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Say the words “big data” in a room full of people and you’ll get a wide range of reactions.
Data is the future! It’s the holy grail of marketing! It’s on its way out because of the GDPR! It’s just getting started because of AI and machine learning! It’s getting too intrusive! It’s not accurate enough!
The reactions are endless—and contradictory.
So, what is the truth about big data? What exactly is big data? What does it matter? And can it really drive the kinds of results it promises?
Here are 7 common myths and the truth behind them.
It’s like the age-old game of telephone: The more information gets passed around, the more it gets diluted. The closer you get to the original source of the information, the more likely it is to be accurate.
In the world of data, this means that the most valuable, accurate data a marketer can get is data that comes straight from the source: The customer. This is what we call first-party data.
Sometimes you’ll collect that data through forms, account profiles, or surveys. Other times, you’ll track customer behavior on your website, email channels, etc. to get a sense of what content, campaigns, and products resonate with them. In every case, that data comes straight from the source—your customer—as they interact with your marketing channels.
So, if first-party data is the most accurate and useful, what other types of data are there and why are they falling behind?
The answer takes us back to our game of telephone.
Third-party data (data collected and sold to you, as you might have guessed, by third parties) is anonymous customer data designed to help you target large numbers of potentially-interested new prospects.
Because you don’t know where the data came from, how it was collected, when it was collected, or why it might categorize someone as a car enthusiast or a cat-lover, it’s hard to judge its accuracy. The more middlemen there are in the data process, the less useful that data is likely to be.
But don’t take our word for it. 82% of marketers agree that third-party data is unreliable.
Now, does that mean it’s useless? We actually don’t think so. But it does mean first-party and third-party data are worlds apart and if you have a choice between the two, you’ll want to choose first-party every single time.
For many years, marketers have been targeting people based on their demographics. Got a laundry detergent you want to sell? Moms are the target. Promoting video games? You’re probably after young men.
Demographics helped marketers segment and attempt to target the right people for their products. Of course, dads or bachelors might be the ones buying laundry detergent and women play video games. But hey, before we had more detailed data, demographics were a much better way to market than the old spray and pray method.
The good news is that now that data has moved beyond surveys and CRM records, we don’t need to think about data or marketing demographically anymore.
Because obviously moms aren’t the only ones buying laundry detergent and gamers are gamers no matter their gender. If they want to buy your game or your detergent, who cares about their demographics? The truth is that behavior is more predictive than demographics anyway. Which means behavioral data is the most useful kind of data.
When new data privacy regulations started to go into effect, lots of marketers panicked. After all, customers demand personalization (86% say it plays a significant role in their purchase decisions), personalization is only possible through data, and it seemed like these new regulations were going to mean a whole lot less data.
But here’s the truth: All they mean is that we have to be smarter, better keepers and protectors of data.
This means being clear about what data you have and where it is. It means being honest and up-front with customers. It means getting consent.
It doesn’t mean people won’t give you their data.
In fact, 75% of customers surveyed said they’d happily share their data with a brand they trust and 80% said they’d give up their data in exchange for a reward.
So, no, data isn’t going anywhere. Privacy regulations just mean changes in how big data works.
(To find out how Lytics CDP can help you harness the power of your data and comply with the GDPR, check out our free guide here.)
Now, for those who already knew that data is important and here to stay, here’s another myth that’s got pretty significant consequences.
We’ve seen it pretty often. A company knows they need data and so they go all in. They implement new technologies. They collect piles and piles of data. And then they realize that data itself isn’t the point.
Data is foundational, yes. But you also need strategy, internal alignment with your people and processes, insights from the data, and a way to take action on the data.
Without those things, more data is just more complication. Which is probably why 87% of marketers say data is their company’s most underutilized asset.
It’s easy to think of digital transformation and data as an IT problem. But the truth is that the more marketing gets involved, the bigger the payoffs.
A survey by Forrester found that 62% of firms with CMO-led digital transformations were experiencing double-digit growth. The number for CIO-led digital transformations was 50%.
Why the discrepancy? Because marketing and tech have different priorities. The CIO is interested in how the tech works, whether it’s efficient, how it integrates with other technologies, etc.
And all those things are important. But so are the concerns the CMO brings to the table—concerns about customer journeys and customer experience and the business goals.
Leaving data decisions fully in the hands of the IT team is leaving out half of the equation and your results are likely to suffer because of it. So when it comes to figuring out data and choosing the right tech to support it, marketing should be leading the charge and working closely with IT to get it right.
Over the last couple years, data has gone from a behind-the-scenes, wildly growing marketing tool to a large-scale public discussion. And it’s all getting mixed up together.
Which makes sense. Because of course the general public doesn’t know the difference between the nefarious data practices highlighted by the Cambridge Analytica scandal and a company tracking what blog posts you open because they want to personalize more content for you.
But marketers don’t have to fall into that all-or-nothing trap. Chances are, if you’re thinking about data, you’re also thinking about using it to make customer experiences better.
After all, one recent study found that by 2020, customer experience is poised to outpace price and product as the #1 key brand differentiator. And how much easier would it be to improve customer experience if you genuinely know your customers—their interests, their frustrations, the campaigns, products, content, and messages they respond positively to?
The worries the public has about data are legitimate ones. There have been companies misusing data. But not all data use is nefarious. And there are plenty of customers out there (like the 75% who said they’d share data with a brand they trust) who understand that data can also be used to improve their experiences.
People really love a one-size-fits-all. But when it comes to marketing, it’s never that simple.
There is no one solution that fits every single data need. CDPs are designed to solve one problem. DMPs solve another. CRMs still another. And the many, many other data technologies out there focus on their own respective challenges.
So, how do you choose the technology that fits your business?
The key here is that everything starts with strategy.
As Vikas Jain, Head of Strategic Alliances at Google, said on a recent panel of MarTech leaders: “Technology is a means to an end…Figure out what the end is…Once you define what it is you want customers to get from your products, then you work backwards to figure out how to get there.”
Understanding how data works and how to separate myths from facts is an essential skill in today’s marketing landscape. So, how does your company stack up? Do you have a CDP? Do you have a data strategy in place? What are your goals and how are you harnessing the power of first-party data to reach them?
We’d love to talk to you about all this. Reach out to our team if you’d like to chat about your data strategy and how Lytics CDP and services can help you take it to the next level.