Enterra Insights

Big Data and Big Brother

"In our haste to study larger and larger amounts of data and find information," writes Christopher Taylor, "there's a point getting lost in the excitement ... those are people who often haven't given their permission for their data to be used for just any purpose. This isn't a small problem or isolated problem. The use of consumer data to understand the marketplace is one thing, but we've gone beyond the question of what's selling well." ["Privacy Rules are the First Casualty of Big Data," DZone, 8 March 2013] In numerous previous posts, I've noted that privacy issues are the 600-pound gorilla in the big data room. Taylor insists, "The data about the purchase has become as important as the purchase itself and less likely to be scrutinized for privacy than ever before." Because so much analysis is being done behind corporate firewalls, protecting privacy rests on the shoulders of corporate data scientists and statisticians performing the analysis. Because self-regulation is the norm, Taylor asserts that "new levels of responsibility" have been created "for those who collect, hold and use all of that data." Unfortunately, not all of these individuals (or the bosses who direct them) are scrupulous. Taylor concludes, "The biggest challenge of Big Data isn't the storage or processing. The single biggest challenge, a challenge many don't see or aren't talking about, is the need to govern data in ways that protect the individual from manipulation, fraud or worse."

Quentin Hardy writes, "Even without knowing your name, increasingly, everything about you is out there. Whether and how you guard your privacy in an online world we are building up every day has become increasingly urgent." ["Rethinking Privacy in an Era of Big Data," New York Times, 4 June 2012] Data collection strategies have become so sophisticated I'm not sure that individuals are now able to guard their online privacy with any assurance. Hardy reports that Danah Boyd, a senior researcher at Microsoft Research, last year told participants attending a conference at Berkeley, "Privacy is a source of tremendous tension and anxiety in Big Data. It's a general anxiety that you can't pinpoint, this odd moment of creepiness." The "creepiness" factor is primarily attached to the notion of big brother watching your every online move. Hardy continues:

"Privacy is not a universal or timeless quality. It is redefined by who one is talking to, or by the expectations of the larger society. In some countries, a woman's ankle is a private matter; in some times and places, sexual orientations away from the norm are deeply private, or publicly celebrated. Privacy, Ms. Boyd notes, is not the same as security or anonymity. It is an ability to have control over one's definition within an environment that is fully understood. Something, arguably, no one has anymore."

That's the rub. I appreciate the fact that Hardy points out that there are differences between anonymity, security, and privacy. The first two are more easily dealt with than the latter. We all understand that companies want to collect and analyze data to help them sell the right product to the right person at the right time. And most of us know that, like ants, we leave a scent of activity that follows us through our online surfing. Companies must legally tell us how they intend to use the data they collect and most of us click the button indicating that we have read the privacy notice without really having done so. We rely on geeks, nerds, and lawyers to read them for us and we trust they are forcing companies to be fair and reasonable. That could be a mistake. Mary E. Shacklett writes, "In many cases, the data collecting is far more comprehensive than people imagine it to be, thanks to new ways to plumb the data, such as reality mining, which gathers and analyzes information from machine-generated data that is capable of predicting individuals' social behavior." To learn more about reality mining, watch the attached video, which features MIT's Professor Alex "Sandy" Pentland.

Despite his work on reality mining, Professor Pentland believes that companies can establish mutually beneficial relationships with consumers so that they willingly provide access to important marketing data. For more on his views, see my post entitled Big Data Dilemmas. Even Shacklett agrees that there are times when reality tracking can provide valuable benefits. She explains:

"If you're an online retailer, you've got a matter of seconds (while the customer is on your website) to consummate a sale. The better you are at predictive selling, the better your sales numbers will be. If you're a healthcare services provider monitoring Alzheimer's patients in their homes, the more real-time data you can collect based on their whereabouts, activity sensors placed in their homes, and on their cellphones, the easier it will be to intervene if patients need help and are unable to request it. If you're a metropolitan area monitoring city traffic flows, the more up-to-the-minute data you can collect about developing traffic jams, the better you can preempt complications by sending out messages to roadside e-billboards that inform motorists of upcoming congestion and advise them on alternate routes. You may be able to control traffic lights more effectively to control the flow of vehicles in the congested area. If you're a financial institution, the more you know about a person's buying patterns (and potentially, even the people they associate with in social media channels) the likelier you will be able to reach out to more customers with the right products. The balance enterprises need to strike in using this data is how far they should go to exploit this vast morass of data. This is the balance organizations must strike between helping the customer (and improving profits) and maintaining trust (which also builds profits)."

That balance between use and abuse of data is not easy to achieve. Shacklett concludes, "The data is out there and tools are available to pull it all together, but organizations must walk a fine line so they don't frighten prospects or existing customers away. It is a balancing act, and corporate reputations depend on getting it right." Professor Viktor Mayer-Schönberger, from Oxford University, and Kenneth Neil Cukier, from The Economist, agree that the risk of abuse is increasing. They call it the "dark side" of big data. ["Big Data - and its Dark Side," Berkman Center for Internet & Society, 6 March 2013] They believe, "The power of big data -- analyzing huge swaths of information to uncover insights and make predictions that were largely impossible in the past -- is poised to transform business and society. Fueling it is the realization that data has a value beyond the primary purpose for which it was collected. Yet there is a dark side. Privacy is eroded like never before. And a new harm emerges: predictions about human behavior that may result in penalties prior to actual the infraction being committed." That proposition should sound very familiar to anyone who watched the movie thriller "Minority Report."

Concerns about privacy continue to rise and will only continue to do so as the so-called "Internet of Things" becomes a reality. Richard Nieva comments, "As the landscape around connected devices begins to take shape, ... the copious amounts of data that devices will be collecting on consumers ad nauseam ... present a sticky situation for those concerned with privacy." ["Privacy and the Internet of things," PandoDaily, 10 April 2013] Nieva believes "there is still a way to shape the discussion." Vrunda Rathod, from Engine.is, an organization that works with startups and government to create public policy, told Nieva, "Consumers are going to give up privacy if they know what they are giving it up for." That pretty much mirrors Pentland's views.

Apparently a lot of people are coming to the same conclusion. That may be one reason that Fred Guterl reports that more and more people now agree that "users CAN and SHOULD have some measurable control over either collection or use of their data." ["How Much Control Will We Have over Our Personal Data?" Scientific American, 25 January 2013] He explains:

"We just saw the world move. Huge companies – and in particular, the large number of massive global companies that are not hide-bound by their attachment to traditional Internet advertising business lines – see clearly the vast revenue opportunities in the data stores they have been accumulating for decades about people, places, and things. And now – for reasons of both regulation and principle – they are highly motivated to start monetizing those data sets in ways that are clearly user-centric and pro-user. There’s a tremendous amount of valuable data that companies can’t presently access or deploy for corporate or user gain – untapped gold, a resource of tremendous revenue generation. With the right model — a 'good guy' paradigm that is user-centric — progressive companies could open the door to a huge new source of wealth creation. With a Field of Dreams-like focus on incentives ('if you offer them, they will come'), consumers will embrace the shift to owning and benefiting from their data."

If Guterl's observations are correct (and people like Pentland seem to believe they are), then individuals may find themselves having much more control over their personal data than they do today. There is no putting the genie of big data back in bottle; so providing people with more control over how their data is used is probably the best compromise that can be reached. It should be encouraging that large organizations are starting to support this concept.

Americans Love Their Coupons

Anyone who has followed the travails of retailer J.C. Penny (JCP) knows that the tenure of former CEO Ron Johnson didn't go well. In fact, some pundits called his leadership "disastrous." Johnson obviously set out to make things better at JCP, not worse. His efforts involved a new strategy that eliminated sales and coupons in favor of everyday low prices. As we now know, it didn't work. Johnson was replaced by Mike Ullman, and, even though Ullman's strategy for putting JCP back on track "has yet to take shape, ... at least one part of the new chief executive’s plan is clear: Coupons will be back." ["Lessons From J.C. Penney: Don't Mess With Coupons," by Emma Rosenblum, Bloomberg BusinessWeek, 10 April 2013] Rosenblum points out that, on paper, Johnson's strategy made sense. After all, she writes, "Coupons are unwieldy and have the whiff of downscale shopping, and discount programs are expensive for companies to maintain." During a fourth-quarter conference call held before his ouster, Johnson stated, "We worked really hard and tried many things to help the customer understand that she could shop anytime on her terms. But we learned she prefers a sale. At times, she loves a coupon."

