Big Data in Marketing – It Is Here To Stay

‘Big Data’ is one of the biggest buzzwords in business at the moment. Yet for many people it remains a concept that is difficult to grasp – how do firms even gather data about us and how does it really affect our daily transactions? Undoubtedly, Big Data helps firms to understand their customers better. This is especially important for marketers whose job is to connect consumers and products.

In some ways, the use of Big Data in marketing is only continuing and extending a trend that has been going on for many years already: market-oriented marketing. Instead of giving customers what they already know they want, companies are trying to understand underlying customer needs in order to fulfil the demands consumers didn’t even know they had. Instead of collecting survey responses from customers (“customer-oriented marketing”), companies are trying to observe their customers in context. Big Data helps them to do exactly that. It can make smart buying recommendations for customers, improve “social listening” efforts, and generate psychometric customer profiles.

Product recommendations have been commonplace in most online shops such as Amazon for many years. However, these recommendations are getting smarter. Companies using Big Data in the right way can now not only resort to previous purchases and similar buyer profiles, but also your browsing history, shopping cart conversion rates, and many other metrics. The algorithms analysing this data are becoming more sophisticated, too, allowing marketers to make sense of this data and draw actionable conclusions more easily.

The use of Big Data in marketing is not constrained to customer behaviour in online shops though. Equally as important, Big Data helps marketers to engage in social listening and find unexpressed customer needs. Producers of consumer goods have been especially successful in developing and marketing new products using this approach. L’Oreal Paris, for instance, uses an algorithm searching Google, YouTube and other networks for user-generated content, trying to determine the next big trends in the beauty and fashion industry. Once focus areas have been established, big data analysis is combined with in-depth qualitative research to find out which trends are likely to succeed and how to address customer needs. As a result of this marketing technique, L’Oreal has developed hugely successful products such as its “Wild Ombre” hair dye.

Perhaps the biggest change Big Data is bringing into marketing is the use of psychometrics, which allows firms to truly understand the psychological factors driving customer behaviour. Through measurement and analysis of people’s real life and online activities, including the use of social networks, companies can determine how individual consumers will react to different products and types of advertisement. As content can be automatically tailored to individuals, marketing is becoming more personal and hence much more effective. This type of marketing has received a lot of press coverage recently, since Cambridge Analytica, a political consulting and data analytics company, used it to influence the Brexit referendum and the American presidential election in 2016. The firm gathered data from Facebook to create psychometric profiles for millions of people. With the help of that data, Cambridge Analytica was able to create marketing messages directly targeting an individual’s desires and fears – for instance highlighting the demand for higher national security. It is interesting to note that the existence of such sophisticated tools is causing marketing activities to be outsourced more and more often.

No matter how helpful these Big Data marketing techniques may seem, they have to be treated with care. First of all, there are a lot of ethical concerns surrounding the gathering of data. In the case of Cambridge Analytica, for example, users’ Facebook data was distributed without their consent. Moreover, companies that rely too much on data analytics without validating and sense checking the results may find themselves disconnected from their customers. Despite these drawbacks, it is unlikely that marketers will want to deny themselves the opportunities that Big Data has to offer – whether or not the technical and analytical work is outsourced, Big Data in marketing is here to stay.

Max Kulaga holds a degree in Economics and Management from the University of Oxford and was President of one of Oxford’s largest business societies. The German-born has also completed internships at two top tier strategy consultancies and is keen on sharing his experiences and knowledge about the industry.

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