Sramana Mitra: I would like to talk about a use case that illustrates how customers deploy your big data capabilities.
Martin Smith: I can give you a very good example of one of our clients in the retail space. We do a lot of work with Oreck. Oreck has retail, they have multi-channel, and they have a web store. We took them through that framework of media investment. They were doing very little display media when we started with them. This is similar to a lot of advertisers. They were struggling to create their display channel properly. By using this technology, we were able to provide them with accurate and aligned metrics of the performance. The first thing we did was ask, “What is actually happening?” with the performance in terms of aligning Oreck to their performance metrics. Over time, we were able to manage the inefficiencies in the media from an initial rate of 45 percent down to 15 percent. During that time we were rapidly growing the volume.
Typically what you see in this space is an increase in volume results in inefficiencies as you grow. We were able to deal by working with the data. We call that model “actively managed media”. We were able to hone in while continuing to invest in the scale of business. That is actually a very difficult thing to do. The third area we started to develop was the targeting and messaging strategies. We were able to drive up and improve the conversion rate. We were asking ourselves: Do we have the right messages for the right people? How do we change that in real-time?
SM: OK. Let’s do another use case.
MS: We are also active in the communications space. Being a communications advertiser, you have to manage data, and you generally have a high level of engagement with your existing customer base – you have a high penetration of the existing customer base – which makes managing the media a little challenging. Using the technology to manage the data quickly and effectively, we are able to start to understand how to become more relevant to the customer. On the prospect side, we are then able to determine how to position products correctly. A lot of the things we see in that space are fascinating. You need to be able to understand the growth of multiple device types and some significant demographic and behavioral aspects to this growth, which are emerging from the data. The data is coming by with interesting, even fascinating, information that can shape data-driven messaging strategies, which is what the big data aspect of this is all about.
What we have seen here is the scaling of businesses and their media investments, with reduction in their cost of acquisition. We have seen that cost drop close to 50 percent over the past 12 months. At the end of the day, the data is very democratic. What we see in the industry are people wanting to work with the marketing metrics and not with the business metrics. We see data being made increasingly prevalent in the organization, and there is better alignment available in terms of the goals of the business. This relates to the acquisition of new customers and increased revenue per existing customer.
We see this use of data as a major trend in the entire big data discussion. If you look at recent IBM white papers, you see interesting trends. Seventy percent of the people [surveyed in the report] were not prepared for big data. What was equally interesting was that a sizable group of people felt that they needed to do more work to understand the accountability of their spending. Fifty-six percent felt unprepared for ROI accountability, and about 65 percent were unprepared for the proliferation of devices and channels.