Everyone is talking about "big data", especially in marketing where it promises to enable a new era of perfectly targeted messaging for the modern, connected consumer – or is that just hype, soon to evaporate among privacy fears, confusion, and the technical difficulty of getting marketing value from a mountain of data, sometimes from disparate sources?
This was the subject of debate at a recent seminar hosted in association with digital marketing solutions provider Adobe. A panel of experts was joined by members of the Guardian Media Network, a community for professionals working in media and technology, for an open debate.
Big data in this context is the mass of transactional and behavioural data that each of us creates as we use the internet, travel with location-aware mobile devices, make purchases with payment cards and loyalty cards online, and communicate our activities, goals and preferences through social media.
According to a recent survey carried out by German market research institute GfK for the Guardian, 86% of marketers consider that big data will change the function of marketing, and a further 62% say that it has already fundamentally changed their role.
"We see it as a contract with our customer. The more data that we can get on them, the better experience we can provide," said Brian Streich, marketing director at the online ticket site StubHub. The starting point is relevancy, showing customers recommendations that make sense for them, but it goes beyond that. "Engagement is something that we look at, an experience that makes them want to browse more, want to interact with us more," he said. The passion in sports and entertainment means it is critical to make correct use of the data. "In the US, if you look at a Dodgers fan and then you give them a Giants email, you could lose them."
Ajaz Ahmed, CEO of the digital agency AKQA, spoke of how data can enhance day-to-day living, starting with better e-commerce. "When someone gets their products and services delivered to them in less than an hour, that creates delight and emotional resonance – and loyalty. When people have the right kind of recommendations made – that makes people go 'Wow' – that creates emotional resonance as well."
The potential for data does not end there. Ahmed spoke about how data may in future be transformative for personal health. "You have products like Nike+ FuelBand that monitors how many calories you're burning, how much activity that you are doing. You have services like 23andMe, where you can send your DNA off and get your DNA analysed. In real time, it will analyse your calorie intake compared to your activity, compared to your DNA, and give you proactive solutions in how to lead a lifestyle which is relevant to your objective."
Near-field communication
Mike Leverington, head of customer data analysis at Guardian News Media, talked of how near-field communication has the potential to connect the dots between the physical world and the digital world, enabling real-time marketing. This is technology that lets devices communicate when in close proximity. An example would be someone passing a promotion in a supermarket that gives them a special offer based on their purchase history, or a sequence of events triggered by passing a poster. "Somebody close to a poster for a band might get sent a link to a Spotify song for them to listen to on their mobile phone, which would be connected to a chance for them to buy a ticket when that band is in town," he said.
These various visions are compelling, but the reality today falls short. "As marketers we tend to use [big data] as a blunt instrument to hit consumers in a very ineffective and insulting way when we could be promoting a dialogue," observed a seminar attendee. Instead of a transformational experience, it can end up as an annoyance, like endlessly seeing the same advertisement.
There is also a risk that organisations may get so caught up in the potential of mining data that they waste money gathering and storing data without clear purpose and with little result.
"Everyone focuses on the data itself. Nobody focuses on what it should be about – solving problems," said Scott Logie, chair of the Direct Marketing Association.
"Big data is in danger of being hijacked by all the people who hijacked terms like one-to-one marketing, and customer relationship management [CRM]. They started off as great ideas in the transformation of ways for people to communicate with the customers, and then got hijacked by tech companies who sold huge bits of kit that became an enormous project and then just ground to a halt," Logie said.
Michael Plimsoll, industry marketing director for Adobe, said that to prevent this kind of wasted opportunity, clear objectives are key. "There is a client of ours who thought that the solution was to bring all of their data together into one place. They took EPOS [electronic point of sale] data, store data, CRM data, call centre data, IVR [interactive voice response] data, mobile data, brought it all together, and at that point they said, let's ask a question, but actually they found that they couldn't answer the question because they haven't thought about the data properly."
