The Black Gold of the 21st Century - refined data | SMLXL - Engagement Marketing and Communication principles from Alan Moore

The Black Gold of the 21st Century – refined data

September 30th, 2008

An interesting piece/rant from Bob Garfield – SMLXL has written a whitepaper on Social Marketing Intelligence – the black gold of the 21st Century – please contact me alanm (AT) smlxtralarge (DOT) com

We've stipulated already that display advertising as a marketing tool – inefficient and universally resented as it is – is headed toward
near obsolescence. The key words in that sentence are "headed" and
"near."

Writes Bob Garfield in Your data with destiny And of course I could not agree more. I have been posting abut how data will transform marketing for a while now. for example in When Petrabytes seem like kilobytes – what comes next?

Tacoda believe they can automate the serendipity of helping brands and people find each other, when they need each other the most. And Microsoft R&D in Cambridge is working hard on how refined data will transform marketing and advertising. Garfield uses Netflix as a company that has built its entire success out of data analytics.

Brands in today's world need to be three things. They need to be… [1]. Life enabling [2]. Life simplifying [3]. Navigational. (Help me navigate my life better) This also means putting the customer experience at the very heart of what you do. Advertising therefore must change too – into valuable services, experiences and interactions.

Netflix, which built a substantial business by delivering movie DVDs
overnight for a flat fee and built a gargantuan business by
recommending to customers — via the miracle of collaborative-filtering
software — movies they'd like to see. Be not misled by the stucco and
ugly, teal industrial carpeting. This is a technology company to its
core.

Consider this, harnessing and understanding the increasing flows of social interactions, is the missing link between the migration of our old media and business world to the new one. The story of social networks and Alpha Users. So consider this… Alphas have 8 times higher influence on churn, or recent findings: 65…70% of purchase decisions are primarily based on recommendations by a peer group. If I were Facebook, Myspace, Microsoft, a broadcaster, a bank, a insurer, a mobile company anyone in fact that is facing up to the significant challenges of the changing worlds of media and commerce in our digital age, I think I would be wanting to understand what Social Marketing Intelligence could do for me.

and another point is that data as a raw material is expected to grow to 988 billion Gb's by 2010from its 2006 position of 161 billion Gb's

Have a gander at Peggy Ann Salz's blog to get your head around how data is changing the face of marketing and communications. Even the Economist has wriiten exstensively on algorithm's and business And of course then the question is who counts the audience and what are the metrics in this instance?

It transforms metrics from CPM's to Cost Per Relevant Audience . Take BMW for example, and a story Tomi Ahonen has recently posted

German winters require snow tyres. So if you bought a car in the summer months, summer tyres would be on the car, and would need replacing with winter tyres. BMW had the necessary information about their recent customers; what car model, what wheel types, and could therefore figure out which winter tyre model would fit the car of any given customer. And BMW, possessed their customer mobile phone numbers. Obviously BMW focused only on those cars that were sold that year between spring and autumn, because if the owner had owned the BMW for more than a year, the owner would have bought winter tyres last year, for last winter.

So BMW designed an MMS campaign, wher they customized the picture of the car to be the model of the car that the customer had, and the
colour of the car, with the wheel rims that the customer had bought. BMW virtually fitted the suggested winter tyre for that car and wheel. Then this image was to sent to the relevant customer.

So when do you buy winter tyres. Not when its the summer. But when winter begins. Because this was mobile, BMW had prepared the campaign, and waited for the perfect moment. That moment was the day the first snow started to fall in Germany, that was when the MMS messages went out.

The MMS message included a link to come to BMW's mobile website, to select alternate tyres (and wheel rims) to upload to the tyre simulator, so that the customer could experiment with other variations and see their prices and compare.

The results? A conversion rate from messages sent, to actual tyre purchases made at registered BMW dealers, of 30%

And this is not unusual – ask yourself do you want 6 feet of junk mail or a 29% response rate?

Garfield highlights the ABC's of data analytics these are

ABCs
That's Reed Hastings, founder and CEO of Netflix, who is describing not
only his company's methods but also the essence of collaborative
filtering, which is one of the "ABCs of predictive marketing." B is
behavioral: tracking your path online. C is contextual: paying
attention to keywords, and A is associative: divining your tastes and
interests based on patterns established by people like you.

However, Bobby, you are missing one vital ingredient and that is peoples roles in social networks, combined with your ABC's. So its ABCR's in fact. R=role in social network.

This vital missing component brings a degree of accuracy that is simply unprecedented. Its described as 3D – profiling. Clay Shirky quoted in Bobs piece says, people do not suffer from information overload but filtering failure. The minute people
are exposed to reality, they freak out. What collaborative filtering does is replace categorizations with preference.

Right and then you need self learning systems, dynamic data analytics, and predictive analytics. Now Garfield gets into 5th gear as he addresses a pet theme of mine, called the furniture of advertising

That brings us, finally, back to the 24-year-old wunderkind Mark
Zuckerberg. Dude, blessed as you are with the megaphenomenon called
Facebook, why are you just another popular utility in search of a
business model? Could it be that you're fixated on the notion that your
revenue must come from typical advertising? Haven't we agreed that
advertising is problematic, because users are suspicious of it, resent
it and employ every means to avoid it? Yes, we have. Yet the same
people 1) love goods and services; 2) crave information; and 3) are so
fabulously self-involved that they display every last detail about
themselves, their tastes, their preferences, their favorites, their
hobbies, their embarrassing drunken photos, their damn near everything right on your site.

So why in the world do you not have a big honking box on the bottom of
every Facebook page titled "What You'll Like" or "YouStuff" or "The
Mirror" with a category-by-category selection of books, music, films,
videos, news articles, websites, tennis gear, shoes, power tools,
specialty foods, flea and tick protection, you name it?

Right on – what is advertising in the 21st Century? We seek knowledge and information that is relevant to us as we go in pursuit of that knowledge and equally on a journey of discovery. If your commercial messaging is not seen as timely, relevant and contextual, forget it – you are irrelevant. How close to 0 do you need to get to discover that click throughs don't work. Heed the lesson of BMW, or indeed Blyk

and that's the painful bit for how advertising is still currently bought and sold.

and of course the next bit is developing a Ui that is so intuitive and so simple in its ability to examine and manipulate massive data flows to make more informed decisions on marketing activity.

The other elementary part is that refined data analytics can enable a company to defend cashflow and revenues and also grow and acquire new revenues and customers.

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