There is no doubt that the amount of data in our world has been exploding. From a business POV, the capacity of firms to usefully analyze unusually large data sets (so-called big data) to generate actionable insights therefrom and apply these insights to drive strategy and operations will become a key basis of competition, underpinning new waves of innovation, and expectedly, market leadership. Key executives across every sector will have to grapple with the implications of big data, not just a few data-oriented managers, as was the scenario which obtained in time past. From a marketing and consumer engagement perspective in particular, the increasing volume and detail of information captured by enterprises, the rise of multimedia, social media and interactive networks will further fuel exponential growth in data for the foreseeable future.
So then, what is big data all about, and why the hype, considering organizations have been dealing with data for as long as we can remember?
In practice, big data transcends the usual streams of industry data firms typically work with (think typical marketing information such as Omnibus survey results, Nielsen Market data et al). The term essentially refers to the ever-increasing volume, velocity, variety, variability and complexity of information. By definition, it describes complex data sets with sizes beyond the ability of commonly used software tools (excel, SPSS etc.) to capture, curate, manage, and process the data within a tolerable elapsed time. Big data sizes are a constantly moving target, as of 2012[update] ranging from a few dozen terabytes to many petabytes of data in a single data set.
In a report published in 2001, Gartner analyst Doug Laney defined data growth challenges and opportunities as being three-dimensional, i.e. increasing volume (amount of data), velocity (speed of data in and out), and variety (range of data types and sources). Most industry experts continue to use this “3Vs” model for describing big data. In 2012, Gartner updated its definition as follows: “Big data is high volume, high velocity, and/or high variety information assets that require new forms of processing to enable enhanced decision making, insight discovery and process optimization”. Additionally, a new V “Veracity” is added by some schools of thought, as far as qualifying big data is concerned – this absolutely makes sense in my estimation, considering that quality and fidelity of data is equally very instrumental.
For marketing/commercial organizations, big data is clearly becoming the fundamental consequence of the new marketing landscape, born from the fast-paced, real-time and interactive digital world we now live in.
Referencing a survey carried out by Mckinsey’ s Global Institute (MGI) and which studied big data in five domains—healthcare in the United States, the public sector in Europe, retail in the United States, and manufacturing and personal-location data globally, It was clearly demonstrated how Big data can generate value in each of the focal sectors of the study. For example, a retailer using big data to the full could increase its operating margin by more than 60 percent.
The study unearthed a number of interesting insights including the realization that Data have swept into every industry and business function and are now an important factor of production, alongside labor and capital.
There are many ways in which using big data effectively will create value. Big data can unlock significant value by making information transparent and usable at much higher frequency. Furthermore, as organizations create and store more transactional data in digital form, they can collect more accurate and detailed performance information on everything from product inventories to consumer purchase trends.
From the foregoing, I believe that (big) data will become a key basis of competition and growth for individual firms. There is no doubt that from the standpoint of competitiveness and the potential capture of value, all companies need to take big data seriously. Increasingly, within the contest of the information-driven new economy in which we live and operate, across most industries, established competitors and new entrants alike will leverage data-driven strategies to innovate, compete, and capture value from deep and up-to-real-time information
We can therefore deduce that big data, as far as it is effectively harnessed offers considerable benefits to consumers as well as to companies and organizations. Take for instance, recent advancements in the use of personal-location data which can allow consumers to capture more value.
It is pertinent however to highlight at this point that while the use of big data generally influences business output across sectors, certain sectors appear to be relatively more primed for greater gains. These sectors include computer and electronic products and information sectors, as well as finance and insurance, telecommunications and governments as well
Several issues will have to be addressed to capture the full potential of big data. Policies related to privacy, security, intellectual property, and even liability will need to be addressed in a big data world. Organizations need not only to put the right talent and technology in place but also structure workflows and incentives to optimize the use of big data. Access to data is critical—companies will increasingly need to integrate information from multiple data sources, often from third parties, and the incentives have to be in place to enable this.
The term “big data” doesn’t just refer to the data itself; it also refers to the challenges, capabilities and competencies associated with storing and analyzing such huge data sets to support a level of decision making that is more accurate and timely than anything previously attempted – big-data-driven decision making.
