Google's Chief Economist Hal Varian coined the phrase "marketing is the new finance".
Varian foresaw great advances in ways to satisfy people's needs, better matches between buyers and sellers, and a more robust advertising environment due to the availability of vast quantifies of rich, real-time, highly available "big data." His predictions today ring truer than ever.
Now, the information-rich environment enabled by the net is transforming marketing into something more. Specifically, marketing is becoming the new research and development (R&D).
Marketers now have immediate access to consumer behaviors and reactions across multiple channels and media. This empowers them to take a leadership role in determining consumer preferences, meeting customer needs, and helping match supply with demand. In other words, driving the business.
Access to consumer behavior across multiple channels and media
Five years later, the information-rich environment enabled by the net is transforming marketing into something more. Specifically, marketing is becoming the new research and development (R&D).
Marketers now have immediate access to consumer behaviors and reactions across multiple channels and media. This empowers them to take a leadership role in determining consumer preferences, meeting customer needs, and helping match supply with demand. In other words, driving the business.
In the past, consumer preferences were largely determined through marketing research tools such as focus groups, surveys, and phone interviews. For the vast majority of marketers, gone are the days when groups of innocents were observed behind two-way mirrors, holding forth about credit card or car preferences.
In light of the rise of the internet and social media, these types of tools are woefully inept at uncovering the deep knowledge of consumers that organizations need today. Nor can these methods gather information at the speed and volumes required to outmaneuver competitors in today's business world.
Rapidly becoming outdated, too, are traditional methods of matching supply with demand. Traditionally, businesses have looked to their ERP and manufacturing systems to determine which inventory is moving and apply "just in time" manufacturing processes to meet customer needs.
At issue with this approach for marketers: it takes time for enough data to build up to make informed decisions, and typically only a handful of variables are factored in, such as where products are being purchased and in what quantities.
Marketing has become a pivotal business driver
Marketing was typically second in line to receive this supply and demand information, resulting in a time and information gap. They then designed and delivered clever creative campaigns to audiences roughly segmented by demographics or geographies.
Due to the growth of mobile, social, addressable TV and other channels and massive amounts of behavioral data pouring in, marketing has become a pivotal business driver, in ways that are more powerful, scalable, fast, and insightful than a year's worth of customer orders or multiple focus groups.
In organizations that have adopted marketing management platforms capable of predictive data modeling, it is possible to have an immediate read on consumers and their preferences. When marketers understand consumer behaviors through actionable data, they can see gaps in markets, improvements to upcoming product introductions, pathways toward competitive differentiators, and better ways to express their brands.
Marketing executives' contributions can take the form of more informed inventory replenishment, new product development, and more.
For example, company managers can know right away if the Ford Mustang in black is outselling other colors. They might even be able to assume through in-depth, real-time modeling that the black version is selling in part due to a video showcasing a black Mustang that is being shown on specific websites.
Company executives could quickly decide to manufacture more black Mustangs. Or, they might create a video highlighting a white Mustang if white models are overstocked.
In either case, it is possible to see the outcome immediately. Think of it as A/B or multivariate testing—techniques typically applied to website designs to gauge consumer preferences in terms of colors, content, and promotions—applied to the entire business.
The result is the ability to tie functional areas into one co-ordinated organism that can continually respond and improve, based on data and real-time analysis from marketing. It takes cultural change and leadership, because companies must break down the silos of information across departments and channels, but this is the new frontier.
Recent technological innovations have made it possible to use automated systems and models to juggle many variables to make quick, smart decisions. For today, marketers need to understand that the power to improve the business through informed insights is easily within reach.
Marketers have the answers to questions such as: Should we be selling more widgets, or focusing on our service business? Is red the new black? How do our customers want us to communicate with them?
Marketing, if informed with data insights and equipped with the ability to share information across the organization, is now in the catbird seat in terms of generating business value.
Julie Ginches is the Vice President of Marketing for DataXu.
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