I’m a lucky guy…as the CEO of ThinkVIne, a company that…As part of my job, I get to meet and work with CMOs and top Insights people at the largest companies across all industriesI hear about lots of challenges, and those challenges vary by industry, but there is one consistent theme TURN
CMOs need better answers ASAPThat’s because they are under tons of pressure to get results… Eric Schmidt’s quote says it allCMOs are caught between two forces…On one side, their world is becoming more complex… consumer diversity, marketing alternatives, buying patterns, technology and data advancements, pace of change, etc.On the other side, they face demanding objectives with fewer and fewer resources and with pressure to deploy more and more of those resources in marketing programsNot long ago, talking with a very large Canadian retailer… “the three of us”
Retail has an additional layer of complexity and challenge that is driven by changes in consumer behaviorThis chart from Forrester Research illustrates the point well, but it is a little tough to read, so let me walk you through itThe bottom portion of each stacked bar is the amount of online retail sales. It’s a significant and growing number and it presents challenges on its own The next portion is the one that I think is at the heart of matter. It represents about 1/3 of total now but it is expected to continue to grow rapidly – a 44% compound annual growth rate. That represents the offline spending that is influenced by “the web”I chose not to put a chart in today’s presentation about the percentage of people who interact with multiple devices as once. The short story of that chart is that nearly everyone does.So, the retail industry is swimming in a tsunami of change
The buzzword “omnichannel marketing” has been coined to summarize how retailers are respondingAs you all well know, omnichannel marketing is about providing an integrated customer experience across all touchpoint. So, at one level it is all about the customer – and that’s a very good thing!To do this, retailers must change systems and structures in ops, IT and Marketing. That’s a huge deal!Omnichannel marketing asks much more from marketing, especially in terms of targeting. content creation and delivery, coordination across agencies and personalization.That’s really hard.The silver lining of all this may be that omnichannel retailer can produce lots of data that retallers can to improve both the customer’s experience and their results
All of that data joins with data that is outside the walls of the company to be part of the second part of today’s buzzword pairing… big dataThe statistics on this slide are just a few of the many mind-boggling ones available… for the latest round of statistics I’d point you to Mary Meeker’s recent update presentationAll this data puts marketers in the same place as the old-time sailors who said, “water, water everywhere, but not a drop to drink.” It seems like it is “The Answer,” but is it? It certainly isn’t the answer in raw form.
Companies are spending a lot of money to capture big data and turn into information they can use.And, about half of that investment in on the revenue side… which is where we’re focusing today.The reason they’re spending so much is that the stakes are so high. TURNThese statistics indicate Big Data’s potential for retailers
It all seems like a pretty clear path… get the data, turn it into information, put that information to workBut, it’s not so easy. Late last year, marketers were surveyed by YesMailThe top two problems they listed in terms of realizing value from big data weren’t related to capture or storageThey were hereTURNAnd hereTURNThe difficulties in turning data into information tend to be technical, and includeAnd, the difficulties in turning information into results tend to be organizational, and includeREecently, when Pitney Bowes asked marketers at Forrester and AMA conferences whether they had received value from big data, they said thisTURN80% -- 4 out of 5 – are still looking for the value. Given all the attention and investment, that’s a really big number
So, today I’d like to talk at a high level about how marketers can get big value from big dataThe answer is a combination of the problems we choose to tackle, the data we use, and the way we use itTURNThe first…TURNThe second…TURNThe third…
I saw some research not long ago that said that people only remember 3 or 4 things from a presentation.If you only remember one thing from this presentation, I’d ask you to remember this oneTo get big value from big data, use it for strategy, not just tacticsTalk about how the focus has been remarkably tactical…
It’s not unusual to read blog posts and articles by marketers who say “the CEO doesn’t understand the value of what we’re doing”When you read things written by and for CFOs, you never read, “the CEO doesn’t understand the value of what we’re doing” A big part of that difference is that CFOs continually speak the language of the Boardroom – revenue and costs and margins and ROIMost CMOs speak that language, too. In that context, they need answers to questions like these… and they need answers in terms of revenue and ROI, not clicks and likesBecause of recent developments in terms of data and analytics and software, CMOs can now confidently provide answers in terms of “Boardroom metrics”
usiness Challenge Right Tactics – Catalogs are currently the primary means of marketing, accounting for >50% of total budget. With ThinkVine, the company is assessing the impact of catalogs within the current mix and testing different spend levels to determine the optimal mix.Right Channel – Offline sales make up 75% of current revenue, with a business goal of 50% online and 50% online sales. With ThinkVine, the company is able to identify the optimal plan to meet the online growth business goals.Right Timing – The majority of business occurs during the holiday season. ThinkVine is working with the company to develop a plan to maximize sales during the holiday season while spending throughout the year to maintain and build brand equity.
