What is Big Data and How It Can Help Boost Your Marketing Efforts
Now, even more evident than ever in our current unprecedented history, the world’s business interactions and engagements have shifted and evolved to occupy the online space. Especially so given the rampant effects of COVID-19, and where physical meetings and sales may not be the preferred mode of operation any longer. The boon for digital and internet marketers alike is that there never has been a greater marked importance in the role of online marketing and advertising.
But truth be told, this approach is not new – given the Industrial Revolution 4.0. Gone are the days when marketing decisions were guided by intuition and gut-feel. Important marketing decisions are now determined by big data.
What is Big Data?
Put simply, big data is larger, more complex data set, especially from new data sources. These data sets are so voluminous that traditional data processing software just can’t manage them. But these massive volumes of data can be used to address business and marketing problems humans wouldn’t have been able to tackle before.
These figures generate insights that can lead to better business decisions and strategic moves. The application of the right technology then improves the quality of decision making and detailing processes for users.
How does Big Data Apply to Marketing and Advertising?
Advertising platforms give us lots of data to work with, including measurable impressions, click-through rates, bid levels, demographics, and more.
Humans certainly have the ability to produce good advertising, measure that advertising, and improve ads based on what they learn. But, digital advertising across search, content, and social media channels, gives us an almost unlimited ability to generate data on what works and what doesn't.
That's what makes advertising at scale tricky – almost impossible – for humans. And this is what makes Artificial Intelligence (A.I) a natural fit for advertising.
With the right data, AI-powered ad tools can detect patterns at scale in your advertising data, then predict what changes to campaigns will improve performance against a specific KPI. This can all happen in seconds, rather than the hours, days, or weeks it might take a human to analyse, test, and iterate across campaigns.
Advertising costs a ton of money, especially if you're selling a product or service that doesn't produce an immediate return.
AI for advertising has the ability to increase your return on ad spend (revenue) and reduce the amount of money you spend on staff time and ineffective ad budget.
But, AI can actually go one step further.
In one high profile example below, we share how an AI-powered advertising system actually helped a brand discover and convert new customers they didn't even know existed.
Case Study
Entrepreneur Naomi Simson, a host on Shark Tank Australia, owns a company called RedBalloon, which sells gifts and experiences online (something like an experience-focused Groupon).
She was spending $45,000 per month on ad agencies alone to run digital advertising for the brand. She was paying over $50 to acquire a single customer at the time.
She lamented at the unsustainability of it in the long run.
Desperation drove her to investigate every possibility. She found an AI tool for advertising called Albert. The tool uses sophisticated AI to analyse ad campaigns, then manage targeting, testing, and budgets.
“Big data also enables companies to better target the core needs of customers by developing rich and informative content. ”
The tool was able to do things humans couldn't. In one day alone, it tested 6,500 variations of a Google text ad and learned from the experiment.
Over time, the tool was so effective at learning from data to improve performance that it skyrocketed RedBalloon's return on ad spend. The company was averaging a whopping 1,100% return on ad spend using the tool when we spoke with them. They had also cut marketing costs by 25% thanks to improved efficiency, all while improving results.
The tool also identified hungry potential customers that Simson didn't even know she had. The system identified from its experiments and the data generated by them that Australian expats were highly motivated to buy.
Normally, this wouldn't make sense. RedBalloon sells experiences in Australia, not the other countries where these Australians lived.
But, it turns out, the expats were highly motivated to buy gifts and experiences whenever they returned home, either for themselves or their family members.
Also, the system identified people traveling to Australia from other countries as prime customers. “I found markets in the US and UK of people traveling to Australia that I didn’t even know I had,” Simson mentioned.
She was so impressed, she started a company to add to her portfolio that acts as an exclusive distributor of the technology in Australia.
The story sums up the promise of Big data & AI for advertising in a nutshell:
Increase revenue by analysing and acting on data at great scale.
Reduce costs by acting on that data faster and automatically.
Build a massive competitive advantage with both superior insights and superior speed.Robotics, drones and vehicle automation
Designing Effective Marketing Campaigns
In addition, Big data also enables companies to better target the core needs of customers by developing rich and informative content. Let’s understand how it helps companies collect data about customer behaviors. One example is through cookie files. They collect information about customers’ activities as they browse the internet, generating and capturing quite alot of personal data.
Campaigns that use big data are thus far more effective than aggregative advertising used in the past. The good thing about using big data for creating marketing campaigns is that it takes the guesswork out of determining what customers want. Marketers can develop different buyer personas using data like customer behaviour, purchasing patterns, favourites and background. For example, they may find that women are more likely to respond to email campaigns, use coupons and engage in bargains and deals, and shape their digital marketing campaign from there.
Allowing you to Make Better Pricing Decisions
The last benefit and most important for businesses of course, is that of making much better and sharper pricing decisions. Traditionally, companies price products and services using basic information like product cost, competitor pricing, perceived value of the product from the customer and demand. With big data, you can use many other factors to make pricing decisions. For example, you can use data from completed deals, incentives and performance-based data. Big data emphasizes making pricing decisions as granular as possible, particularly in the business-to-business (B2B) sector, as each deal is different from the next.
When applying big data to set prices companies need to remember that they may already have plenty of unused data at their disposal.
These may include information such as customer preferences and general economic information. The challenge is how to derive valuable insight from this information. For example, does your pricing strategy consider what products a particular customer has purchased over the last five years? What is their disposable income? How much can they afford to pay for a product? Additionally, does your pricing strategy consider macroeconomic indicators like quarterly GDP growth rate, inflation rate, exchange rate, interest rate and government spending for the countries you operate in? Incorporating these insights will lead to better pricing decisions.
Big data also allows you to automate, which can save time in price settings and lead to more accurate pricing decisions because there will be no human assistance and hence less chance for error.
So therefore, all in all, leveraging on Big data and novel technology to extract such insights, could be the most influential factor in driving a business forward.
