Branding

Big Data. Big Deal?

The Makegood is pleased to welcome Nathan Levi as a regular contributor. Look for his column every third Thursday on The Makegood. Nathan has over a decade of experience working in digital media at companies including 24/7 Real Media and Razorfish and is currently the Head of Media at VCCP

Whilst surveying my book recommendations on Amazon I chanced upon a recent industry publication entitled ‘How Brands Grow’ by Byron Sharp. The premise of the book is to disprove many the marketing principles many of us live and die by today. The main points can be summarised as follows:

 

  • Competitive brands generally have a similar customer base
  • Paying premiums for low reach media is a waste of money
  • Price promotions do not grow your customer base
  • The largest percentage of a brand’s customer base will only make a purchase once or twice a year…
  • …For this reason over investing in already highly loyal customers or retention schemes and neglecting to reach new buyers or casual buyers is a folly.

Byron Sharp goes on to make many other interesting observations, all heavily reliant on data but I wanted to concentrate on the ones above, mainly for their pertinence to the digital space. Before I go on, ‘How Brands Grow’ is a landmark publication and well worth a read for anyone in marketing.

For many years us digital folk have lauded the channel’s ability to target a brand’s potential customers more accurately than any other channel. Recently there has been an overwhelming amount of noise about ‘big data’. Part of the lure of big data is the ability to target acute groups of people, like 54 year old women living in Mill Hill who read gossip magazines. Byron Sharp might see this strategy as pointless, especially seeing as he thinks ‘it’s wrong to assume that a brand appeals to a particular type of buyer’. This must mean that ‘paying premiums’ to the likes of Bluekai and Exelate is a bit of a waste of money. I myself have witnessed highly targeted campaigns under performing against high reach low cost media buys. This is partly because the cost of the data outweighed the media spend (ridiculous I know). The other reason being that cookies don’t scale; there aren’t many 54year old women in Mill Hill reading gossip magazines, and so once you’ve exhausted this particular audience segment you have no where else to go.

Sharp’s next point about price cutting is particularly relevant to digital media. Price promotions are often a mainstay of any direct response campaign, and prerequisite for any affiliate marketing efforts. Byron Sharp makes the point that price promotions don’t have a lasting effect on sales. No big surprises here. Having overseen many price lead campaigns the big sales spike is always followed by a sharp decline once the campaign has run its course. Brands are often forced to compete on price because it’s all too easy for customers to switch websites at the click of a button, but the longer term effects of price-cutting are more often than not destructive. Online marketers often use incentives as a tactic to improve sales volumes as a quick fix solution, not really thinking about longer term implications.

Investing in customer loyalty by re-targeting prospects or existing customers is another mainstay online media tactic that we all employ to improve conversion rates. Sharp would argue against re-targeting existing prospects, and champion growing the prospect cookie pool by finding new customers on an ongoing basis. Reaching a new audience requires a certain amount of data to implement, but not the smorgasbord of customer data that is available to us.

Is big data the panacea we suppose it to be or have we over egged the omelette? This all depends on what role we think digital media plays in the advertising mix. A lot of the digital channels and tactics we employ today are a suitable condiment to a much wider marketing strategy but many of them do not grow brands. This includes re-messaging, price promoting and behavioural targeting. Before anyone shoots me down I’m not in any way underplaying the potential of these tactics to play an important role in a person’s decision making process. In the industry there is a lot of emphasis on targeting and data and less perhaps on finding new customers (or prospecting). The challenge with prospecting is often one of measurement. To plan measure and evaluate this correctly you would would need to apply metrics that are more meaningful than reach and frequency but less empirical than sales and revenue.

A final few words on big data. Today’s market is cluttered with data providers who have oversold the powers of targeted media, this will change in time. Data is only powerful when you can do something with it, and we are often in danger of focusing on the small stuff over the big stuff. As more media channels become digitized, growing brands in an online environment will not just be a ‘nice to have’, but a requirement. On that note I shall return to Amazon to see what other literary treasures I might find. Thanks for reading.

  • Paul Silver, ExchangeWire

    Good piece Nathan. But let’s not pigeon hole ‘Big Data’ into the world of 3rd party audience buying….

  • Nyoheleven

    Sorry to nitpick, but the small errors (the missing “of” in the second sentence for example) sap the strength of the argument.

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