Deep Diving Into Big Data

Direct marketing and image advertising have often been on separate sides of the advertising coin. Brand advertisers say direct marketing is best suited for crass infomercials for diet pills and kitchen gadgets. Direct marketers say image advertisers waste millions on ads that use entertainment and creativity, but forego basic salesmanship–more interested in winning awards than moving product.

Peter Fader, the Pei-Yuan Professor of Marketing at the Wharton School, and co-director of the Wharton Customer Analytics Initiative spends a lot of time training students in direct marketing.

He explains that direct marketers, while at times looked down upon by general marketers, have actually been a big influence on all advertising. He points to Lester Wunderman’s book “Being Direct,” as one of the first books exploring best practices for direct marketing. In fact, segmentation, lifetime customer value, and other landmark concepts come from direct marketing.

Direct marketers think of each customer as an individual, not an aggregate. They want to know your individual preferences, habits and tastes, so they can better create and merchandise products for you.

Mr. Fader point to two examples of effective use of data.

• Harrah’s Casino was losing market share when they decided to expand their use of data. While all casinos have loyalty programs, Harrah’s was one of the first to drill deep into their customer data to find out exactly what each customer wants from their experience at Harrah’s. Within a short period of time, Harrah’s was able to increase profits tremendously by improving collection and implementation of fine-grained data for marketing purposes.
• Tesco in the UK was able to figure out which of their customers were the most vulnerable to Walmart’s impending arrival on their shores. Tesco offered unique pricing and selections to these customers in advance of Walmart’s onslaught. They were able to keep their “herd” of customers in the Tesco barn.

It’s true that “image” agencies and their clients have always used lots of focus groups, product research and package testing. However, they rarely on deep dives into big data to learn how to target consumers so closely.

So, are direct marketers cool now?

Well, consider this: Right now all the “image” agencies are scrambling to find data wonks that can help them translate “big data” into usable information.

It wasn’t too long ago that some executives said “big data” was too amorphous to be of any use. Now that view has gone out the window.

The challenge marketers, advertisers and agencies face is how to leverage the knowledge locked inside all that data.

Some firms are way ahead. Amazon, for example, knows so much about you they recently filed a patent for their “anticipatory shipping” model–soon they will be able to send you products before you order them.

Direct marketers were right about using data the whole time–now advances in technology and information gathering are forcing all advertisers to become data experts.

Direct marketing says “How do you like me, now?”