The solution, according to Plimsoll, is to set objectives at the start. "What are you trying to do, what are the questions you are trying to answer: is it retention, is it reducing churn, is it driving cross-selling, up-selling or customer acquisition? What is the data that drives that? And if you bring that data together so you know where the individual is in the customer lifecycle, what would resonate with them?" he said.
He spoke of four stages in using big data for marketing. The first is listening via social media, CRM tools, or other sources. The next is to bring the right data together, depending on the objectives, and to analyse it to understand the right message for each customer. The third stage is to assemble the message. "Adobe with Creative Cloud can bring creatives together in a very simple way," he said. The final stage is to deliver the message correctly tailored to the device being used, such as a mobile phone or tablet. "It is about what is the right message for where they are in the customer journey," he said.
A seminar attendee asked about linking consumer data with other datasets such as those published by governments. That raised the wider question of how organisations can take advantage of large datasets from third parties. "There are at least two mobile phone companies in the UK that I'm aware of that are selling data at a crowd level," said Logie. Marketers can get information on how many people were in a certain location at a certain time of day, and what their demographics, such as sex, age and income, look like. "You don't need to get people's buy-in to be allowed to sell that data, because it is not at an individual level," he said.
What about privacy issues? Regulatory compliance and privacy policies are important, but there is also work to be done in educating individuals about the value exchange that takes place when they supply their data. "We spend an awful lot of time and effort and money defending or debating changes [in regulation], when actually more of that time and money could be spent on helping to educate the consumer," said Logie.
Leverington described how Channel 4 has tackled the issue with an entertaining video. "They have taken a privacy policy and turned it into a video with Alan Carr [channel4.com/4viewers/viewer-promise/ourpromise], and been honest with their audience in terms of what they going to use the data for when you sign up to 4oD [Channel 4 on demand]." The video explains that Channel 4, a non-profit organisation, will use data for advertisement targeting. "They actually had an increase in sign-ups."
Ahmed said that younger people are less concerned. "It is just a generational thing," he said. People who have grown up with digital assume that everything they do will be connected. "The next inevitable stage is when that digital data will become genuinely useful to anticipate people's needs. I think that generation is completely happy," he said.
At the same time, Ahmed acknowledged that it is a two-way exchange. "There is a price you pay for having services for free. At the moment that price is a small element of advertising," he said.
Is big data hype or opportunity? There are elements of both, and listening to marketers discuss big data you can sense frustration as well as excitement. While the potential is enormous, it is still early days for the kind of connected and personalised experience that is promised. The message for marketers is to pursue the opportunity, but also to be wary of the pitfalls, maintaining sharp objectives and communicating clearly with users and customers about how data is used.
Key discussion points
Access to rich customer data enables marketers to provide a personalised experience for customers, with relevant advertising and recommendations, increasing loyalty and brand engagement as well as driving sales.
Making connections between things such as purchase history and physical location means that precisely targeted real-time marketing becomes possible, though execution today falls short of what marketers want to achieve.
Gathering and storing a huge volume of data for its own sake is a mistake. Having clear objectives – and data that matches those objectives – is the key to success.
The privacy issues diminish if customers understand the value they get from sharing data. The industry needs to do a better job of communicating these benefits.
At the table
Robin Hough (Chair), head of content, Guardian Media Network
Michael Plimsoll, industry marketing director, Adobe Systems Europe
Scott Logie, chair, Direct Marketing Association and strategic marketing director, St Ives Group
Brian Streich, international marketing director, StubHub
Ajaz Ahmed, founder and CEO, AKQA
Mike Leverington, head of customer data analysis, Guardian News & Media
Credits
Roundtable report commissioned and controlled by the Guardian. Discussion hosted to a brief agreed with Adobe. Funded by Adobe. Contact Matthew Race on 020 3353 2884 (matthew.race@theguardian.com). For information on roundtables visit: theguardian.com/sponsored-content