What kind of marketing department do you have?
In a recent analysis of the Irish marketing industry by Core Media, we see five distinct clusters of marketing departments emerging in terms of their engagement with data science.
The ‘not interested’ group
This group, accounting for 11% of the industry, are indifferent and occasionally cynical towards the application of data science and technology to their functions. However, the size of this cluster is reducing, as the realisation of being left behind is a real concern.
The ‘heavily invested’ group
On the other hand, 7% are heavily invested and pioneering in the area. This early group of adaptors are moving at an impressive pace. Many have allocated data resources and technology to their teams. The use of data insights, optimised decision making and sophisticated measurement tools is engrained in their operations. This group is made up of two contrasting department types: large, established, big-budget departments and young, agile, lower-budget ones.
The ‘want to invest’ group
Making up 28% of the pie, this group is characterised by their belief in data science that can transform and improve effectiveness. For this group, the barriers include risk aversion, indecision about which area to focus on, lack of available talent and, in some cases, an inability to justify the investment. These barriers are likely to shift in the coming years, but, in the meantime, these organisations are likely to be disadvantaged.
The ‘about to invest’ group
This is the single biggest cluster, accounting for 34%. They are on the brink of investing. These investments take many forms, such as off-the-shelf technology, CRM systems and in-house talent.
The ‘have invested’ group
Finally, one in five marketing departments have already invested. The use of data science and technology has become part of the day-to-day operations of the firm. However, it is not yet embraced in the decision-making processes within the organisation. They may experience problems with the new technology initially, which can make the firm lose confidence in the new way of doing things.
For trailblazers, the year will be dominated by the need for convergent marketing technology, but it is a given that this will be a year of mainstream adoption. It is the experience of the middle three clusters that will dominate 2017 from a data science perspective. The biggest issues which will be faced is quantifying the return of investment and overcoming data impediments (internal & external).
Return on investment
The question being asked of most marketing teams is what was your marketing return on investment (ROMI)? Methods for calculating return on marketing investment have been around for decades, however in recent times they have becoming increasingly more sophisticated. Econometric techniques can gauge the influence of all marketing channels at driving online and offline sales.
There are slightly more mature algorithms that can measure the impact of digital media in driving online conversions. Advice to those embarking on this venture in 2017 is to be cognisant that the results of any ROMI study come from a model. Even the most sophisticated model is based on probability. The results the models will generate will quantify the return from marketing investment within a defined margin of error. It is through refreshing and fine-tuning the model that the margin of error is minimised and the forecasting power of the model optimised.
Finally, whether conducting the study internally or via a third party, keep an open line of communication with your data resources. This will enable the mutual exchange of information and insights between the expert and the situation. Nuggets of insight about sales patterns, customer behaviour, etc. could be key to explaining anomalies in the data and could greatly assist the modeller.
Data impediments
Data can all too often actually be an impediment to marketing departments. Some of the most common concerns we hear from clients are: ‘There is too much data’; ‘My data is sitting in so many different systems – I can’t connect it’; ‘I’m worried about the quality of the data’; ‘I find it difficult to convert data to information’; ‘I can’t find time to study it properly’.
Once the data cupboards are opened, the majority of departments will encounter some of these issues. Our advice is to invest in the right skills. There are specialists in the area of data architecture, data management, data quality, data privacy, etc. These skills may already exist in your organisation, but unfortunately, they are often not allocated to marketing projects.
Traditionally, the predominant areas of focus for data resources are operational, financial or R&D projects. Marketing departments need to command a greater share of these resources. There is a case to be made that whoever owns the data owns the customer, in which case the marketing department should take precedence.
Convergent marketing technology
For the pioneers, the greatest theme this year will be the emergence of the need for ‘convergent marketing technology’ – a move from currently disparate applications and projects to single-point solutions to monitor and manage all engagement activity, while simultaneously modelling actual sales response.
A recent Gartner survey of marketers in the US and UK revealed that a staggering 27% of total marketing budgets is being invested in MarTech. This means marketing’s tech spend is second only to that of IT (3.2% of total revenue versus 3.4%). We estimate that there are few Irish marketing departments currently at these levels; however, 2017 will see large-scale investment, particularly from the innovative 7% ‘heavily invested’ group (referred to earlier).
In our opinion, this lag between domestic and global investment levels is due to failings on the supply side, rather than the demand. Leading tech providers often overlook Ireland due to our relatively small scale. We believe 2017 will see the rise of niche Irish technology providers to satisfy this need and, ultimately, arm the innovators with increasingly sophisticated weaponry.
