There are two competing approaches to marketing analytics, but only one points to the future.
Imagine two worlds: In one, people only understand the world by submitting their questions to a committee who disappear for a few months and come back with an answer. The highly esteemed answering committee never fully discloses their methods. They are obviously smart and often helpful, but trying to understand their methods is hard and they don’t often like to talk about it. The answers they give are precise, testable and often comforting, but when they are asked about new problems, new ideas and hypotheticals, they offer few answers.
In another world, people use their own tools to answer their own questions. They have free access to the tools, which are continuously improved through trial and error and free exchange of ideas. No questions are shunned. Every idea can be tested and every question answered. There are often many competing answers for the same question, and the answers change based on the people and tools involved. This makes some people uneasy at first, but soon people learn that the world itself is ambiguous and all comfort in prediction is a false comfort.
The State of Marketing Today
These two worlds are caricatures of the state of marketing analytics today. The marketers’ relationships with their analytics providers are currently strained as a service-based, methodologically undisclosed and one-off delivery of insights. These providers and methods are pitted against a new generation of managers and executives who are “data natives” -- professionals who rose to the top by having full control of their answering techniques, who like to be empowered and in charge of their own destinies, and who understand the world as a continuous, adaptive place that may have constantly changing answers. This new generation of leaders likes to identify tradeoffs and understand the “grayness” of insight rather than the clarity being marketed by the service providers.
A recent Forbes article explains that “we never thought our models were a perfect depiction of reality, but developed techniques to suit the tools we had.” But the techniques have changed. Analytics is democratizing. The savvy marketer now understands many approaches and uses them to suit the question, not to suit the tools. A company called DataXu offers an algorithm exploration tool where any analyst with a question can experiment until they have found the right tool.
Technology has changed too: with higher processing power, Excel and regression techniques feel like Buicks on a road filled with Porsches. We can now run thousands of simulations on a laptop and use search algorithms on a daily basis that return answers in milliseconds. No one needs another analytics consultancy to get to the answer. The new marketer likes to find the answer herself. Just point her to the community and to the right tools.
The Demands of Growth
But what if the marketer misses out on the optimized solution? A recent AdAge article discusses the growing criticism of the service providers in the field. What we think is optimal is such only in the narrow scope of the observable past and of the few variables we think matter. An optimizer will find the best allocation of budgets or reach the same target with fewer dollars. Mathematically, this is wonderful, but every marketer who has actually grown his or her business knows that you can’t grow a business by mixing and matching your investments or cutting costs.
Growth requires innovation, thinking outside of the box, and taking a bet outside of what you have already been doing. Optimization of spend would not have led to a completely new way of building and organizing a computer and electronics store the way Apple did. The Apple stores have succeeded not because of advertisements paid for by excellent optimization tactics. The Apple stores have succeeded because they created a unique product and shopping experience, found creative ways to introduce and display new products, and found messaging that connected with and grew their consumer base.
Testing potential new strategies like this is just impossible within an optimization framework since optimization is about productivity: allocating or reducing spend. There is no place for new products, experiences or messages, and businesses can’t fully understand how to connect with, maintain and build their customer bases without knowing how these work in their market. They need a sounder strategy. Furthermore, changing one of these characteristics is a strategic decision marketers must make. Is it risky? Of course, but who’s to say that it’s any more risky than repeating the past in an effort to succeed in the future?
The Age of the Empowered Marketer
A shift is occurring. People are realizing that optimization is not the single “answer” everyone has been looking for over the years. Optimization might be a piece of the puzzle for some marketers, but it doesn't deliver all it has promised. The result in this case is that some marketing decision makers are experiencing discontent that they’re not getting what they were promised, which is contributing to the larger shift to look for something better.
Data natives, transformational thinking and technology as a driver (not a service) will form this new market, and there will be a push for and by clients to be able to develop and manage their own scenarios. We are in the midst of an age of empowerment: DIY musicians, self-published authors, personal social media accounts as sources of news, internet personalities that turn themselves into businesses and more. Why would marketing be any different? It isn't, and the businesses that will enjoy the most long-term success will be those that support this new outlook.
The foundation of this new outlook is the vast cultural shift that has occurred for consumers, creators and businesses alike over the last five to ten years. People have become accustomed to having more tools at their fingertips to learn, create and share through smartphones, iPads, Nooks and other devices, and the notion that these same people, when confronted with marketing challenges, would hand over their data and wait for a professional services firm to tell them what to do with their business is not in tune with reality.
Instead, as part of this drive towards empowerment, an emerging best practice for achieving useful forecasted results will be including a combination of expert insights with big data analytics rather than strictly historical information. This fusion is necessary to develop a forecast of what will happen and will enable trade off analysis that reflects the manifold objectives of the marketing decision makers. Executives already choose to ignore certain data in favor of their unique, expert insights. This practice would simply make this choice explicit.
The result of this type of empowerment, strategy development and process will be revenue growth, which is one of the most basic business goals. Without it, businesses will collapse. However, when we read Forrester’s recent report, “Forrester Wave™: Marketing Mix Modeling, Q2 2013,” we realized that the report was advocating optimization methodologies as the future of marketing when they’re actually several steps behind. In this way the Wave report is more like a ripple from a stone that was thrown into the water years ago. Ironically, the report evaluating forward-looking platforms is written by a firm that makes its name by evaluating historical information.
We are moving from the world of the convinced expert to the world of the adaptive thinker. Our new methodologies embrace complexity and ambiguity because they are modeling the true nature of the world. Data and technologies are coming alive through collaboration and constant feedback. There is less and less space for secret and proprietary methods to hide. The new world is one of transparency, empowerment and community. Join us.
Title image courtesy of Sergey Nivens (Shutterstock)
Editor's Note: For another take on the relationship between marketing and analytics, read Matt Mullen's Dispelling the Chief Marketing Officer Myth