The Data-Driven CMO

talkdataMark Zagorski, the CEO of data management platform eXelate has worked with dozens of big marketers to help them put all kinds of data to work, including their own.

“Right now most organizations are dealing with terabytes of data. Over a third [manage] more than 10 terabytes of data and one-fifth will manage half a petabyte of data within three years,” Zagorski tells me. “The key objective for marketers seeking to harness the power of big-data is to make it actionable.”

As a marketer, it is likely that you have access to a great deal of data, and maybe even the kind of big-data we’ve been hearing so much about. CRM data grows every day; point-of-sale data gets easier and less expensive to store; tag-collected data from websites and social sites expands daily; and there is a seemingly infinite amount of third-party data available for purchasing and mixing in with your own.

The modern CMO must find a way to value the data assets she has, learn to listen for the real signals among the noise, and find a way to put that data to use. Mostly, that means understanding customer attributes, what drives them to transact, and how much it costs to get them to do so more frequently.

For Darren Herman, in charge of digital media at forward-looking agency Media Kitchen, data is all about the way it can be leveraged for his clients. “We care less about big-data and more about actionable data. Our clients have tons of first-party data,” Herman tells me, adding that the real challenge is in “uniting the data between silos (usually within client organizations) and making them available and actionable for advertising and marketing decisions. Much of the time, the clients’ data is available through the IT organization, and it’s not quite understood how it will be used for marketing decisions.”

In many ways, data-driven CMOs face two challenges: Firstly, winning the internal battle with the CTO to get access to disparate data sources, and bringing them together in a way that creates the opportunity to glean global insights; and secondly, building the platform that enables them to normalize many discrete data types, query that data quickly, and “activate” that data to produce a sales outcome.

Think of a large, global consumer products organization. A company that sells soap suds around the world may have up to 20 regional operating companies, and as many as 200 separate datacenters throughout the organization. Within all of those data silos are digital stories of marketing success and failure. Imagine if you could duplicate the promotional dynamics that drove a 20 percent increase in Italian diaper sales across the entire global organization, or leverage the learnings that one operating company had when a key discounting scheme failed?

These types of insights can be obtained when the CMO asks the right questions, and when he has data management platforms behind him that can make it possible to get the answers. Being a data-driven marketer isn’t about how much data you can centralize in a single platform. The data may be big, but ultimately the data you store is only as valuable as your ability to extract insights from it — and act upon it.

[This post originally appeared in the CMO Site on 3/20/13]

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Death of the Digital Media Agency (Redux)

ImageLast year, I wrote that the digital agency was dead. I was mostly talking about how platform technology was going to knock a lot of digital media agencies out of business. In a world where over five trillion banner impressions are available every month, I argued, it was simply too much for humans to navigate through the choices and wring branding effect and performance out of campaigns. Well, digital media agencies are still around—but they continue to lose share to platforms as the amount of programmatically bought media increases. With RTB-based spending estimated to rise at an annualized rate of nearly 60% a year, according to market intelligence firm IDC, we could see as much as $14 billion in spending by 2016, or 27% of total display spending. Looks like the machines are slowly taking over.

Fairfax Cone, the founder of Foote, Cone, and Belding once famously remarked that the problem with the agency business was that “the inventory goes down the elevator at night.” That’s a big problem for an industry that relies on 23 year-old media planners to work long hours grinding on Excel spreadsheets and managing vendors to produce fairly mediocre media plans. Cone was talking about IP—what, exactly is the digital agency’s core intellectual property when the majority of the work seems to be hard labor? Digital creative agencies have no such worry. In this world of ubiquity, where everyone has access to wonderful SaaS-model technology that enables real-time bidding and access to trillions of exchange-based advertising impressions, the one place an agency can make an impact is on the creative side. Agencies that can create the miracle of getting more than 1 in 10,000 people to click on an ad, or watch a :30 pre roll video to completion are considered geniuses. But, what about the media shops? Can they really buy more efficiently than machines? More importantly, can they leverage the right machines to once again own the middle position between the advertiser and his prospect?

As I write in my recent report, looking at the history of display advertising, the future doesn’t favor the agency. In the beginning, agencies’ favored relationships with publishers made them a great way to buy media. Publishers aligned their content with the audiences that advertisers wanted (ESPN for sports enthusiasts), and largely controlled their inventory and audience data. Soon enough, the Network Era told hold, and smart companies like Tacoda started segmenting audiences based on context and behavior. By using technology to understand audiences better than the publishers themselves, they put yet another layer of IP between agencies and audiences. Then the DSP Era started, which further decoupled audiences from media. Agencies scrambled to create new vendor relationships with the MediaMaths of the world—but grew nervous that they would be disintermediated, and formed their own trading desks. This era is now evolving in the DMP Era.

After all of promises of easy audience targeting and automation, advertisers are looking at the same disturbingly low click-through rates, near impossibility of true attribution measurement, and spending waste—and determining that their own data is more valuable than most data that they can buy. Their desire to activate their “first party” data has given rise to the “DMP era.” Andy Monfried, who has brought his company Lotame through this transition, sees it this way, “Agencies are attempting to become technology providers for their clients, and from our perception, clients are hesitant to adopt. The larger agency holding companies have made an attempt at understanding first-party data but have come to be just a solution for clients to leverage third-party data. This is due to the lack of agency technology and lack of trust that clients put in agencies accessing their first-party data in a raw state.”

So, what happens now? Are advertisers simply going to license DMP technology, and build small practice groups for audience segmentation, targeting, and analytics? Or, are agencies going to adopt and learn how to become the centralization point for evaluating and helping clients implement new advertising technology? Media Kitchen digital head Darren Herman thinks the way through the trees is through education: “We are super bullish about teaching our strategists to learn the skills of data scientists. While the average media strategists will probably not have the skills of a robust data scientist with a PhD, from Stanford, an entire organization that learns to embrace data and make it useful will be more powerful than a few data scientists sprinkled [through] many. Knowledge of how to action data must both come from the top down and bottom up and be embraced by all. Building a culture that does this is hard as many people resist, but retooling and finding people who want this type of career is what we’re doing.”

Is your agency ready to hire a data scientist? Looks like the days of agencies hiring armies of English majors is over, and the next MIT recruiting session you see may have a few agency folks in attendance. Are digital media agencies dead? The data says not yet.

This post originally appeared on the EConsultancy blog on 12/13/12.