The second key for getting big value from big data is to use smart data.People talk about big data in terms of the 4 Vs – volume, velocity, variety and veracityThe first two, volume and velocity, get most of the attention – but the others are equally important, especially for using data to move the dials that matterThe big players in the space – the large players from the IT ecosystem who sell databases, do large-scale consulting projects and so on, bang the drum about volume and velocityThat’s important – if you don’t have data you can’t turn it information – and it makes a good story because there are “gee whiz” numbers like the ones that I presented earlier todayI think that the other two Vs – Variety and Veracity – need better agentsHere’s a simple illustration of whyTURN
What do you see?Let’s add more data – and add quicklyTURNWhat do you see?TURNWhat do you see now? Would you be willing to tell the CEO that is a green apple if you weren’t sure that it was? This is more than a simplified example – this is really important point for marketers because their interests, especially the strategic ones, require more attention to Variety – which is sometimes called “Smart Data” – and Veracity than those closest to IT tend to have
The spreadsheet on this slide is an example of annual marketing plan data that we received from an agencyIn the salad days of Mad Men and the Marlboro man, annual planning that enabled cost-effective media buys was smart – working with few options and even less data, that was a pretty good way to try to improve marketing ROIWe all know that world is very different nowNearly every part of marketing has been increasing automated and increasingly objective to be more responsive to the pace of change in the marketplace and to do more with lessSo, in that context, I ask you the question Big Bird asked many of us when we were youngTURN
Obviously, my point here is that the strategy and planning part of marketing… the place where the biggest decisions are made, is the part of marketing that is, in almost every company, the least automatedYes, software like SPSS or SAS is used to create the numbers that are part of the presentations, but in the end, even when there are Excel-based “simulators” involved, marketing mix and planning are still, for the most part, being done the way they were 20 years ago when the world was very, very different
The good news is that data and technology are now making it possible for marketing planning and optimization tp be more agile, more objective, and more automatedOn the data side…TURNOn the technology side…
Where’s this all headed? Especially in a fast-paced, everchanging world, marketing optimization isn’t a project or an event, it’s an ongoing process whereby…Historically, the parts of this process that were done were done by analysts using software tools and brought together in presentations. The work was time-consuming and costly, so it was done infrequently, in combination with annual planning in some companies, and less frequently at others. Where there were gaps in facts and concrete deliverables, expert opinions were provided as bridges Now, it’s possible to do this in a more modern, more automated way
I acknowledge that to some extent, this slide is a commercial for ThinkVineBut, more importantly it’s here to represent what the state-of-the-art is in terms of marketing planning and optimization softwareI’m not just saying that – Forrester recently called ThinkVine’s software “potentially disruptive” to the current marketing mix world because we are leading the shift from a service heavy approach to a software-focused approachSo, let me tell you just a bit about ThinkVIneHave you ever played the game Sim City?...
In the time allotted to this presentation, I can’t get far enough under the hood about what ThinkVine is doing analytically to satisfy your curiousitySo, I’m going to give a very high level overview and invite you to talk with us if you want to learn moreWe all know that regression wasn’t invented to solve the marketing mix problem, it was applied to itWhen Damon Ragusa founded ThinkVine, he was doing marketing mix work across industries using a toolbox of deterministic methods, but he was disappointed by the results that approach delivered as the marketing world became more complexSo, he started to look around for new and better ways to solve the problemGiven that marketing is all about consumers, he looked for methods that would be able to focus on consumer behavior – something that is completely missing from traditional mixHe came upon agent-based modeling, a method that had been used in the hard sciences for many years to describe and simulate behavior in complex systems – for example the WHO used it to simulate how flu spreadHe then set about applying that to marketing.He made agents – people – the core unit of analysis…DF train, validate, simulate
Because ThinkVine’s agent-based approach starts at very granular level and takes many variables into consideration, the results can be summarized in many ways that are of interest to marketers – and thereby provide answers to the tough questions CMOs have to answer, as well as more detailed onesAnd, because ThinkVine’s focus is forward-looking, customers can move from using marketing mix reactively to justify what has been done to using it proactively to prescribe what should be done to improve results along many dimensionsSome of the dimensions…
When buzz words collide: what happens with Big Data meets Omnichannel Marketing