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Marketing Analytics for Web 2.0

by Randy Erdahl, clario AnalyticsMonday, November 2, 2009

The new internet trends (often referred to as Web 2.0) are forcing marketing and analytics into new territory.  The new Web 2.0 is characterized by a proliferation of social networks and rich web applications.  These and other internet trends are greatly transforming both marketing and analytics.  While many traditional marketing and analytic methods will survive, many new ones will need development.  Web 2.0 will lead to Marketing 2.0, the new marketing paradigm.  Also, new analytic challenges will present themselves with Marketing 2.0, so we will see analytics evolve in many new directions.  A whole, new world of marketing and analytics awaits us.  Below are some key marketing and analytic consequences of the new world of Web 2.0. 

Marketing with Unstructured Data

Historically, customer databases are heavy with numeric and date data in structured formats stored in large transactional files.  The new marketing data is largely text-formatted content in unstructured data sources.  Examples include web site content, search keywords, blog content, social network content, or anywhere the consumer is entering content freely.  The implication for analytics is a greater need for data mining of textual content to categorize it for summarization and analysis.

Marketing to Customer Spheres of Influence

Formerly, marketing and analytics for consumers revolved around the individual and their household.  The new paradigm adds a third level to cover the consumer's “sphere of influence”, those tightly connected to each individual that share views on products and services freely and regularly with each other.  “Recommend to a friend” is now a key component of marketing and analytics.  Linking together these communities strengthens the message and reach of marketing.

Consumer-initiated Communication

Marketing has traditionally meant a company reaching out to its prospective and existing customers.  Now it also involves consumers reaching out to each other to communicate about products and services they find interesting.  Within social networks, consumers communicate frequently and freely about everything on their own schedule.  Marketers must find ways to encourage a positive, frequent, and far-reaching communication.  Analysts must be able to monitor and analyze these non-traditional marketing messages.

Behavior-triggered Marketing

Another effect of consumer-initiated communication is a greater focus on reactive marketing.  Consequently, analytics must provide decision-making tools to immediately respond to consumers reaching out to web sites or call centers.  Marketing happens when the consumer wants it or triggers it with visits to a web site, retail store, or call center.  Analytical recommendation engines serving up the next marketing action will be emphasized.

Consumer-defined Analytic Mini-Solutions

The new marketing and analytic paradigm introduces marketing analytics to the masses to make their life more tolerable.  Everyone is being deluged with messages and information and will demand tools to organize, customize, and manage their personal flow of information.  For example, I want my own personal email spam filter and message categorizer that learns my preferences.  Similarly, I want my preferences reflected in the web sites, blogs, and other destinations on the internet.  These smart applications won’t require understanding analytics, but will capture my behavioral tendencies and stated preferences.  They likely will be offered as on-demand analytic tools leveraging the latest software as a service and cloud computing technologies keeping them affordable to all.

Analytic Platform to Consolidate & Leverage Data Sources

The growing numbers of relevant data sources that reside outside the typical corporation’s domain demand an analytic platform to access any and all data to serve up analytical solutions to marketers.  With increasing complexity and scarce analytic talent, there is a trend towards outsourcing marketing analytics to experienced professionals.  Marketing business users and analysts must collaborate more than ever before.  All these trends emphasize the need for a highly collaborative marketing analytic platform – one that accesses internal and external data sources, facilitate analytics performed in-house or outsourced, and ease the transfer of information between marketer and analyst.

New Media and Channels

The trend is towards more communication via personal communication devices, such as the iPhone.  Today’s cell phone, email, and internet channels are merging into a single personal communication device containing all the features.  Even television, radio, and printed media will play lesser roles than they once did in getting the marketing message out to consumers.  The advantage is the personal, customized messaging that will be available.  There are many challenges, one is how to distribute your message and maintain relevance to the consumer.

Complex Data Privacy and Usage Rules

The more demanding landscape of the new marketing and analytic paradigm will only increase the complexities of data privacy and usage.  Consumers want relevant marketing messages, and protection from the rest.  You can use their data if done to provide them relevant marketing.  Striking the proper balance for each consumer is the challenge.

Predictive Analytics with Optimization

Historically, there has been limited use of optimization in marketing solutions.  Granted, many have used predictive analysis and data mining techniques to improve the tools for marketers; however few have utilized the problem-solving strength of true optimization.  True optimization can leverage the power of predictive customer scores to recommend the optimal marketing contact strategy.  Analytics serves up decisions instead of summarized information. 

The new Web 2.0 world of marketing and analytics is both exciting and challenging.  CRM (customer relationship management) is evolving towards CMR, customer managed relationship.  Where once the company managed the customer touch points and controlled the information flow to the customer, now the customer knows more about the product and company via internet research and reviews by others than what they learn from traditional corporate advertising.  The customer is more than king or queen, they are dictator.  The future customer reaches out to the company when he/she wants or needs to and considers everything else irrelevant.

About the Author

Randy Erdahl

Randy co-founded clario Analytics, an analytics product and services firm, in 2002 and currently serves as company president overseeing solution design, strategic planning and business development.  A pioneer in customer-centric contact optimization systems and an innovator in predictive modeling methodologies, he also is designing a number of marketing solutions for database marketers. Randy previously served as the director of business intelligence for Fingerhut Companies for twenty four years.  He has advanced degrees in mathematics and operations research.

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