Rosenblum points out that American have a "longstanding affection for those money-saving pieces of paper. For evidence, just look to TLC's hit reality series, Extreme Couponing, which since 2010 has been showcasing the most dedicated (if slightly insane) couponers in America." According to Progressive Grocer, "Ninety-five percent of Americans use coupons when shopping, while 73 percent admit to using coupons at least a couple times per month, according to a recent survey conducted by Boston, Mass.-based Linkable Networks." ["Coupon Use Still Prevalent Among American Consumers," 5 April 2013] If the show is a reflection of reality, it appears that extreme couponing is primarily a female passion. Jessica Grose, in a review of Extreme Couponing, noted that the show features "women (and very few men)." ["The All-Consuming Pleasures of 'Extreme Couponing'," Bloomberg BusinessWeek, 28 February 2013] Admittedly, most of the people featured in the show demonstrate abnormal buying behaviors. But coupons still hold attraction even for people with more normal shopping habits. Grose explains, "Couponing began in the U.S. — it was invented in 1887 by Asa Candler, a co-owner of Coca-Cola and still hasn't caught on around the world."

That statement may be true specifically for extreme couponing, but there have been successful coupon campaigns conducted outside of the U.S. For example, the London-based ad agency Proximity won an award for a campaign it conducted on behalf of Procter & Gamble called "Mums on Mission." ["Three Brands That Used Data to Transform Their Media Strategies," by Noreen O'Leary, Adweek, 25 March 2013] O'Leary describes the campaign:

"Realizing that mothers no longer swap tips on the school run, Proximity sought to replicate that community via Facebook. Working with Supersavvyme, a P&G Facebook community, the agency created a to-do list app via the social network that produced a solutions database. Thus, consumers became the media channel themselves, crowdsourcing searchable advice. Rewards came in the form of coupons, which, in the first two weeks, generated 33,000 redemptions for P&G products. Also during that time, 52,872 tips were shared while the average time spent on the site was 18 minutes. Fifty-one percent of visitors were repeat visitors."

Grose says that one reason extreme couponing is localized to the U.S. is the fact that "only in the U.S. are houses big enough to store so much excess, and only here are we so obsessed with end times; more than one couponer semi-jokes that if the Rapture were to come, she'd be prepared with her eight-year supply of toilet paper." To be fair, Grose notes that some of those involved in the extreme couponing craze "donate their largesse to charity." The editorial staff at Progressive Grocer insists, "America is a country of deal seekers and technology enthusiasts, and it is no surprise these two are converging." The article continues:

"While 78 percent of respondents name the Sunday paper as the source for their coupons, 61 percent also use online sites for coupons and promotion codes. Not surprisingly, age is the biggest factor in determining how a consumer looks for coupons – 85 percent of those 45 or older clip coupons from the Sunday paper, while 69 percent of those age 18-44 search coupon and deal websites or seek coupons on mobile phones."

Tom Burgess, CEO of Linkable Networks, told the staff at Progressive Grocer, "Our society continues to be deal savvy. As we emerge from an unstable economy, I think we all learned the value of stretching the dollar as far as we can and one way to do that is to seek out coupons, promotions and deals. Our research shows that consumers are using multiple sources to simplify and streamline their shopping experience and save money along the way." The article concluded with these additional survey findings:

• Married people are more likely to use the Sunday paper as their source for coupons (81 percent vs. 75 percent unmarried).
• Women are more likely than men to search for coupons on coupon and deal websites (67 percent vs. 56 percent men).
• The majority of Americans surveyed (82 percent) report using some form of plastic, whether debit or credit card, when shopping.
• When shopping, 67 percent of respondents say they check their smart phone to see if there is a better price elsewhere.

With print editions of many newspapers struggling for survival, it's clear that the future of coupons probably rests in technology. Paul Ritz writes, "Searching for coupons the old-fashioned way by combing through newspaper ads, supplements and local flyers can be kind of disheartening." ["Are Coupons Really Worth All That Time And Effort," National Debt Relief, 30 September 2012] The reason the "hunt and clip" method of couponing can be disheartening, he writes, is because "the best deals are at stores where you never shop or that they are for products you rarely [buy]." That's why targeted marketing and coupons are a match made in heaven. Ritz insists that using "a search-and-find system on the Internet" can save a shopper both time and money. He writes:

"There are an amazing number of sites where you can get coupons. And many of them are electronic, meaning that there is no clipping and sorting. Some of the best sites for coupons are www.retailmenot.com, www.coupons.com, www.smartsource.com, and www.couponcabin.com. RetailmeNot is different in that it is a community where couponers report if a discount code did or did not work for them so that you can quickly filter out bad deals."

Consumers worried that coupons are in the twilight of their existence should be cheered by the fact that some large media organizations are about to get into the digital coupon business. According to Christopher Heine, "Fox News, The Wall Street Journal and Shaw Media want to help advertisers convert their TV commercials into hyper-local mobile commerce opportunities." ["Fox News and WSJ Look to Turn Video Ads Into Mobile Coupons," AdWeek, 11 April 2013] Heine reports:

"The companies announced that they are working with mDialog to create 'tap-through' video ads aimed at smartphone users who are perusing these publishers' digital properties. ... The main concept behind mDialog's service is relatively simple: it's about helping brands deliver location-based coupons via mobile ads."

With so many consumers now carrying smartphones, this strategy makes good sense. One of the reasons that consumers still love coupons is that they "saved $4.6 billion in 2011, $500 million more than the previous year." ["Forever Frugal Mindset Leads to $4.6 Billion Coupon Savings in 2011," Valassis, 26 January 2012] To help control the costs of discounting, manufacturers are reducing the time that coupons are valid and requiring multiple purchases to use a single coupon. Nevertheless, it looks like coupons will continue to have a bright (if digital) future.

Semantic Web and Semantic Search

Sir Timothy "Tim" Berners-Lee, inventor of the World Wide Web, also coined the term "semantic web" nearly a score of years ago. It has taken most of two decades to develop technologies that hold the promise of making his vision a reality. Some people believe it may take another twenty years to perfect. Bill Kilpatrick, a student at Temple University's Fox School of Business, offers this brief, but informative, description of the semantic web concept. ["What Is The Semantic Web?," HASTAC, 15 November 2012] He writes:

"The technology aims to link up information, on a worldwide scale, in a way that is easily understood by machines. In essence, the Semantic Web will allow computers to process syntax closer to the way humans do by describing things in ways that computers can understand. For example, consider the following statements:

• The Rolling Stones are a rock band.
• Keith Richards plays guitar in the Rolling Stones.
• 'Brown Sugar' was recorded by the Rolling Stones.

"Those sentences, and their mutual relationship, are easily comprehended by most people. To be understood by computers, however, they would need the ability to process syntax semantically. This process is likened to the use of hyperlinks, which connect a current web page to another one, thus defining a relationship between the two pages. However, on the Semantic Web, an important difference is that such relationships could be recognized between any two or more resources, if the information is properly structured. To do this, the Semantic Web uses special languages for detailing web-based resources and information, such as RDF (Resource Description Framework). Information put into RDF files allows computers to find, extract, store, analyze, and process web-based information, which the Semantic Web can then describe."

