Marketers to double digital data budgets by 2012
US marketers say they will more than double their annual spending on online-derived data sources over the next two years, investing as much as US$840 million by 2012 on information about digital audiences, transactions, and 'clickstream' behaviours, according to a white paper by consulting firm Winterberry Group.
The report, entitled 'The Changing Mission of Marketing Data' and sponsored by Acxiom and Netezza, explores how the usage of data for marketing purposes has been impacted by the accelerating shift in investment to digital advertising channels, as well as the impact of this shift on both marketers and the activities of data-driven marketing service providers.
Among other conclusions, Winterberry Group found that US marketers had invested a total of US$7.8 billion in marketing data in 2009 (including spending on both original information and complementary services such as hosting, hygiene and analytics - focused both online and offline).
That total is expected to increase slightly over the next two years - to some US$8 billion in 2012 - but all of that growth will be driven by digital channels including e-mail, online display advertising and other integrated media.
"Over the next few years, a substantial sum - perhaps as much as US$1.5 billion - will be chasing new marketing and data models onto the internet, thereby pushing the boundaries of what's currently possible in terms of targeting and optimisation," said Bruce Biegel, a managing director for Winterberry Group. "This has the potential to make online acquisition and engagement channels significantly more effective and accelerate the shift of even more advertiser spending from traditional to online channels."
The white paper outlines five key trends that illustrate the substantial shifts now defining the marketing data industry, including:
- Marketers' desire for basic prinicples The current wave of new data investment was initially driven by marketer desire to apply the basic principles of direct mail-embodied by the "right offer, right audience, right time" targeting concept-to underleveraged online channels such as e-mail, affiliate marketing and search.
But rapid advances in technology and an explosion of information availability have given rise to a new set of data-driven digital applications (including web site optimisation, lead generation and real-time media buying) that align with a broader array of business objectives and integrate inputs from multiple sources.
- Data becomes a critical core asset Companies are increasingly coming to view virtually all data sets as critical core assets, with insight into such (as enabled by analytics processes and tools) representing an important source of potential differentiation and competitive advantage.
Although the same marketers are anxious to make use of the burgeoning quantity of unstructured information being generated across the Web, most remain hamstrung by inefficient data management infrastructures built to handle structured data funneled through a well-defined set of channels.
- Service provider landscape yet to coalesce The service provider landscape supporting integrated data utilization has yet to fully coalesce. But it is already clear that the industry will grow increasingly fragmented, led by new influencers including online data compilers and exchange platforms, database management vendors, publishers, e-commerce platforms and a wide range of technology-focused performance optimisation providers.
- Technology is the big execution challenge The most fundamental execution challenge facing the users of integrated data (i.e. that which is derived from both online and offline sources) is rooted in technology and infrastructure. Both digital and traditional data sources must be compiled, standardised, segmented and made appropriate for use in near-real time, demanding process controls, storage technologies and segmentation algorithms that can efficiently manage high data volumes and progressively learn from past performance.
- Responsible standards remain a problem Among the potential obstacles that are likely to vex users of integrated data in the years ahead, the most important will be the still-unsettled question of what standards count as "responsible" with respect to data security, transparency and consumer choice.
Marketers overwhelmingly say they want to abide by a set of universal best practices in this regard, but rapid technological proliferation and the continuing threat of regulation are raising concerns about their ability to collect and use virtually any online data, especially when that information is embedded with personally identifiable (PII) elements.
"We are at a turning point in history with new digital channels creating an explosion of data as consumers interact with them. This is a defining moment for modern marketers, since many of their most critical marketing challenges are now actually technology and large-scale data analysis challenges," said Brad Terrell, Netezza's vice president and general manager of Digital Media.
"The proliferation of data is something that marketers have been seeking to address and capitalise upon for many years," concluded Todd Greer, Acxiom's senior vice president of consumer insight products. "But proliferation isn't just about gathering more of the same traditional sources of information; Real insight comes through integrating multiple dynamic data streams, including the vast quantities of information generated on the web. While that may have made for good marketing theory in the past, many marketers and suppliers are now applying this theory for more effective returns on their investment."
The full white paper has been made available for free download from the 'Our Insights' page of Winterberry Group's web site - click here (free registration required).
For additional information: · Visit Winterberry at http://www.winterberrygroup.com · Visit Acxiom at http://www.acxiom.com · Visit Netezza at http://www.netezza.com