What is Data Driven Marketing?
At its core, data driven marketing is just as the name states; informing marketing decisions based upon what first party and third party data say. It’s a relatively new practice, at least in terms of feasibility, due to advancements in data storage, data collection and data analytics.
All prominent companies are scrambling to utilize various buzzwords such as big data, machine learning, artificial intelligence and data science. Data driven marketing is the culmination of these things in an effective and executable fashion, as it relates to marketing or advertising.
The Rise of Data Driven Marketing
The advertising industry is currently projected to spend over $628 billion in 2018 across the world. All companies, from the smallest to the largest, understand the importance of advertising; as this statistic clearly indicates. While advertising spend shows no signs of slowing down, it is starting to show a clear shift in how funds are being used.
Digital media is on track to even out with traditional media by the end of 2020, marking an interesting point for all companies and the ad industry as a whole. This transition away from traditional advertising means is heavily influenced by the internet and by extension, data driven marketing.
Marketing best practices have gone through many modifications since the rise of the world wide web over 20 years ago. Many mediums used for advertising today have only been available for around 10 years and are still becoming more prevalent as the world becomes more connected.
Arguably the largest contributing factor to this is social media, with the average person spending almost two hours a day on various platforms. This constant connection has become embedded within the last two generations and will continue to become more ingrained in society.
These changes don’t just mean that we’re more connected though, we also tell the world more about ourselves than we ever have before. Companies are mining everything their consumers say about themselves to help improve advertising through a variety of information gathering methods. Effectively using all possible avenues to understand who your consumer is and the best way to reach them is known as data driven marketing. There is a treasure trove of information within first party and third party data if a company knows how to find and use it. Gathering and analyzing this information is the basis behind data driven marketing, and can generate significant results when applied correctly.
Why is Data Driven Marketing Important?
To see and understand why data driven marketing is growing in importance, advertising needs to be examined from traditional versus digital methods. In the past, a consumer profile had to be built out of subjective information at best and at the worst a complete guess.
Data collection consisted primarily of surveys to derive an outline of customers and even after getting the topical understanding this would provide, there was no way to store that information or effectively create action from it. It could inform an audience that would be good to target, but there was no way to guarantee to reach only those consumers. Much of this stemmed from the fundamental way advertising used to function, there was no real way to learn more about your consumers or segment through traditional means.
Television, radio, magazines, billboards and other traditional methods still operate for the most part on a broad stroke mindset.
There is no verifiable way to segment an audience for exactly what your company wants. Second, they also offer little to no insight into who is actually purchasing or engaging with a brand. A television or billboard doesn’t have a way to pull information about who is watching as they see an ad or drive past a billboard. Timeslots and channels can also be switched, but the ability to verify who is interacting and how still isn’t there.
The lack of input from consumers with these platforms is a heavy detriment. It also makes attribution for the spend, and the efficacy of the buy as a whole difficult to quantify. Suffice to say, traditional methods don’t generally drive improving data driven marketing strategy.
The Digital Space
Then there is the digital space, which positively influences data driven marketing; it actively addresses the two issues above. Using Facebook as an example, an audience can be segmented in nearly any way a company would want, segments that are verified within the platform’s own users. Copy, imagery and offers can be changed depending on the age group, gender, income, interests and more.
Furthermore, how consumers engage with those ads and convert is reporting back, giving a basis for how they’re responding to multiple different ad sets via A/B testing. Building on that, information is also provided back for a general outline of the demographic information that comprises your site audience.
When starting from nothing, traditional media provides little to no information directly back to the company on how their consumers are interacting with the ads or brand. Conversely, digital media provides a wealth of information back, allowing you to start constructing a data driven marketing strategy. As you continue to collect this information it will allow you to continually refine the ads delivered to consumers and the best platforms or methods of doing so. This also provides a means for a very clear attribution model, where advertisers can use data driven marketing to quantify the revenue their efforts produce.
Data Is The New Oil
This brings us to why data driven marketing is a crucial part of any business. It’s an evolution of how companies will function in the future and one of the most important steps to being a data-centric organization.
There’s a common expression in the advertising and technology industries at the moment, “data is the new oil.” While the statement seems odd, there are many reasons companies have started to think this way. It boils down to one concept though, data possesses the same value for companies that oil used to and having control of it will ensure your business’s success in the future.
Having your employees understand the best way to leverage data is something all companies need to strive for. Since marketing is one of the best ways to get understanding, or data, about a company’s consumers, data driven marketing is a great place to start.
Customer analytics, one of the central parts of data driven marketing, is shown to have a significant positive impact on company performance. Generating revenue should be the goal of all marketing efforts, and many companies are still learning the best ways to do so.
Initiating Data Driven Marketing
The sooner companies start stepping into these data-driven solutions, the more competitive they will be in the future. Data driven marketing is one of the first and most important steps to take towards achieving a company culture that uses data in all of its operations.
Every day, more tools and concepts are being introduced to drive further growth and data utilization. Companies that keep waiting to modernize will continue to fall farther behind their competitors and eventually lose out altogether.
Get Started With Untitled
At Untitled, data driven marketing is one of our core offerings. We specialize in data analytics and use our intelligent optimization methods to inform better marketing decisions. Getting started on the data journey can be difficult for any company, and we ease that process in a variety of ways. If you and your company are looking to leverage data driven marketing and be a lead performer in your industry, contact us today.