Berners-Lee adds:

"When you use speech grammars and VoiceXML, you are describing possible speech conversations. When you use XML schema, you are describing documents. RDF is different. When you use RDF and OWL, you are talking about real things. ... Because this information is about real things, it is much more reusable. ... The general properties of a car, or a product of your company, of real things, change rarely. They are useful to many applcations. This background information is called the ontology, and OWL the language it is written in." ["Speech and the Future," World Wide Web Consortium, 14 September 2004]

A company called hakia, which advertises itself as "a pioneering company in semantic search technology, notes that a semantic search has to achieve at least ten things in order to be successful. ["What is Semantic Search?"] They are:

1- Handling morphological variations (like tenses, plurals, etc.)
2- Handling synonyms with correct senses (like cure, heal, treat,.. etc.)
3- Handling generalizations (like disease = GERD, ALS, AIDS, etc.)
4- Handling concept matching
5- Handling knowledge matching (like swine flu = H1N1, flu=influenza)
6- Handling natural language queries and questions (like what, where, how, why, etc.)
7- Ability to point to uninterrupted paragraph and the most relevant sentence
8- Ability to Customize and Organic Progress -- Semantic search allows customization in various stages by the owners of the system as well as the user of the system (i.e., such as semantic tagging) where search becomes a part of a social network formed around a business.
9- Ability to operate without relying on statistics, user behavior, and other artificial means
10- Ability to detect its own performance -- A semantic search engine is expected to produce a relevancy score that reflects the degree of meaning match. ... Accordingly, the search engine can understand its poor performance to automatically flag areas of improvement that is needed.

The ability to confidently discover semantic relationships dramatically improves search results. Hakia insists, "Conventional search systems (indexing keyword search) can no longer meet the increasing demand for quality results and time-saving practices in today's world, nor do they offer any room for progress for the future. As a result, semantic search has increasingly been the choice as the next step by many businesses during the last decade." It continues:

"Semantic search technology is based on a computerized system that understands content and query similar to how the human brain processes natural languages. Instead of matching the occurrence of words or symbols (as done in indexing systems), semantic search systems match concepts and their meaningful variations. As a result, a number of benefits emerge:

• Accuracy: Improves the accuracy of the search results exponentially
• Focus: Transforms search function from pointing a document to pointing a direct answer
• Engagement: Allows flexibility to use natural language queries, thus increases user engagement
• Intelligence: Enables semantic understanding of the user behavior via search analytics
• Control: Prevents manipulations from content providers and users
• Independence: Does not rely on external inputs (i.e., popularity) for base performance
• Progress: Allows customization, user input, organic improvement

These advantages result in indisputable return of investment that are reported in several enterprise-wide case studies."

Eric Savitz agrees that semantic search has the potential to change the business landscape dramatically. ["5 Ways Semantic Search Will Disrupt Business," Forbes, 20 June 2012] The reason he believes that semantic search has a promising future is because it can be used to help make sense of big data. He writes:

"As the Big Data dialogue progresses and the information onslaught grows more acute, a single technology has quietly evolved that holds the promise to put our data anxieties to rest and it's been here all along. One could even say that it was one of the origins of the Big Data challenge – semantic search. Semantic search significantly improves search accuracy and relevance by understanding a searcher's true intent and the contextual meaning of words. The technology considers the context of search, location, intent, word variation, synonyms, multiple meanings of words and foreign language to provide users with exactly what they are seeking. Say good-bye to the days of search results with endless pages of blue links."

Savitz believes there "are 5 areas where semantic search will disrupt and transform business and help solve for the global data obesity challenge." They are:

• SEO: By 2016, the interactive advertising business will reach $77 billion, according to Forrester. ... Semantic contextualization will enable better ... targeted ads based on a searcher's intent. One to one consumer/advertiser relationships will reach its full potential with semantic search. ...

• Database Management: Using semantic search to build new ways of analyzing the massive amounts of data that businesses are generating will allow them to identify new business opportunities. ...

• Drug Discovery: Using semantic search will allow streamlined access to critical information necessary for complex product development such as drug discovery. ... Semantic technology can help choose better candidates by using matching technology combined with scoring and ranking systems, saving money and re-filling the global drug pipeline.

• Travel: ... The next big transformation in [the] travel industry will be booking the complete travel package. Semantic search can dramatically simplify discovering destinations and activities, reduce the complexity involved with tailoring a vacation. ...

• Human Capital Management: ... Semantic search holds the promise of becoming the killer app in human capital management because its sophisticated recognition process enables finding the right needle in a million data haystacks.

The most important word in all of these discussions, according to Doc Sheldon, is "semantic." He writes, "'Semantic', ... is a qualifier that means a great deal in this context. It demands that a machine, or more accurately, the software that drives that machine, must understand the information in the way it was intended. Let's face it: most of us know a handful of human beings that are challenged in that regard." ["Semantic Search in 2025," Search Engine Watch, 6 November 2012] He continues:

"Indeed, for a machine to comprehend the meaning behind what a human has put to text, requires a certain amount of artificial intelligence. Humor, irony, and emotion certainly seemed to be beyond the conceivable limits of a computer program in 1994. Even in 2012, there are still some that doubt that such comprehension will be possible in the near future."

As the title of his post reveals, Sheldon believes that the semantic web will be a reality by 2025. He believes that all of the tools and data are in place to make this happen. They just need to be refined over the coming decade.

Personalization and Targeted Marketing, Part 2

In the first segment of this two-part series on personalization and targeted marketing, I discussed the views of a number of analysts who believe that getting to know customers better and then providing them with tailored offers represents the future of advertising. Despite the almost unanimous opinion that personalization is going to be the differentiator that sets successful businesses apart, studies show that many companies have been sluggish to adapt their business models to include an effective digital path to purchase. One of the reasons for this delay may be that they don't know where to begin or how to proceed. Joel Rubinson, who labels the way ahead "behavior marketing," offers five cornerstones that will "equip your organization for behavior marketing." ["From mind marketing to behavior marketing," Joel Rubinson on Market Research, 14 March 2013] They are:

1. Build interactivity into your brand communications creative [endeavors]. TV advertising should encourage digital and second screen behaviors. Facebook stories should encourage return to the fan page, etc.
2. Build brand audiences so you have an annuity from your marketing investments. Encourage people to like and follow your brand, sign up for e-mails, and to download branded apps.
3. Create media targeting strategies that are based on behavior first and only use demos as a last resort for more scale.
4. Master mobile. It is not too soon to get ahead of the curve and soon will be too late. Mobile is likely to account for 10-20% of your total ad spend by 2020.
5. Build an insights and brand tracking strategy that converts digital and social behaviors into brand KPI metrics.

Many of the actions contained in Rubinson's cornerstones involve what Laurent Faracci, the U.S. chief strategy and marketing officer for packaged-goods giant Reckitt Benckiser, labels "calls to action." He states that if he had his way, "100% of our digital media would have a call to action." ["Years After Ditching the Click, CPG Marketers Embrace Web Ads With 'Calls to Action'," by Jack Neff, Ad Age, 25 February 2013] As you can see, behavior marketing must embrace both previous and contemplated consumer behavior. Francesco Banfi, Andrea Ghizzoni, Eric Hazan, and Andrea Travasoni, analysts with McKinsey & Company, believe that corporate digital advertising budgets are "often allocated inefficiently. At best, consumer companies evenly distribute their advertising resources across all consumer segments. At worst, they spend the majority of their budgets on the consumer segments with the least conversion potential." ["Digital intelligence: Profiles to profits in a new consumer landscape," Telecom, Media, and High Tech Extranet, 10 April 2013] To optimize marketing spend, they recommend a much more refined approach. The McKinsey & Company approach is based on four key pillars. Their first pillar involves user profiling:

"A profiling algorithm that uses semantic analysis classifies the content of the Web sites that Internet users visit. The algorithm tracks their histories and profiles them using up to 200 variables based on the content of the Web sites they visited and their purchasing behavior. Specifically, each user is automatically scored on each area of interest based on his or her browsing behavior (e.g., daily visits to travel Web sites or time spent reading travel articles). Additionally, online purchases for each product are tracked for at least one month, including whether the user was exposed to online ads. The profiling algorithm makes it possible to create highly descriptive profiles based on analyzing click-through and conversion rate data, which include user interests and sociodemographic descriptors."

Gabby Griffith agrees with the McKinsey analysts that the best way to provide a personalized digital path to purchase for consumers is "by gathering as much customer data as possible and building user profiles which can be updated as more data is received." ["Personalisation of ecommerce," eSeller, 18 March 2013] She warns, however, "This kind of use of data is viewed by some as an invasion of privacy so ... be careful not to go too far. But done correctly, personalisation can lead to a better customer experience and improved conversion rates for ecommerce businesses." The second pillar offered by the McKinsey analysts involves segment-product matching. They write:

"Using the relationship between product conversion rates and profiling variables, consumer companies can then employ a statistical algorithm to identify specific user segments for each product. These segments are defined by their appetites for and propensity to buy a certain product and are characterized by a well-defined and homogeneous profile. This makes it possible to create user microsegments that are potentially interested in a certain product."

