Four Predictions for Predictive Analytics

By Rick Watrall, Partner, MarketingNPV

The accelerating search for accountability has put a great deal of focus on marketing analytics, a collective term for the mathematical engines behind marketing measurement. The past 15 years have seen an explosion in the use of statistical algorithms and processes to gauge marketing performance, and firms have embraced them as a means to drive more efficiency from their marketing dollars.

 

At this point, practically every marketer spending more than $20 million annually on marketing tactics is employing some sort of marketing-mix model, customer funnel model, or perhaps just a simple response model to help them predict the outcome of their marketing expenditures. Whether you’re in this statistical fraternity or contemplating joining, it might be helpful to step back for a moment and ask, “Where do we go from here? What is the prediction for the tools that help us with prediction?”

There are four key trends emerging that will shape the marketing analytics space over the next few years:

1. First, there is a definite movement toward higher-level organizational attention being paid to analytical tools . Once the domain of the resident stat wizard and a close group of marketers that were curiously predisposed to number-crunching, marketing analytics has risen to C-level importance as executives see and hear more stories from colleagues and media about how critical insights emerged through analytics to become strategic assets. Many of these same senior folks have benefited from business-process improvement movements like Six Sigma in operational parts of the business, and are eager to see some of the very same philosophies applied to marketing.

This escalation of attention is more than just welcome, as the next stops on the road ahead for marketing analytics will inevitably involve expanding their domain of influence into processes and decisions where they have been largely absent. Which strategy would be most effective for us? What tradeoffs are the most critical to success and in which areas should we concentrate our efforts to acquire knowledge and understanding? These are analytical questions, but they also involve elements of culture, process, and organizational alignment, which can only be realized when championed from above.

2. This strategic prioritization will fuel the second trend we see coming: continuous marketing measurement . Most of the marketing analytics tools of today are point-in-time analysis models, which deliver an outcome based upon the realities in effect at the time they were created. Unfortunately, these can quickly become old news. From the day they’re implemented, they lose their validity rapidly as the underlying assumptions and statistical relationships erode in the crush of dynamic change to markets.

Today’s marketing leaders need more immediate feedback on their initiatives so they can capitalize on the faster iteration cycles afforded by the expanded media options, such as online and addressable communications channels. Providing continuous insight with little to no lag time is the only real means of capitalizing on (instead of lying victim to) today’s increasingly fractured media market. Without it, the options become paralyzing and work against effectiveness. With it, the value of the tools emerge as powerful allies to those who can move fast and see the game change in front of their very eyes.

Moreover, best-in-class marketers are realizing that continuous exploration (also known as “test-and-learn”) is the most effective way to dial in on the best strategies and tactics for their brands. A disciplined measurement framework, applied consistently throughout the year, captures marketplace feedback more quickly. This results in the necessary adjustments being made faster, yielding more immediate reactions to market opportunities. In other words, the learning process is greatly accelerated. And in the era in which we operate today, those with the best knowledge aggregation processes have a huge competitive advantage.

3. Easier said than done for sure. Real-time analytics is much more difficult than the isolated point-in-ime methods of the past, which is why the third trend we envision is the continued leverage of software technology to enable analytic models to be created and delivered cheaper, faster, and at levels of granularity far exceeding today’s capabilities . Specifically, we’re anticipating dramatic improvements in platforms to help with the behind the scenes “heavy-lifting” of data integration, and portal tools to help with delivering the insights and expand points of access to multiple classes of “what-if” users.

4. If these three trends form the backbone of future marketing analytic frameworks, the last major trend is the flesh. While most software vendors relentlessly search for the next “killer application” in marketing analytics, we firmly see that the real value is more toward applications and methodologies that fit the highly unique aspects of company needs . Marketing analysts are accustomed to hearing the phrase, “But my business is unique.” More often than not, it’s true, if for no other reason than each business has different underlying data availability — the lifeblood of analytics. It’s this same variability that practically ensures that the quality of the insights are not likely to emerge from a parameterized, configured (and possibly even constrained), analytical process, but rather from an astute framework of many individual analyses intelligently linked together to create relevancy on the most profound levels. We see this customization trend only expanding as companies continue to address complex issues such as brand equity quantification, customer franchise value calculation, long-term effects of marketing, etc.

 

The critical commonality among the trends above is that none of them involve the next “whiz-bang technique” coming down the pike. The future of marketing analytics will be determined more by people-driven processes, technology, and creative applications of unique solutions to individual situations. These trends have begun to root, and you may already have experienced aspects of some of them. The reality, however, is that we all have a long way to go on each before the benefits can be realized. Every day, these factors will help marketing analytics be a more valuable asset of the organizations they serve, and the road ahead should be an exciting one.