It’s an exciting time to be in marketing, because there’s a major multimillion-pound paradigm shift on the horizon.
Conditions are ripe for an overhaul of the old way of doing things, and the sales and profit numbers involved mean that only wilful blindness on behalf of the industry could delay the revolution.
This shift in marketing culture relates to how marketers make decisions. The old way of doing things often relies heavily on guesswork, gut instinct and ‘what we’ve always done’.
Too much marketing has been based on presumptions such as ‘older people don’t use Facebook’ and ‘we’re an online brand, we have to run banner ads’.
These are just a few examples of the kind of decision-making that continues to take place in the absence of robust data to inform decisions, and which often leads to expensive mistakes and lost opportunities.
While hunch-based marketing should be confined to the past, it’s still all too common. A study by Harvard Business Review, published earlier this year, found that marketers depend on data for just 11% of customer-related decisions.
The potential damage this is doing to profits is revealed in research conducted last year into the effect data-driven decision making has on an organisation’s performance.
This showed that companies that emphasise data and analytics delivered output and productivity that was 5%-6% higher than peers that did not - enough to separate winners from losers in most industries.
Having worked in marketing effectiveness for over 20 years and provided analysis in more than 30 countries, I’ve found companies could typically increase sales revenues by 3%-8% and boost profits by up to 20% over the medium term, just by optimising their marketing investments. It is hard to think of any other single change a company could make that could result in such an immediate boost to the bottom line.
But if the bad news is that some brands are missing out on millions because they use guesswork rather than data, the good news is that it no longer has to be this way.
The key step change laying the groundwork for cultural change within the marketing industry is the creation of tools that allow marketers to mathematically model their campaigns for themselves.
Historically, brands wishing to make proper use of data have had no option but to commission external analysts. Often, these analysts wouldn’t share the marketer’s understanding of the brand or the industry; would struggle to communicate their findings in a way marketers understood; took several months, preventing marketers making quick data-informed decisions; and commanded large fees, which is why modelling was previously viewed as a once a year luxury reserved for the biggest brands.
New technology, however, has comprehensively addressed all of these problems, allowing marketers to model their campaigns and understand the results themselves - in a matter of hours, not months - and dramatically reducing the costs.
This means that this type of analysis can be used much more widely and frequently to answer a whole new range of marketing questions that have previously been left to intuition.
Providing marketers with the tools to quickly model and view results on their ordinary desktop computer is a step change that brings together the right analytical techniques with the marketer’s knowledge of the brand.
Marketers are newly able to forecast commercial impact when planning new campaigns, and determine the correct marketing mix for optimal return - ending the need to commit to sales targets without the right amount of marketing spend.
The tools are out there and the business case for making use of them should make a cultural shift within marketing inevitable. Those companies that are first to realise the potential of desktop analytics will dramatically increase the efficiency and effectiveness of their marketing, and deliver increased profits to the organisation.
With less waste and better decision-making, it will be like having a bigger marketing budget - and you’d be hard pressed to find a marketer who didn’t want that.