Analysts at the marketing firm Compete agree. They write, "More work is ... needed to understand and personalize the mobile experience to different segments." ["Aligning Mobile Marketing With Consumer Behavior," Compete Pulse, 11 March 2013] Caspar Craven also agrees. He states that "knowing which segments of their target audience is engaging with what content, allows you to achieve three things." They are:

• Attribute the real value that marketing generates to the 'sales' process.
• Segment their target audience and reach out to key targets with the right messages at the right time.
• Build stronger relationships through enhanced client insights.

Craven adds, "We're seeing much more sophisticated measurement, reporting and analysis coming through, and the plethora of tools will continue to increase." Judi Hand, however, believes that segmentation doesn't go far enough. ["Three Ways to Use Customer Data to Drive Marketing Relevance," Customer Experience Blog, 12 March 2013] She writes:

"Adaptive marketing programs are in tune with customers because they use next-generation analytics to extract valuable insights from mountains of data. They gain ground by leveraging intelligence to segment customers and evaluate their engagement patterns as well as their total customer lifetime value. Marketing masters know that although segmentation has long been a key component of a successful strategy, it shouldn't be the only analytical engine driving the effort. Customer engagement analytics and predictive models are also critical."

The next pillar discussed by the McKinsey analysts involves targeted advertising. They write:

"Once the relationship between products and users has been identified, digital advertising can be pushed to only the most relevant segments using tailored messages. This approach optimizes advertising budget allocation and significantly increases ROI. McKinsey's pilot shows that the solution can improve digital campaign ROI by 250 percent thanks to accurate targeting and ad tailoring."

A 250% improvement in ROI is a big number and it makes you wonder why some companies have been slow to adapt a good digital path to purchase strategy. According to Hand, one of the reasons that a better ROI can be achieved through targeted marketing is that fragmentation of markets is no longer the barrier it used to be. She explains:

"The one-size-fits-all marketing approach is dead, and influential marketers are using psychographic profiles to develop value propositions that resonate with each customer type. But, how do they efficiently generate marketing materials that are as unique as their customers? They use adaptive engagement technologies to do it all for them—automatically. Gone are the days when markets were considered too fragmented to penetrate cost effectively. Smart marketers use technology-driven marketing solutions to automatically evaluate and create custom-tailored campaigns for each person's unique needs. These solutions analyze customer data across all communication channels and dynamically generate customized content based on personal profiles and buying behavior. The most intelligent solutions shift strategies based on customer online activity, purchases, and other trigger events."

The final pillar discussed by the McKinsey analysts is easy implementation. They explain:

"This solution can easily be integrated into ad servers. Once the algorithm is rolled out, targeted campaigns can be both continuously run and continuously improved - ensuring that only those Web users with the greatest potential for conversion will be targeted. Beyond advertising, this solution can be used to achieve other objectives, such as optimizing a merchant Web site so that it better fits visitor characteristics. Examples of this include customizing Web site layout, offering tailored promotions and prices, and displaying products to maximize sales conversion. Companies can even enrich their CRM databases to enhance their relevance by using Web behavior information to design more sophisticated multichannel campaigns."

Although McKinsey's algorithm is proprietary, the pillars they discuss are applicable to similar solutions offered by other companies. Hand, for example, pushes her TeleTech's solution. She writes:

"True marketing powerhouses collect multichannel data (including social and mobile), deploy adaptive marketing technologies to extract customer insights, and automatically generate personalized content for each segment. While many companies get bogged down in building their own architecture to execute customer-centric marketing strategies, leaders leapfrog their competition by involving their IT partner and by working with customer experience companies to deploy all-in-one cloud solutions for the data-driven marketing of tomorrow."

My company, Enterra Solutions, can also provide powerful digital path to purchase solutions for companies. I agree with Joel Rubinson that "paid advertising WILL change in fundamental ways in our digital, social, and mobile future." The companies that will do best will be those that start now to understand as much as they can about this digital future.

Gamification and the Future

According to Wikipedia, "Gamification is the use of game thinking and game mechanics in a non-game context in order to engage users and solve problems." The staff at Mashable adds:

"Typically gamification applies to non-game applications and processes, in order to encourage people to adopt them, or to influence how they are used. Gamification works by making technology more engaging, by encouraging users to engage in desired behaviors, by showing a path to mastery and autonomy, by helping to solve problems and not being a distraction, and by taking advantage of humans' psychological predisposition to engage in gaming. The technique can encourage people to perform chores that they ordinarily consider boring, such as completing surveys, shopping, filling out tax forms, or reading web sites. Available data from gamified websites, applications, and processes indicate potential improvements in areas like user engagement, ROI, data quality, timeliness, or learning."

It should be clear from those descriptions that gamification can be used in any number of situations and in any number of domains. For example, gamification is one of five technologies predicted to improve education in the years ahead. According to one website, gamification in education will include: educational programming tools, educational games, achievements & badges, student-developed applications, and self-paced learning modules. Mother of three and founder of TechMamas.com, Beth Blecherman, is a strong believer that gamification has a place in the classroom. She claims to have witnessed "first-hand how making activities into a game suddenly turns stubborn stand-offs into engaging fun." ["Does Gamification Help Classroom Learning?" Mashable, 8 March 2013] She doesn't claim that gamification is the be-all and end-all for learning, but insists that it is a valuable tool in education's kit. She explains:

"Engagement is key. If my kids aren't enjoying a learning environment, whether it's in school, summer camp or a sports team, I hear about it very quickly. In our house, Little League is all about how the kids and the coaches all gel together, and not necessarily about the game itself. ... How does this all translate to the classroom? It looks like the way to get kids to learn during 'game play' is by engaging them to investigate a topic, not just play to earn points. It's also important to understand why. For some kids, this type of learning may be more effective than traditional classroom lectures. For my kids, the answer is 'yes' but it won't work for everyone."

Imagining the use of games in an educational environment is not that hard to do. After all, most kids love to play games. But it's not just kids that love to play games. The fact of the matter is most people love to play games throughout their lives. The type and level of sophistication of those games may change; but, the satisfaction we gain from playing them apparently remains fairly constant throughout life. That is why Sam Laird writes, "From recycling, to personal health, to corporate culture, gamification is seeping into all aspects of everyday life." ["Why Gamification Can't Be Stopped," Mashable, 7 April 2012] Rajat Paharia, founder of company called Bunchball, which helps company use gamification, told Laird, "Gamification is all about providing sustained user engagement. The word itself implies a transformation of something that exists, and people are starting to see more and more how they can apply it to their own situations."

Gabe Zichermann, founder of Dopamine, a strategic consultancy specializing in engagement science, claims that startup companies primarily use gamification to acquire customers. ["The Game Mechanics of Customer Loyalty," Mashable, 24 May 2012] Zichermann notes that gamification doesn't necessarily have to take the form of something that looks like a game. Gamification is a call to action. He explains:

"Think of the top five social actions you want your users to take, and use verbs to describe them. Don't use 'buy' or 'subscribe' because those are outgrowths of good engagement rather than ends in and of themselves. Concepts such as 'like,' 'comment,' 'argue,' or 'challenge' are good examples. It's critical to think of them as social actions because they will also help you attract new users."

Using gamification for the purposes of marketing is a fairly well known technique. Most of us have received emails offering us the opportunity to join a contest or something similar. Sharlyn Lauby believes that companies should also look internally for ways to use gamification. She writes, "An example would be to create a game to learn something new for work: While a lecture session could potentially turn off employees and prevent learning, a game that teaches the same skills could lead to an interested employee that is eager to learn." ["The Evolution of Gamification in the Workplace," Mashable, 15 June 2012] She continues:

"Companies need to embrace the idea of blending games with work. And in order for that to happen, gamification needs to be perceived as a profession, not a frivolous activity. Proper gamification must have a minimum knowledge base and skill set about the given subject matter, as well as both theory and practical application of its core principles. Lastly, it must create a common vehicle for advocacy and ethics to maintain standards."

