Big data is not a magic bullet

Dax Hamman is chief strategy officer at Chango.

In marketing circles, “programmatic” and “big data” have replaced “synergy” and “social activation” as the buzzwords du jour. And while knowing how to use those terms in client conversations is a crucial skill, a lot of marketers still don’t seem to really understand what they mean or how they relate. Since you probably have a meeting in 15 minutes, let’s try and clear a few things up.

What is “Big Data,” Really?

A lot of industry rags think of big data as a recent discovery and, worse, a magic bullet for online marketers. Firstly, big-time retailers have spent decades collecting treasure troves of customer data. More importantly, big data is no divine solution to your marketing problems. Ask Macy’s or Walmart how much time and money they put into extracting large-scale consumer insights from that data.

Instead of thinking of big data as a solution, think of it as a start. Big data is, most accurately, lots of freakin’ data. It’s a raw entity, like crude oil, and like crude oil, it has the potential to be tremendously powerful. Once all that data is refined, game-changing insights will emerge. You just need to refine that data in the right way.

This can be tricky. It’s easy to go nuts and start layering on data points until you find some seemingly magical insight: “Asian consumers with a past purchase history living in Western Massachusetts and driving Hondas are our ideal demographic!” Unfortunately, when you add in too many layers, the pool of possible consumers becomes so small that the cost of the data can outweigh the returns. So be ambitious with your data, but be smart.

How “Programmatic Marketing” Actually Works

Not to sound like your dad, but let’s face it: Ignorance leads to poor decisions and wasted money. Pro-mark (the “catchy” new slang for programmatic marketing that we’re trying to get to catch on) is pretty darn simple. Companies like Chango are able to buy media at the exact moment it’s needed through real-time bidding exchanges, targeting a specific prospect. That means that we can deliver a message to exactly the right person without committing money upfront or wasting money by shouting at large crowds.

This is where the data comes into play. It’s the key to identifying the right individuals. This data comes from a couple of places. Advertisers might bring their first-party data to a vendor like us. Or we can supply you with third-party data like keywords searched, demographics, geo-tags and more.

What Most CMOs Still Don’t Get

Many marketers are embracing programmatic for a slew of reasons: new customer prospecting, smarter site retargeting and even brand awareness. Yet those who have are still in the minority. Some 75 percent of CMOs are still throwing money away because they don’t understand the basics. I met with one a few weeks ago that was paying $5.50 CPM on a budget of $3.5 million per year — 68 percent of which was pure profit for the vendor. With a smart programmatic approach, she could have targeted the same individuals for just $1.4 million.

Why are so many people getting ripped off? They misunderstand the buzzwords. Don’t fall into that trap. Sure, there’s a lot of complicated technology involved, and sure it sounds cool when someone talks about data a lot. But the fundamental principles aren’t that complicated. Data is information, and when you have a lot of it, you can make smarter decisions.

It’s true in life, and it’s true in digital advertising.

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