The Paradox of Big Data

 

Recently Gartner predicted that by 2017, marketing’s technology spend will exceed that of IT’s within the business enterprise. According to Gartner, 2011 B2B and B2C marketing budgets as a percentage of revenue were almost three times as high (10 percent) as IT budgets (3.6 percent). 2012 IT budgets are expected to grow 4.7 percent, while all marketing budgets, in general, are predicted to grow 9 percent, and high tech marketing budgets, more specifically, are expected to increase 11 percent. On average, nearly one-third (30 percent) of named marketing-related technology and services is bought by marketing already. What’s more, marketing now influences almost half of all purchases.

So why are these facts so important (other than having more money to spend on projects)? In my opinion it is important because of the Paradox of Big Data and its impact on marketers. More money spent on IT means more data streams the marketing teams must manage, right?

Notice I didn’t say ‘information streams’?

Marketing teams can hardly keep up with the fire hose of bits and bytes, metrics, actions, activities and the like today. So how does more make it better? It doesn’t.

Think about your own work. How many dashboards, spread sheets and reports do you see? Do you have the time to study them all and make good decisions or is there simply too much and you do the best you can? Is information overload a reality for you today?

I predict that as more information systems are deployed and the more data that comes online, marketing teams will settle into two camps. 1. High intelligence/managed data and 2. low intelligence/unmanaged data.

The net result of this likely evolution will be organizations that better understand the nuances of their customer segments innovate well and deliver relevant and compelling content, products and experiences to their constituents. That’s the first group. How will they do this?

It is simple in theory, hard in practice (which is why this first group will be smaller than the second).

Members of the high intelligence/managed data group will have forged strong collaborative internal bonds between the various business teams. Marketing, IT, product development, knowledge & insights, HR will all be working together in more efficient ways than in the other group. They will have at their disposal clear and actionable intelligence that comes from their effective Big Data use. It’s important to note that this group will use much more than the standard web data we all use today. They will integrate vast amounts of other transactional information into the intelligence process such as shipping information, call center data, mobile geo-location and usage data, RFID data, etc.

Essentially, these high performing organizations will put the right filters and algorithms in place to provide them with what they need to know to perform well, not what they can know. This is a really important distinction. More data is not better. More intelligence is. Individual data streams will tell you very little. However, when they are paired and bundled together, weighted in terms of importance and linked with certain business goals, patterns and pictures emerge that provide clear insight into what actions might be taken to generate certain outcomes.

clip_image001

By creating intelligence filters, the paradox of big data (more) becomes the power of big data (better). When it is organized against business objective and tracked over time, high performing organizations will excell even further. They will know what activities, campaigns and assets are generating very specific business results. These teams will be able to discern between important activities and unimportant. After all, not all activities or even business goals for that matter are of equal importance.

For instance, below is a filtered report you might find in use in the first group. Note that for this business, generating revenue and driving product innovation are more important objectives than decreasing the cost of support. The question is how much more important and what activities feed into each one of these goals and how important are each of these activities? What if you tracked 800 separate activities or metrics? How would you know? If you take each metric or data stream on its own you wouldn’t.

clip_image002

Which brings me to the second and larger group, low intelligence/unmanaged data organizations. This group collects data like it is going out of style, many times without any rhyme or reason as to why and what to do with it. The problem here isn’t that they will continue to collect more and more of this information but that they will do so while ignoring many other forms of information that is available which can provide critical intelligence. In the end, they will bury themselves in expensive and somewhat useless information.

Customers of firms in this group will grow weary of their disjointed experiences, inconsistent content and lack of understanding of their needs. Firms that fall into the first group will enjoy the benefits of collecting these people as new customers.

There is a relatively recent analog for the potential impact that Big Data will have on marketers in the coming years and the dichotomy between the first and second group I’ve outlined here. In the 1960’s Ed Deming taught the Japanese auto manufactures how to establish and manage a quality process that turned out better parts than their American counter parts. The Japanese listened and adopted the approach, enterprise wide. The result was the reversal of market share, which had a catastrophic effect on Detroit’s automobile dominance.

Currently, neither the first or second group has really formed yet but organizations are already headed one way or the other. For marketers with the ability to be change agents, recognizing which path you are on and doing something to either ensure you remain on that path or quickly change it will impact your organization’s future success.

Big Data will either be your greatest ally or your nemesis. It is up to you to choose which.

Leave a Comment

Subscribe to Lumenatti