Big Ideas

Data. The Final Frontier.

By idfive \ July 26, 2012

By Dr. Sean Carton, Chief Creative Officer and Professor of the Practice at the University of Baltimore

If you believe the hype in the ad industry press, you’d have to believe that digital agencies are places filled with 20-something hipsters slinging buzzwords and obsessed with maintaining their Klout scores while cranking out flashy web sites and viral videos. And for good reason. These places do exist (don’t ask us to name names, though) and if you follow the trade press you hear about them all the time…21st century Madmen so far out on the cutting edge that they’re practically in tomorrow, cooler than you, smarter than you, and definitely more connected than you’d ever be.

But there’s a difference between hype and results. And if you’ve been feeling a little left out of the digital marketing revolution (or just feel like you still have a lot to learn), don’t worry: you’re in good company. As it turns out, a surprising number of marketers (and agencies) are still trying to figure things out. And if going online was the first step in the digital marketing revolution, the next frontier seems like it’s going to be dealing with the tsunami of data all those digital activities are generating.

A new study out from analytics firm PulsePoint, entitled  “Bridging the Digital Divide”  recounts the findings of a research effort that looked at “the digital marketing capabilities, top challenges and priorities of nearly 400 senior marketers, agency executives and publishers.” Their goal was to better understand what is actually going on in the world of marketing these days and discover just how effectively marketers are using digital in their marketing mix.

What they found was pretty scary. While consumers are, in their words, “moving freely across channels and devices, interacting with brands and content in real-time,” the digital marketing industry is, for the most part, pretty seriously lagging behind. PulsePoint found that only 10% of digital marketers were capable of running “real time interactive marketing,” using data to make decisions about messaging and performance at the speed of consumers. And while 65% of marketers surveyed claimed that they were able to take a “multi-channel” approach in their digital campaigns (using two or more channels), only 27% of agencies reported that they were capable of actually managing a program in real-time.

When asked why they weren’t doing such a good job at real-time interactive marketing and campaign performance measurement, the most common answer was “metrics.” While they may be collecting data from all of their campaigns: technical complexities, inability to handle and measure real-time data, and difficulties in assessing return on investment (ROI) were all cited as reasons they were lagging behind. They just can’t keep up with, or don’t know what to do with the data.

But PulsePoint isn’t the only company to find out that marketers and agencies were having a hard time with data. A study conducted by DataXu back in March 2011 discovered that only about 25% of marketers were able to use data to efficiently allocate their digital marketing spend. With almost $32 billion spent on online marketing last year, that amounts to potentially $24 billion in wasted ad dollars. Yowza.

Clearly the digital marketing industry is still a ways away from fulfilling the promise of being more accountable than “traditional” media. Of course, that’s not a very high bar to cross: other than direct marketing, mass-media advertising has rarely been called to task for its accountability. But that’s what we had and so we lived with it….even when, for example, studies revealed that 82% of TV ads produced didn’t work.

Of course, it’s not like anyone’s going back to the “good old days” of what we so quaintly call “traditional” marketing. Forrester predicts that online marketing spending will come close to $77 billion within the next four years…just about double the spending on broadcast TV in 2011. Last year alone pending on “traditional” channels plummeted 161% while digital spending rose 14%. So what’s the answer?

The answer is data. Lots of it. For digital marketing to really work it has to move beyond flashy gimmicks, viral videos, and hip new social apps.  All those things are fine, but they have to be accompanied by smart data collection and analysis of the performance of online marketing programs across multiple channels in real-time. While we’ve made some strides in this direction, if digital marketing is going to deliver on its promise, we’re all going to have to get down with Big Data.

What’s “Big Data?” The McKinsey Global Institute states that “Big Data” is “the next frontier for innovation, competition, and productivity.”IBM says “Big Data” is “an opportunity to find insights in new and emerging types of data and content, to make your business more agile, and to answer questions that were previously considered beyond your reach.” Forbes simply calls it a “big opportunity.” At idfive we just call it “knowing how to understand what’s going on.”

While “Big Data” has become a buzzword lately, the concept’s not that difficult to understand. Whether you’re using your debit card to buy lunch, zipping along in your car using your EZPass to skip through tolls, searching Yelp to find a place to eat dinner, or just using Google’s search, just about everything we do these days generates data. Lots of it. According to IBM, every day the world generates 2.5 quintillion (yes, with a “q!”) bytes of data.

And while people concerned with privacy have become increasingly alarmed by the amount of data the average person generates as they move through their life, the dirty secret is that most of that data just sits around in databases gathering the digital equivalent of dust (pixel dust?). Companies that have figured out how to analyze and make decisions based on that data – Google, Amazon, TRW, and Wal-Mart, for example—have done extremely well for themselves because they’ve realized the power inherent in understanding how to turn raw data into actionable knowledge. For most businesses, the potential is huge:McKinsey Global Institute estimates that retailers could increase their operating margins by as much as 60% by leveraging the data they’re already generating and the US healthcare industry could create $300 billion in value every year by using data to reduce costs and increase efficiencies.

The ad industry’s no different. The promise of digital marketing has always been based on the data it generates. Knowing what ads are working and which aren’t allows advertising to move from creative guesswork to real-time science. Knowing information such as the age, gender, location, and interests of consumers allows advertisers to hyper-target advertising so that the right messages reach the right audiences at the right time (see the market cap of Facebook to understand just how valuable this capability can be). Being able to serve advertising based on consumer behavior and charge for media based on whether or not an ad generated a response allows publishers to create incredibly attractive and efficient advertising models that need less overhead (the decisions are made by computers) to generate more advertiser satisfaction (we’re talking about Google here, in case you’re wondering).

The promise of digital marketing is huge. No more wasted ad dollars. Real-time optimization. Up-to-the-microsecond ROI calculation. Hypertargeting. Personalized messaging custom tailored to the individual consumer. Advertising Nirvana.

That’s the promise. The reality is that there’s still a ways to go. In order to fulfill the promise the industry has to move away from thinking of advertising as some mysterious (and sexy) secret known only to a few hipper-than-thou acolytes lucky enough to “get” the culture and move towards a way of thinking that puts data first. This doesn’t mean creativity isn’t important: it is now and it always will be. In fact, in a future where the ad biz relies on Big Data, creativity becomes even moreimportant as a way to create messages that cut through the ever-growing digital noise of an always-on, always-connected global marketplace. Great creative gets even better when it’s coupled with great data…and gets great results.