Data has emerged as a key player in the marketing and media sphere. There isn't a single member of the six biggest media corporations in the U.S. or the big five global ad agencies that hasn't made data an integral part of its sales pitch to the marketplace. However, there remains some confusion regarding what exactly is meant by "data" and why it's so valuable. As a result of this lack of clarity, I will address what we mean when we talk about it, as well as why it's so valuable for media and marketing companies.
Data, using the simplest definition, are facts. These facts alone tell us nothing. They must be analyzed using a variety of statistical methods and combined with deductive reasoning to generate knowledge. No business can proceed without knowledge generated from data.
Most often, when we discuss data these days in the context of marketing and media, we are referring specifically to consumer data. Before the explosion of digital media during the last 15-20 years, there was a much smaller quantity of consumer data available. Companies had to invest significant resources in actively gathering data about their consumers. An entire industry built on consumer research emerged. A handful of companies had an effective monopoly on consumer data.
All of that changed with the advent of the internet. Now every company with a digital presence is subject to a continuous deluge of data. The metaphorical data playing field has been leveled. It's now the responsibility of every business to know more about its audiences and customers than anyone else. Here are five ways in which consumer data is invaluable for any and every commercial enterprise.
Opportunity cost-Consumer data is rapidly the minimum entry requirement-table stakes-for doing business in a variety of markets. Media companies without consumer data and data capabilities will increasingly miss out on opportunities in the coming years. As consumer data becomes increasingly available, businesses will seek out partners with exclusive consumer data and disregard those without it.
Sales erosion-As periods of economic softening become more frequent-and innovation and emerging technologies continuously disrupt established markets-forestalling sales erosion will become increasingly critical. Media companies continue to see changes in consumption habits due to media fragmentation across platforms. By enabling more effective marketing, consumer data is rapidly emerging as a key tool for capitalizing on these consumption trends.
Marketing effectiveness-Consumer data enables better media targeting and measurement. Marketers can use data about their consumers to target creative executions and promotional offers to customers with the greatest value potential, using variables aside from age, gender, and geographic location. Additionally, marketers can use data to measure the effectiveness of their marketing, going beyond delivery to bottom-line metrics (such as sales and other end objectives).
New business development-Businesses can use data they have on their consumers to win new customers. In an increasingly competitive marketplace, companies must continuously grow their customer bases-and consumer data is critical for driving growth. For example, a media company could leverage its consumer data to make the case to a new advertiser that its media properties are indispensable for reaching potential customers.
Premium pricing-Consumer data also holds the potential to drive premium pricing for products and services. For instance, a media company could demand a premium price per a thousand impressions on its network from an advertiser by showing the advertiser that those impressions would be reaching exclusive, higher-value potential customers, using variables beyond age, gender, and geographic location. A similar strategy could potentially serve ad-buying agencies as well.
Data is a ubiquitous resource. The companies that ignore their consumer data will increasingly miss out on revenue opportunities and, ultimately, become irrelevant in their respective markets.