The trend towards data-driven marketing in being accelerated and enabled by rapid advances in analytics approaches, big data technologies and cloud computing. Many business people are surprised when they learn just how much technologies have advanced, how much the cost has dropped and how rapidly data-driven insights can be gleaned.
What’s the Big Deal About Big Data?
By now, everyone involved in marketing and technology has heard quite a lot about big data. Big data has been one of the most-used technology buzz words for the past several years. But, many of us are still left wondering exactly what it is and how our organizations can benefit. In this section, I’ll cut through the hype, provide a clear definition of big data, and explore a few potential uses, especially those that will have increasing significance for marketers in the years to come.
So, first of all, what exactly is big data? Big data is a term used to describe the vast—and increasing—amounts of data available to organizations today.
You may hear people use terms like structured and unstructured data. Structured data means data that can be identified because it exists in a structure, most commonly a database where the data is stored in rows and columns. Unstructured data, on the other hand, has no identifiable structure. For example, images, videos, music files, emails, and documents are all considered to be unstructured data.
Large amounts of structured and unstructured data have been the norm in most organizations for quite some time. So, why all the buzz about big data? As it turns out, data volumes have been increasing, especially the volumes of unstructured data. Which makes sense when you think about it. Our increasing use of social media, digital photography, digital video, etc has led to vast amounts of data. Its not uncommon to purchase a new personal computer these days with a terabyte of storage to hold all the music, photos, videos, etc. expected to be stored there. A decade ago, companies with a terabyte of data had the largest data warehouses in the world at that time. Times have certainly changed.
The real reason you’re hearing so much about big data these days is the opportunity to take advantage of tremendous new insights that can be gleaned from the volumes of data available.
Tom Davenport, professor at Babson College and author of Competing on Analytics and Keeping Up With The Quants, has identified three different types of analytics that benefit from big data and new approaches.
Business analytics: Business analytics are the traditional reporting, dashboards, and business intelligence infrastructure that has been in place in most organizations for many years. Advances in business analytics have led to the introduction of new key performance indicators (KPIs) and the capture of data from disparate sources across the enterprise.
Predictive analytics: Predictive analytics uses data from the past and present from internal and external sources in order to build statistical models to predict future events. For example, predictive models can be used to predict when customers are likely to leave or the future lifetime value of different customer segments.
Prescriptive analytics: Prescriptive analytics produce insights that tell organizations what to do. In marketing, prescriptive analytics can be use to optimize the mix of marketing investments and create pricing simulations.
Enter Cloud Computing
Cloud computing is making it easier than ever to spin up new computing resources—accomplishing this with literately a push of a button. And, cloud computing infrastructure is often half the cost or less. Companies such as Amazon have revolutionized cloud computing with Amazon Web Services (AWS) and have driven down cloud computing costs over the past several years. Many organizations have discovered that cloud computing infrastructure is much more reliable and secure while a fraction of the cost of on-premise infrastructure.
What this means for marketers and other business people is that the ability to quickly ramp up computing infrastructure and integrate and analyze data has never been cheaper, faster or easier. In the past, developing this capability often meant engaging internal IT resources to create enterprise data warehouses which took many months and costs hundreds of thousands of dollars.
“Cloud computing is often far more secure than traditional computing, because companies like Google and Amazon can attract and retain cyber-security personnel of a higher quality than many governmental agencies.”
– Vivek Kundra, former federal CIO of the United States
“Line-of-business leaders everywhere are bypassing IT departments to get applications from the cloud (also known as software as a service, or SaaS) and paying for them like they would a magazine subscription. And when the service is no longer required, they can cancel that subscription with no equipment left unused in the corner.”
– Daryl Plummer, Gartner analyst
Big Data Marketing Recommendations
The combination of new analytics approaches, big data technologies and cloud computing unlocks new capabilities that can be obtained for less money and in less time that ever before. These changes also put marketing leaders and line-of-business leaders in the driver’s seat and increase the pressure to bring new awareness and capabilities into their organizations.
As you consider how you can apply big data to marketing in your organization, we recommend the following:
- Big data is not about the data or technology, but about the business decisions that the insights enable.
- Big data insights have maximum value when the focus is on real-time insights connected with front-line execution.
- Many business insights can be found by mashing up different data pools. But, it is important to begin with whatever data is available today.
- The best approach is business question or hypothesis-driven. Often the biggest challenge is to follow the 80-20 rule and identify the 20% of the data that provides the right insights.