organisations and learn from them to ensure you benefit from the big data evolution.
The amount of data being generated is growing by 40 per cent a year, estimates MGI
There are already more than 5bn mobile phones in use and 30bn pieces of content shared on Facebook every month.
66 per cent of attendees needed more data scientists to manage, analyse and interpret their data so marketers can create effective campaigns, according to Aprimo.
Retailers can increase their operating margins by 60 per cent if they get big data right, according to Aprimo.
Text FOR CAROUSELS O