Lauby assumes that most workplace gamification activities will involve IT technologies. The reason for that assumption is the fact that the "number of people playing video games in the U.S. has risen 241% since 2008." That means that most employees are already familiar with some of the technologies they will be asked to use as part of their training. This familiarity enhances the prospects for success and reduces training costs. Since so many sectors are starting to adopt gamification, Lauby concludes, "While some aspects of gamification are still evolving, there's clearly a vibrant future ahead for the profession." In a follow-on article, Lauby notes, "Often the hardest part of introducing games into the workplace isn't the game itself; it's selling the idea to senior leadership." ["Give Your Business a Boost With Games in the Workplace," Mashable, 27 July 2012] She goes on to note that once they see the results, most executives are convinced. She concludes, "Whether it's brand awareness, recruitment or high performance, companies are using gamification in varied forms to accomplish their business goals."

Another use of gamification in the workplace focuses on innovation. According to the staff at Market, "Gamification will be used for innovation by 50% of companies and will become as important as Facebook for customer retention, Gartner predicts." ["50% of companies will gamify innovation by 2015," 18 February 2013] According to the article, Gartner identified "four principal means of driving engagement using gamification." They are:

1. Accelerated feedback cycles: Gamification increases the velocity of feedback loops, such as annual performance reviews, to maintain engagement over time.

2. Clear goals and rules of play: Gamification provides clear goals and well-defined rules of play to ensure players feel empowered to achieve goals.

3. A compelling narrative: While real-world activities are rarely compelling, gamification builds a narrative that engages players to participate and achieve the goals of the activity.

4. Tasks that are challenging but achievable: Gamification provides short-term, achievable goals to maintain engagement while seeking to fulfill more long-term goals.

Other analysts indicate that gamification, when partnered with big data analytics, can be used to address security and fraud challenges. ["How Big Data Analytics and Gamers Could Solve Fraud and Security," by Heong Weng Mak, Gamification Corp., 29 March 2013] "When a system is constructed," writes Mak, "whether it is an online game or within an enterprising organization, raw data is constantly generated by its users' actions and stored onto servers. When these vast quantity of unstructured data are compiled and analyzed through analytical programs, amazing things begin to happen." One of those "amazing things" is the ability to discover whether an individual is "gaming" the system. People who game any system create problems for the rest of us and generally end up costing us money because we have to cover the costs of fraud.

Because people like to play games, the gamification of all sorts of activities is likely to happen over the next few years. Clearly, however, marketers will embrace gamification. They are always looking for new and exciting ways to engage with consumers.

McCormick & Company Uses Big Data to Boost Business

It's safe to say that more than doubling a company's share of unique online visitors in a specific category in less than two years is an accomplishment worth crowing about. Well that is exactly what happened when McCormick & Company teamed with the digital marketing agency R/GA. "When R/GA took on the McCormick spices account in 2011, the brand was getting just 12 percent of the category's unique visitors, with rivals outspending it four to one. Now McCormick has grown its share to 25 percent, and with a minimal increase in the media spend." ["Three Brands That Used Data to Transform Their Media Strategies," by Noreen O'Leary, Adweek, 25 March 2013] When asked, "What closed that gap?" Tony Effik, managing director of media and connections at R/GA stated, "Creating efficiencies through the use data." O'Leary continued:

"We all know consumers have never been so digitally connected, generating a limitless amount of data as they click, search and scan throughout each day. So it's no wonder Big Data dominates the conversation in an industry where almost everything can now be empirically validated, brands have the ability to connect cross-channel marketing with buying behavior, and corporate financial execs are more involved in the marketing process than ever before."

The industry to which O'Leary refers is the advertising industry not the spice industry. And it's not really Big Data that is dominating the conversation it's the actionable insights that can be gained through the analysis of that data that has captured executives attention. O'Leary notes that the ad industry now employs as many "Math Men" and it does "Mad Men" in order to achieve the results that clients now expect. She continues:

"Advertisers may not even realize how much data they have at their disposal since so much of it resides outside of their jurisdiction, in areas like customer service, finance, sales and distribution. Identifying that information and discerning its relevance is an urgent priority for leading marketers — who can bet that their competitors are already doing so. Adding to the challenge, large packaged-goods marketers, understanding the value of all that data, are increasingly keeping it to themselves, creating their own private 'trading desks' for information rather than sharing it with their agencies. 'Data is only [an] asset if you can make value out of it,' Nick Orsman, international head of data and analytics at Proximity London, tells Adweek. 'There has never been more pressure on budgets and clients wanting to achieve more with less. Some of this data is already in their hands — it just needs to be put to use, to turn value out of those assets and use data in a way that is intelligent around content, timing and personalization.'"

It should come as no surprise that companies quickly learned that data can be valuable. Data contains knowledge and, as the old adage goes, knowledge is power -- and, in some cases, a gold mine. O'Leary reports:

"Proximity should know. At the Data Strategy Awards in London, ... the agency won a Gold for Best Use of Social Media for its Procter & Gamble initiative "Mums on a Mission." Realizing that mothers no longer swap tips on the school run, Proximity sought to replicate that community via Facebook. Working with Supersavvyme, a P&G Facebook community, the agency created a to-do list app via the social network that produced a solutions database. Thus, consumers became the media channel themselves, crowdsourcing searchable advice. Rewards came in the form of coupons, which, in the first two weeks, generated 33,000 redemptions for P&G products. Also during that time, 52,872 tips were shared while the average time spent on the site was 18 minutes. Fifty-one percent of visitors were repeat visitors."

The P&G effort is an excellent example of how a traditional marketing tool (coupons) can be married with digital-path-to-purchase technologies to create a truly targeted marketing campaign. The campaign was able to get consumers to voluntary enter into a conversation with P&G and share valuable information. The result was a win-win for both consumers and P&G. The remainder of O'Leary's article discusses the marketing and media strategies of three companies that used Big Data analysis to help them improve their market position. Those companies were: McCormick, UPS, and Sprint. Since Enterra Solutions works with McCormick, I want to highlight its story. O'Leary reports:

"McCormick isn't just in the seasonings business — it also offers meal inspirations by way of recipe suggestions on its website. With more consumers as budding chefs and Americans developing more of a taste for ethnic and gourmet flavors, that digital real estate has become even more important — and especially so considering that the company is going up against much larger rivals with fatter media budgets and with pure-play sites like that of Food Network thrown into the mix."

The McCormick website has recently become even more personalized, with consumers now able to discover their individual FlavorPrint^TM so that recipe suggestions can be even more personalized. Enterra is helping McCormick ensure that those FlavorPrints are accurate and up-to-date. Tony Effik told O'Leary, "Recipe views, in many respects, are a proxy for a sale. While McCormick is a significant business, it's generally outspent by competitors, so we had to figure out a way to outsmart them by leveraging data to execute earned and paid media plans. We do media. But we also come up with creative, and data is the thing that holds all of that together." O'Leary continues:

"In 2012, McCormick spent $43.3 million in media, per Kantar. Compare that to $404 million at Campbell's Soup. ... With its Responsive Media System, R/GA analyzed the online recipes market, seeking out anomalies and undervalued strategies. The agency studied media-spending patterns and set up a series of algorithmic rules across media channels including search, social, real-time media and promoted videos. R/GA then took what it unearthed and applied it to paid search for McCormick's Lawry's brand. McCormick's and R/GA decided to leverage Lawry's West Coast heritage in a test using search and Mexican recipes. The agency split Lawry's media budget between Western states like California (where Lawry's originated) and the rest of the country. Two data points were key: the clickthrough rate and cost-per-recipe view. The national market did well for clickthroughs. But more interestingly for R/GA was data from the West Coast where the post-click action rate was 20 percent to 60 percent greater than in the rest of the country, prompting it to tailor the media plan geographically. 'That learning allows us to explore the same rule in other channels, so now we can run display advertising in a more focused way on the West Coast if we want to,' says Effik. 'We're thinking about how the budget responds to the market and how we make changes, sometimes in real time, against the dynamics of the marketing using data. Response for us is not whether something succeeded or failed — it's an opportunity to learn. What we're learning from search we can apply to other areas of marketing.'"