In what represents a major plus for the major global IT service players, “Big Data” has essentially increased the demand by businesses for information management specialists, manifest in the realization that Software AG, Oracle Corporation, IBM, Microsoft, SAP, EMC, HP and Dell have spent more than $15 billion on software firms only specializing in data management and analytics, with a lot of them targeting the marketing/communication services industry for patronage . In 2010, this industry on its own was worth more than $100 billion and was growing at almost 10 percent a year: about twice as fast as the software business as a whole.
Expectedly, developed economies make increasing use of data-intensive technologies. There are an estimated 4.6 billion mobile-phone subscriptions worldwide and there are between 1 billion and 2 billion people accessing the internet.
Why Big Data should matter to businesses
Everyone everywhere is now 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 in the midst of alarming considerations and concerns such as privacy fears, confusion and even the technical difficulty of getting marketing value from a mountain of data, many times from diverse and mostly disparate sources. It is pertinent to explain that Big data in the marketing 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.
By combining big data with an integrated marketing management strategy, marketing organizations can make a substantial impact in these key areas:
• Customer engagement. Big data can deliver insight into not just who your customers are, but where they are, what they want, how they want to be contacted and when.
• Customer retention and loyalty. Big data can help you discover what influences customer loyalty and what keeps them coming back again and again.
• Marketing optimization/performance. With big data, you can determine the optimal marketing spend across multiple channels, as well as continuously optimize marketing programs through testing, measurement and analysis.
The Emerging Markets Perspective
Good analytics can indeed make a remarkable difference as far as effective marketing and company growth is concerned. According to McKinsey’s statistics, big data leaders have, on average, 5 percent higher productivity and 6 percent higher profits than other companies. Notwithstanding the strong evidence that big data can indeed bolster success and profitability, many firms evidently still struggle to measure the impact of digital marketing on sales and profits, and this no doubt remains a crucial hurdle to overcome, as CEOs might hesitate to give marketers additional funding without knowing how much business the money will generate.
The challenges in this regard are even more exacerbated by the fact that in our local market, a lot is still not in place in terms of the requisite technical and intellectual infrastructure to make sense of all these. Big data is most useful if you can do something with it, but how do you analyze it?
According to another recent survey carried out by German market research institute GfK, 86 percent of marketers consider that big data will change the function of marketing, and a further 62 percent say that it has already fundamentally changed their role.
It is also noteworthy that even in the so-called developed world, there will, into the near future, continue to be a shortage of talent necessary for organizations to take advantage of big data. By 2018, the United States alone could reportedly face a shortage of 140,000 to 190,000 people with deep analytical skills as well as 1.5 million managers and analysts with the know-how to use the analysis of big data to make effective decisions.
These outlined challenges, related to the effective use of big data can be especially daunting, particularly for us within the marketing function – which is very much scientific as well as it is artistic by nature. This is also due to the realization that more often than not, analytic systems are not aligned to the marketing organization’s data, processes and decisions. For marketing, the three (3) most critical challenges are:
• Knowing what data to gather. Data, data everywhere. You have enormous volumes of customer, operational and financial data to contend with. But more is not necessarily better – it has to be the right data.
• Knowing which analytical tools to use and understanding their application. As the volume of big data grows, the time available for making decisions and acting on them is shrinking. Analytical tools can help you aggregate and analyze data, as well as allocate relevant insights and decisions appropriately throughout the organization – but which ones?
• Knowing how to go from data to insight to impact. Once you have the data, there’s the key question of how you are able to turn it into insight in addition to how well you are able use that insight to make a positive impact on your marketing & engagement programs.
So, whilst (Big) data is a big deal in marketing, there are a few things every marketer should keep in mind to help ensure that big data will lead to big success:
• Big data affords you the opportunity to dig deeper and deeper into the data, peeling back layers as it were, to reveal richer insights. The insights you gain from your initial analysis can be explored further, with richer, deeper insights emerging each time. This level of insight can help you develop specific strategies and actions to drive growth.
• There’s no debating it – CMOs and marketing leaders need the meaningful insights that big data can provide; but so do front-line store managers, and call center phone staff, and sales associates, and so on and so on. What good is insight if it stays within the confines of the board room? Get it into the hands of those who can act on it.
