The advertising world was much simpler in the 1800s, when industry pioneer John Wanamaker famously said, “Half the money I spend on advertising is wasted; the trouble is I don’t know which half.”
Today, Wanamaker’s old dilemma should be at an all-time high, when businesses deal with fragmented media offerings that encompass print, broadcast, digital and social media.
But that’s not always the case, said Marshall Toplansky, managing director of advisory services at KPMG LLP’s Irvine offices, who credits big-data analytics with helping brands reduce inefficiencies when allocating advertising dollars.
“I’ve seen the whole marketing world evolve from being pretty much an anecdotally driven, gut-feel kind of business to an intensely data-driven business, both at the client side and the agency side,” he said. “Where we’ve evolved is (we are) looking at people’s past behavior as an indicator of what is it that they want to buy, and we are customizing both the message and the offer and the medium through which they get the message.”
Toplansky’s Irvine-based firm, Wise Window, was acquired in 2012 by KPMG, one of accounting’s Big Four firms.
WiseWindow’s Mass Opinion Business Intelligence technology helped companies “assess and track their competitive positions in real time and develop more accurate forecast models” by analyzing online comments consumers made about their brands. Now its technology is a part of a toolset KPMG calls “dynamic decision analysis,” which is used to set up big-data collection systems for businesses in various industries.
KPMG also provides data analytics to help brands make informed decisions to bolster their marketing initiatives.
For example, Toplansky’s team there recently created a big-data system for a major U.S. mobile wireless service provider.
“The way you make money in the telephone business is through retention,” he said. “It costs you just to get a customer, but once you get them, the way you really make a profit is by keeping them. Every telephone company has the same problem, which is, ‘How do I judge which ones are worth keeping, and how much money do I give people in order to stay?’ ”
The data system KPMG created enables the telephone company to track customers’ online behavior, such as purchases, site visits, and comments they make about the service provider on social networks. It overlays the information with data gathered by outside sources, such as Costa Mesa-based Experian PLC, including customers’ home ownership and number of children. The data system then assigns each customer a score that, come contract renewal time, determines who gets which incentive to stay with the telephone company.
“Scoring is embedded in the system that gets activated tens of millions of times every day,” Toplansky said. “The number of interactions that this company is having with its customers now completely outstrips its ability to manage that with a human contact.”
Big-data systems can also focus on consumer patterns that might reflect entire customer segments, giving a brand a competitive edge.
“If you find those patterns and see them as they emerge on the fly, then you can become more accurate,” Toplansky said. “Accuracy is not about, ‘Did I shoot the arrow in the right direction and hit the bull’s eye?’ It’s about, ‘Can I continuously fire those arrows accurately and keep them updated as the ground shifts?’ ”
A recent survey of 370 marketers shows 54% have started investing in big data, 30% plan to start participating in the next two years, and 11% have no plans to spend on big data.
Chicago-based marketing data firm Infogroup Inc., whose client roster includes eBay Inc., FedEx, HP and Automatic Data Processing Inc., conducted the survey at the Direct Marketing Association’s 2013 Annual Conference in October.
Of marketers that have taken the big-data plunge, 61% said they’re already seeing a positive return on investment from data-related expenditures. Some 62% of those surveyed expect an increase in their data-related budgets in this year, while 29% expect their data expenditures to stay the same, according to the survey. Roughly 40% said they plan to hire for data-related positions, with the majority looking for data analysts and strategists.
Gina Alshuler, president of Costa Mesa-based advertising agency Rauxa, said her clients rely on her to provide similar expertise. Her firm, though it doesn’t build big-data systems, recently integrated with a technology subsidiary, giving it data analysis capabilities. It farms out data mining to outside sources, such as Dayton, Ohio-based Teradata Corp.
“A customer will say, ‘I want to look at 10 actions that led the customer to sign a new agreement,’ and (Teradata’s) Aster goes and looks at the most common 10 paths that got you to sign,” Alshuler said.
Then the company can choose the least-expensive path that will lead it to new customer contracts.
Collected data is a commodity and therefore should be as precise as possible to ensure accuracy of targeting and of marketing offers. The search engine industry has made great strides in that aspect, Toplansky said.
“Back in the old days of three years ago,” he said, everyone’s pitch to buy a car would come in two months after the consumer’s initial online search for the vehicle, oftentimes too late. “Now you start typing things in a search engine about buying a car, and immediately you are targeted by car companies to buy something, because they know you are in the market for it. That’s the kind of accuracy, and that’s the role big data plays in the marketing industry and how productivity of marketing dollars is being improved.
“One of the elements that we didn’t used to have is timeliness, and now with the speed of communications and the speed of data collection, we can actually capture people not only as they are in the market for something, but in some cases we can predict that they will be in the market for those things. Somebody who is searching for cribs, you know that they’ll be in the market for diapers in six months.”
Data, when analyzed properly, is a valuable asset, Toplansky said, but also can be an obstacle to deep-rooted company beliefs.
“Many, many people have been successful over time building their businesses up on a gut feel, on their own intuition
that comes from the experience of having been in the business for a long time,” he said.
“Sitting down with them and saying, ‘Here is the data’ sometimes challenges those beliefs. So that is a difficult one, when you have to say to them, for example, ‘If your competitor is a large ecommerce company, and that company has algorithms that every second of the day are looking at what to pitch to whom, how can your gut feel compete with that?’ Your gut feel can only take you so far.”