Clearly, the more you know about a location and the consumers who live there the better you are going to be able to offer them products that are tailored to their tastes and preferences. That is heart of targeted marketing. Joel Rubinson explains this as going "from being a battle for the mind to becoming a battle for behaviors." ["From mind marketing to behavior marketing," Joel Rubinson on Marketing Research, 14 March 2013] He explains:

"In traditional marketing, we ran mass advertising, targeted based on demos, that was intended to change people's attitudes about a brand. We measured our effectiveness via surveys like copy testing and brand trackers with attribute ratings. All attitudes, all mind marketing. We HOPED that affecting the mind would result in increased sales behavior but there was little direct connection unless you were in the direct marketing business. In a digital, social, and mobile culture, people can do things with media and marketers should want these behaviors to occur as much as possible so the commercial doesn’t pass by like dust in the wind. They amplify the effectiveness of your paid media. Behaviors include sharing links, liking or following a brand, commenting in Twitter or in a forum, taking a picture in Pinterest, searching to find out more and visiting brand.com websites. Add to the list downloading branded apps, Shazamming a TV commercial, scanning a QR code, and who knows what else a few months from now? And media targeting is increasingly based on behaviors rather than old-school demo approaches."

The ultimate desired behavior, of course, is a purchase. Tapping Big Data strategies can help manufacturers and retailers offer consumers what they want, when they want it, at a price that seals the deal.

Big Data is Transforming Your Life

A recent book entitled Big Data: A Revolution That Will Transform How We Live, Work, and Think has been getting a lot of press. The book was written by Viktor Mayer-Schönberger, a respected Internet governance theorist, and Kenneth Cukier, a long-time technology journalist who's been with The Economist for many years. In a review of the book, Gil Press writes:

"Big Data is an excellent introduction for general audiences to what has become a topic of conversation everywhere, faster than any other technology-driven buzzword in recent memory. To those who may react to 'big data' as today's incarnation of 'big brother,' Mayer-Schönberger and Cukier offer a comprehensive and highly readable overview of the benefits and risks associated with big data, which they define as 'the ability of society to harness information in novel ways to produce useful insights or goods and services of significant value.' ["What's to be Done about Big Data?" Forbes, 11 March 2013]

Press actually spoke with the authors, who "reacted sharply," when he "asked them if they are cheerleaders for big data, as one reviewer implied. 'We are messengers of big data, not its evangelists,' said Cukier. Added Mayer-Schönberger: 'The reviewer did not read the book.'" Clearly, Cukier and Mayer-Schönberger aren't cheerleaders because cheerleaders never point out the problems and weak spots associated with the teams they support. Cukier and Mayer-Schönberger, on the other hand, do discuss challenges associated with big data. Press insists it is "the most important part of the book." The reason for that, he explains, is that by pointing out both the benefits and risks associated with big data the book provides "a launch-pad to a much-needed conversation regarding what's to be done about big data." Cory Doctorow agrees with Press that "issues of governance, regulation, and public policy" represent "some of the most interesting material in the book." In fact, Doctorow believes that the discussion "probably needs to be expanded into its own volume." ["Big Data: A Revolution That Will Transform How We Live, Work, and Think," boing boing, 8 March 2013]

For companies involved with big data, the greatest challenges they will face will involve privacy. At least those will be the challenges that will create the most public reactions. "Mayer-Schönberger and Cukier point out that perfect anonymization is impossible in the age of big data," writes Press, "they are concerned about two other, less-discussed, risks. One is what they call 'propensity' or using big data predictions to punish people even before they acted. ... The possibility that our fascination with data may become a dangerous addiction is the third risk the authors of Big Data discuss, what they call 'the dictatorship of data.' The potential for abuse of data by people with bad intentions and misuse by blindly admiring people with good intentions is as big as the data itself." Doctorow writes:

"We know that computers make mistakes, but when we combine the understandable enthusiasm for Big Data's remarkable, counterintuitive recommendations with the mysterious and oracular nature of the algorithms that produce those conclusions, then we're taking on a huge risk when we put these algorithms in charge of anything that matters."

Despite all the relevant concerns associated with big data, Press writes, "Mayer-Schönberger and Cukier make it clear in the book that big data does not equal the rise of the machines. Big data, they say, is not about trying to 'teach' a computer to 'think' like [a] human. Nor does it foretell the 'end of theory' or abandoning making and testing hypotheses, the bedrock of scientific progress for centuries. 'In the world of big data,' Mayer-Schönberger and Cukier say, 'it is our most human traits that will need to be fostered — our creativity, intuition, and intellectual ambition.'" But, as the subtitle of their book declares, big data is transforming how we live, work, and think. The following infographic from Intel aptly illustrates why big data is so big.

Neither big data nor its analysis is going away. That genie can never be put back in the bottle -- nor should it be. The benefits of big data analysis are simply too great. Nevertheless, Mayer-Schönberger and Cukier are wise in pointing out potential pitfalls that lie in the road ahead. Irving Wladawsky-Berger, like Mayer-Schönberger and Cukier, believes that big data can transform the world. ["Reinventing Society in the Wake of Big Data," Wall Street Journal, 22 March 2013] Wladawsky-Berger cites MIT Media Lab Professor Alex "Sandy" Pentland, a big data pioneer:

"'This is the first time in human history that we have the ability to see enough about ourselves that we can hope to actually build social systems that work qualitatively better than the systems we've always had,' says Pentland. 'That’s a remarkable change. It's like the phase transition that happened when writing was developed or when education became ubiquitous, or perhaps when people began being tied together via the Internet. ... I believe that the power of Big Data is that it's information about people's behavior - it's about customers, employees, and prospects for your new business, ...' he says. 'This Big Data comes from location data from your cell phone and transaction data about the things you buy with your credit card. It's the little data breadcrumbs that you leave behind you as you move around in the world. What those breadcrumbs tell is the story of your life. It tells what you've chosen to do. ... Who you actually are is determined by where you spend time, and which things you buy. Big data is increasingly about real behavior, and by analyzing this sort of data, scientists can tell an enormous amount about you. They can tell whether you are the sort of person who will pay back loans. They can tell you if you're likely to get diabetes.'"

That kind of analysis can obviously be very transformative. Like most other pundits who discuss big data, Wladawsky-Berger is concerned about privacy issues. He writes:

"For big data to realize its potential requires access to vast amounts of personal information, which leads to very serious issues about privacy, data ownership and data control. Pentland strongly advocates that individuals should have the final say about the use of the data collected about them, including the ability to put the data in circulation and turn it into a personal asset by giving permission to share it for value in return. He has been working closely with the World Economic Forum (WEF) to help develop the proper guidelines for the collection and use of personal data in collaboration with private companies, government representatives, end user privacy and rights groups, academics and others."

All of the benefits and challenges of big data come from analysis. Data that sits fallow in a database isn't really the issue. "The value comes from what you do with it," writes Barry Devlin, "not how big it happens to be." ["Big Analytics Rather Than Big Data," SmartData Collective, 7 February 2013] When most pundits write about big data, what they are really commenting on is the analysis that flows from it. For example, Maria Deutshcer writes, "There are so many ways Big Data will impact our lives, from the economy to education." It's clear she is talking about analysis when she explains that "organizations are leveraging analytics to generate business value and, in the case of the Rio de Janeiro municipality, to raise the living standards of over 6 million people." ["Changing the World: Big Data Deep Dive Part 1," SiliconANGLE, 25 February 2013]

The debate about big data is just getting started. Like any large, amorphous concept, big data will be viewed from any number of different perspectives and proponents of those perspectives will support their views using different arguments. It would be unwise to ignore those who hold different perspectives simply because you don't believe in the arguments they make. Most arguments hold a kernel of truth and, if we are to gain the maximum benefit from the analysis of big data, we need to be aware of all of the potential risks associated with that analysis as well the benefits it can provide.

Digital Marketing Growing in Importance

"Digital marketing budgets averaged 2.5% of company revenue in 2012, growing 9% in 2013," reports Gartner's Laura McLellan, "and that's still too low. At a time when 2012 marketing operating budgets were over 10% of revenue, spending only 25% on digital marketing implies some companies aren't taking the shift seriously enough." ["Digital Marketing Is Underfunded," Gartner, 20 March 2013] Should retailers pay attention? They certainly should according to the staff at SupplyChainBrain. It asserts, "Retailers that do not fully grasp that retail is at a crucial crossroads and adjust their strategies will disappear, and the ones who do step up will see substantial value creation." ["Retailers Must Adjust to New Realities or Disappear," 12 March 2013] Digital marketing is clearly one of the changes that is taking place at the crossroads alluded to by the SCB staff.