• It is important to appreciate that taking on big data can at times seem overwhelming, so start out by focusing on a few key objectives. What outcomes would you like to improve? Once you decide that, you can identify what data you would need to support the related analysis. When you’ve completed that exercise, move on to your next objective. And the next.
The Emerging Markets Perspective
Interestingly, more recently, it is observable that a geographic role-reversal is just around the corner. A study by Greenplum, the data analytics division of EMC predicts that although the digital universe has in the past been a developed-world phenomenon, we are currently on the verge of a shift as the population of the emerging markets begins to cast a longer shadow. The study posits that 62 percent of data will be attributed to the emerging markets by 2020.The incisive research report, themed the Digital Universe study also indicated that, whilst emerging markets accounted for 23 percent of the digital universe as recently as 2010, their share is already up to 36 percent in 2012. The current global breakdown of the digital universe in percentage is: U.S. – 32, Western Europe – 19, China – 13, India – 4, and Rest of the world – 32
Yet by 2020, China alone is expected to generate 22% of the world’s data.
Elsewhere in the media, the Financial Times in a report focused on what is known as the ‘Big Data Gap’ – the huge untapped opportunity offered to organizations through big data. As only a small fraction of data generated daily by people and machines is being analyzed little is known about it. The study estimates that just 0.5 percent of the world’s data is being analyzed. This presents a business opportunity like no other, with the potential to create lucrative new revenue streams and real, incremental growth.
Opportunities to revolutionize marketing within the retail space – In Sub-Saharan Africa, over the last 5 years, we have witnessed phenomenal proliferation of retail channels, whilst also noting increasing use of social media which is empowering consumers in an unprecedented manner. With a wealth of information readily available online, consumers are now, more than ever before better able to compare products, services and prices—even as they continue to shop in physical markets, in addition to e-commerce. Essentially, when consumers interact with companies publically through social media, they have greater power to influence other customers or damage a brand.
The point that relates to big data application in all of this is that in order for retailers to capitalize on these and other changes in the industry, they need ways to collect, manage and analyze a tremendous volume, variety, velocity and veracity of data.
To this end, If retailers succeed in addressing the challenges of “big data,” they definitely are better positioned to more effectively use this data to generate valuable insights for personalizing marketing and improving the effectiveness of marketing campaigns, optimizing assortment and merchandising decisions, and removing inefficiencies in distribution and operations.
Adopting solutions designed to capitalize on big data allows companies to navigate the shifting retail landscape and drive positive transformation including the critical commercial objective of delivering a smarter shopping experience as well as developing smarter and more cost-effective merchandizing and supply networks for efficient trade marketing
The benefits accruable when ‘big data’ is correctly harnessed for retail marketing are immense – With better knowledge of competitive pricing and demand trends, retailers can initiate sales and promotions that help avoid losing business. Implementing an effective big data platform can help retailers build smarter supply chains and optimize merchandising across a multi-channel retail operation:
• Predict optimal pricing and maintain a price leadership position by analyzing price and demand elasticity
• Select the right merchandise for each channel and fine-tune local assortment planning by drawing on insights from social media, market reports, internal sales data and customer buying patterns
• Optimize inventory across multiple channels by using leading indicators such as customer sentiment and promotional buzz to anticipate future demand
The relevance of big data and in fact, effective use of available data, particularly in service businesses need not be overemphasized. From my vantage position working in marketing & communications within the financial services industry however, it is observable that very few organizations, if any at all have instituted the discipline of data-driven marketing and customer engagement in this environment. Considering the wealth of available data in such a sector as banking, for instance – in terms of customer transactional patterns, card usage trends/habits, customer cash flow cycles etc, how much of these (regular, not even classifiable by our standards as big) data are being harnessed with the aid of CRM infrastructure to deliver effective marketing by way of more relevant, targeted offerings to customers? Clearly, banks and telcos, for instance, are sitting on a wealth of data that can no doubt be better utilized. Whilst big data and its implications may take a while to fully hit us in this environment, like it happened with new media, it is only a matter of time.
TOMI OGUNLESI