McLellan notes that despite the fact that some things are changing dramatically, marketing's purpose is not one of them. That purpose, she writes, "is the same as it has always been – attract, acquire and retain customers in order to grow revenue and profitability. And do that in a way that will bring the highest returns, regardless of marketing (or sales) channels used." That said, Fiona Severson agrees with McLellan that digital marketing is growing in importance. "It is important for businesses to realize that integrated digital marketing is not just a fad," she writes, "but rather an evolution in marketing." ["Integrated Digital Marketing: The Basics," Social Media Today, 18 February 2013]

Greg Satell also perceives digital marketing as more evolutionary than revolutionary. "We still need to run TV ads and in-store promotions, man conference booths and hand out brochures," he writes, "but now on top of that we have a whole new world of algorithms, apps and devices to master." ["How To Market In A Digital Age," Forbes, 19 March 2013] Satell alludes to the fact that we now live in a mobile and multi-screen world. Retailers that don't understand that basic reality will probably not be around a decade from now. Google highlighted the fact that we live in a multi-screen world with the following graphic.

With such a large percentage of multi-screen purchases made spontaneously, it is clear that retailers that don't have a digital marketing strategy are missing significant opportunities. Lynne D. Johnson and her colleagues at Urban Times put together a list of "top trends to anticipate for 2013" that they believe will help companies address their marketing strategies. One way or another, all of the identified trends have digital technology as their touchstone. ["16 Definitive Digital Media Trends to Help You Plan 2013," 13 February 2013] The list includes:

1. Online video platforms and social TV matures to new heights
2. Google+ gets an Android boost
3. LinkedIn, no longer just for B2B marketing
4. The visual web moves beyond Instagram, Pinterest, and Tumblr
5. Social commerce speeds full steam ahead from referrals to direct purchase
6. Context trumps content (well, maybe)
7. Mobile advertising grows up
8. Blogs explode again, yes, again
9. Augmented reality gets really real
10. Gamification, gamification, gamification
11. Native advertising gains ground
12. Multichannel publishing finds its groove
13. The end of online anonymity (?)
14. Social measurement will be standardized
15. Insights-based strategies rule
16. Finally, it's time to sound the death knell for the silo

Businesses don't necessarily need to master all of those trend areas, but they certainly must be aware of them and use them when appropriate. Satell asserts, "To meet the new challenges, we need a new strategic approach, a new mindset and new organizations. ... In the digital age, marketers must change their focus from grabbing attention to holding attention by focusing on three core business objectives: sales, awareness, and advocacy. ... Simple metrics such as awareness, sales and advocacy will give you an accurate snapshot of your brand's health and how you can best improve it." The first step in developing a digital media strategy is determining objectives that the strategy is supposed to achieve. As the old adage goes, "If you don't know where you are going, any road will take you there." Satell's article goes on to provide some specific recommendations, supported by interesting videos that can help a company get a handle on digital marketing strategies.

"In 2013," writes Severson, "if you don’t have an integrated digital marketing plan, you don't have an edge. Brands that don't engage with their consumers via digital media will slowly die out, and the ones that do will win the awareness and loyalty of the mobile user." Like Satell, she provides a number of recommendations that will help retailers develop a digital marketing plan. She then writes, "Before you even begin to implement all of these other aspects of your integrated digital marketing strategy, it is important to set up metrics by which you can measure their effectiveness."

McLellan concludes, "Digital commerce experience is the top priority for increased digital marketing spending in 2013. Multidimensional stories told with the intent of leading a prospect down the buying path and driving a transaction, commerce experiences provide consumers with a sequence of information, experiences (think entertainment and gamification) and channels that draw them into the buying process. Not fully mature yet, but all organizations should be exploring and piloting." That conclusion is right in line with the trends identified by Johnson.

The SupplyChainBrain staff believes that retailers have little time (i.e., months rather than years) to develop and implement a winning digital marketing strategy. Part of that strategy, of course, is ensuring that order fulfillment meets customer expectations. It concludes:

"The customer is now in the driver's seat, and Amazon is leading the pack whether all retailers realize it or not. With online sales, omnichannel, multichannel, social media, technology and customer sophistication booming, retail finds itself at a critical crossroads. Between now and holiday season 2013, major decisions will be reached by both in-store and online retailers that will result in a flood of retailer bankruptcies not seen since the dotcom bubble burst of 2000. Each retailer will have to forge a unique retail strategy by providing a distinctive mix of price, selection, convenience and experience to offer a compelling reason for customers to shop with them. To realize this unique retail strategy, organizations must implement the right supply chain strategy and technology to bring customers real benefits and value. They will also have to be great not only in each channel in which they participate, but also in providing a consistent omnichannel view of how they can exceed customer expectations any way, anytime and anywhere the customer desires. Succeeding in all channels requires retailers to achieve multichannel operations excellence (MOE). This process begins with the development of the supply chain strategy for the multiple channels. It then adds the right fulfillment plan, processes, organization, technology and process of continuous innovation. The right supply chain technology will depend on whether retailers substantially enhance their distributed order management system and orchestration system, as well as employ a true demand-driven supply chain system. This technology will position the retailer to achieve multichannel and omnichannel excellence."

Analysts have moved beyond discussing the future of digital marketing because the future is now. If the SCB staff is correct, the 2013 holiday season could be the turning point for many retailers. That's not much time to jump on the digital marketing bandwagon and master all of the activities involved.

Big Data and You

"Did you know," asks a blogger named Klaus, "that 90% of the data in the whole world today has just been created as of 2012?" ["Big Data – Its Importance and How It Affects our Everyday Lives," Tech Patio, 4 March 2013] The amount of data created each day is staggering. Klaus claims that each day "we create about 2.5 quintillion bytes of data!" You might be surprised to learn that you contribute to that ocean of data, knowingly and unknowingly. As Klaus points out, "This data actually comes from many sources including but not limited to: sensors utilized to collect climate information, digital pictures and videos, software logs, mobile phone GPS signals, purchase transaction records, and let's not forget, posts to social media sites. All of this is known as big data." Big data, however, is a lot like garbage piling in city streets during a sanitation workers' strike unless something is done to make it useful. But, as Klaus points out, big data is "so huge and complex that it becomes hard to process with the use of conventional data processing applications or on-hand database management tools."

Ignoring it, however, is really not an option since it contains valuable information that can change the course of businesses and individual lives. One of the ways that organizations use big data analytics to serve and protect us involves leveraging it "in order to improve ... existing procedures and processes." Klaus provides a few examples:

"Science and research companies – The decoding of the human genome originally took 10 years to process in the past, but now it can be achieved in just 1 week!

"Financial services companies – since these companies already execute fraud analysis, they can utilize big data from other sources, thus improving the process and even identify potential issues much faster than ever before.

"Police and other law enforcement agencies – big data technology aids law enforcement personnel to analyze streaming video footage in real time and specifically point out smaller chunks of video relevant for review, rather than relying on human eyes to look at each and every frame."

Klaus also points out that manufacturers and retailers use big data "to do something utterly special and/or unorthodox, offering 'fresh, out-of-the-box marketing opportunities' from already-existing, previously untapped data." Most marketing specialists agree that personalized or "targeted" marketing is next big thing. It offers the right product to the right consumer at the right time (and, if adopted widely, could spare consumers from receiving irrelevant offers for products or services in which they have no interest). For more on this subject, read my posts entitled Marketing to the Individual and The Importance of Location in Targeted Marketing. According to Klaus, another way that big data analytics affect your everyday lives involves making your transactions easier, especially purchasing transactions that involve something other than cash. He concludes, "No matter how you look at it, big data ... is something that aids in making one's business more agile and flexible, it helps in finding insights regarding new and emerging kinds of data and content, and it helps in making processes more efficient and faster than ever before."

Not everyone is as sanguine as Klaus about finding the gold buried in mountains of data. Richard Stacy calls it an "actionability" problem. ["Big Data: Gold Mine or Fool's Gold?" Social Media Architecture, 1 March 2013] He certainly doesn't dismiss the potential of big data analytics. He writes:

"In the world of Big Data it is theoretically possible to know as much about your consumers as they know about themselves: to be able to anticipate their every thought and desire and be there with an appropriate product or response. It is a world of ultimate targeting and profiling and this world is tantalisingly within reach because of the huge amount of real-time, personal information consumers are giving away about themselves via their usage of social media tools."

Regardless of the potential of big data analytics, Stacy writes, "The problem is that no matter how good we think we have become at this, we haven't actually been that good." From all that I've read on the subject, I think Stacy is correct. He also believes, "Even if we can now use Big Data to find exactly the right time, to talk to exactly the right person with exactly the right message – organisations are just not set-up to know how to handle this situation appropriately." That's a problem. He continues:

"The world of social media is the world of the individual, whereas the world of traditional marketing is the world of the audience. We have become very good at speaking to audiences with single messages, but we have no experience as to how to talk to individuals, where our behaviour has to be social and the information we give has to be highly specific and relevant and where we also have to recognise that the task is not simply to target conversations, but to create the permission to enter a conversation. In reality, there are very few consumer conversations that it is possible for a brand to enter. A consumer may be having a conversation about shoes with her friends, but this doesn’t mean that she has given permission to have this conversation interrupted by a shoe manufacturer or retailer. So no matter how precisely we may be able to use Big Data to identify the conversations we would like to join, it is likely that the majority of our attempts to enter these conversations and strike-up relationships will be rejected. ... So 'actionability' is the first big problem with Big Data – relevancy of response and the creation of permission to enter a conversation or create a relationship. And this question of permission brings us onto the next problem. As we have seen, brands need to create permission from consumers to enter their conversations – but brands also need to create permission to have the data about these conversations in the first instance. It is very easy for a consumer to see the collection of Big Data, once they know it is going on, as a form of digital spying. In fact it is very hard to portray Big Data as anything else."

The actionability challenges highlighted by Stacy (i.e., entering into a conversation with consumers and getting permission to collect personal data) are being addressed. Laurent Faracci, the U.S. chief strategy and marketing officer for packaged-goods giant Reckitt Benckiser, told Jack Neff, that if he had his way, "100% of our digital media would have a call to action." ["Years After Ditching the Click, CPG Marketers Embrace Web Ads With 'Calls to Action'," Ad Age, 25 February 2013] Although that sounds like Faracci wants consumers to back some kind of cause, his "call to action" refers to invitations that ask consumers to "click here" or "take the challenge" or "enter to win." In other words, he is recommending ads that can result in voluntary conversations with customers. He claims, "The return on investment is three times better when you do." Chris Pape, Executive Creative Director at Genuine Interactive, told Neff, "The key principle is: If people are taking action, they're retaining information better than if it's passive. We're big fans of adult-learning theory, which says if you're passively watching information, it's not really being sent to long-term memory." Neff continues:

"A 2010 study by WPP's DynamicLogic found no link overall between a call to action and effects on recall or brand favorability, but did find that call-to-action digital ads do better on purchase intent for CPG and travel advertisers. Across industries, ads asking people to 'send something' or share doubled brand favorability and purchase-intent scores compared with the average ad. ... Call to action is a big part of CPG digital advertising largely because much of the budget is coming out of promotional buckets, said Gian Fulgoni, chairman of ComScore. Accounting rules don't count such spending as marketing, but CPGs spend 67% of their all-inclusive marketing dollars on retailer trade promotion, he said, citing data from Kantar and SAP. Media advertising of various forms makes up only 22% of spending, while consumer promotion -- largely around distributing coupons -- makes up 11%. Almost half of digital ads in CPG have some kind of promotional message,' Mr. Fulgoni said, compared with 8% of TV ads."

The point is, call-to-action advertising is a good way to enter into conversations with consumers. These kinds of permission-based conversations help remove some of the negativity associated with big data collection. Chris Hornbeck, CEO of Resort Insiders, believes permission-based advertising will become more of the norm. ["Permission-based marketing leads the way," RCI Ventures, 4 March 2013] He writes:

"The basic concept of consent-based marketing is to gain a potential customer's attention in a way that a voluntary communication is created between the marketer and the customer. That communication can be either inbound (initiated by the customer), outbound (initiated at the request of the customer), or even face-to-face – but the keyword is voluntary. When a customer contacts a company out of interest in its value proposition, or leaves his number for a call back, they have effectively become a 'warm' lead. The beneficial marketing atmosphere created by this type of voluntary communication leads to lower labor costs, higher conversion rates, and overall higher sales efficiencies. Permission-based marketing methodology is based on looking for responders, people who see and are interested in a value proposition and give express permission to speak with them about it. This permission can be granted in many ways. ... To find these responders, companies can place value propositions in different advertising channels ... based on popular premiums or services. ... Value propositions can even be in the form of informational or educational content. ... The importance of an honest, high-quality value proposition cannot be understated. In this age of highly-educated consumers and comparison shopping, the value proposition must be competitive, well-considered, and beneficial to the end user to maximize conversion."

The bottom line is that consumers are gaining more control over their conversations and their data and that trend is expected to continue -- and that's not a bad thing.

The Importance of Location in Targeted Marketing

Walter Loeb recently reported that Macy's has done well merging its retail and eCommerce channels using a strategy it calls "MOM" (My Macy's localization, Omnichannel, and MAGIC selling strategy). Loeb reports that the strategy has resulted in more satisfied customers and increased sales. ["Macy's Loves MOM, And Consumers Do Too," Forbes, 27 February 2013] Loeb briefly explains the MOM strategy:

"For more than three years the company has worked on specific localization – 'My Macy's – which focuses on having each store feature merchandise that is relevant to customers who live and shop in that area. ... The customer has responded enthusiastically to the My Macy’s strategy. The Omnichannel strategy allows for extraordinary service to customers. In addition to warehouse fulfillment of purchases from in-store, on-line or mail order customers, Macy’s now has 292 stores that participate in the fulfillment of orders – to insure that the customer receives better service as purchases are delivered quicker than ever before. By the end of the year management expects to have about 500 stores participating in this program. Magic selling is the third key initiative. Through new training tools, associates are taught how to be more engaged with the customers and how to be more empowered so that they can make decisions on the selling floor. It is an important step ensuring more caring and responsive customer service."

Although every letter in MOM represents an important part of the strategy, in this post I'll focus on just one aspect of that strategy -- tailoring products by location. According to Loeb, Macy's uses big data to understand differences between customers in different locations. He writes, "Whether it is Latino or Asian customers, the selection of fashion merchandise, as well as the taste level and sizing of the clothing, is often very different from store to store, and requires a trained buying staff. In some cases this localization program requires special advertising and displays, and there is much less of a cookie-cutter approach to buying across the company." As noted above, both Macy's and its customers have been happy with the results.

A blogger, who calls herself Beans and writes for ContentsEqualMoney, believes that location is going to drive one of the next big things in advertising. She asks, "What if you could advertise to potential customers based on their vicinity to your product or service?" You don't have to imagine such a scenario, she writes, because "this is one of those 'the future is now moments." ["Location-Based Advertising: Data-Driven Marketing for 2013, CEM Blog, 15 February 2013] Location-tailored, in-store merchandise and location-based, targeted advertising are obviously highly complementary strategies. Beans asserts, "You can combine analytics and principles of personalization with mobile location services to get in on what might be the next transformative trend in mobile marketing." She continues:

"I discussed the recent convergence of technology with overwhelming amounts of information in my recent post on big data. We know that businesses have access to more and more demographic data and huge amounts of analytics, and that the sheer volume can sometimes lead to decision-making paralysis. The same is, in many respects, true for consumers, too. How many ads do you see in a day? How many product reviews do you check out before making a purchase or using a service? So many it's hard to keep track of them, right? Search Engine Watch recently predicted that one of the biggest challenges for 2013 is going to be breaking through all of that growing noise to make your business' voice heard over everyone else's. They also pointed out that consumer purchases continue to involve mobile devices at higher percentages with each new survey, from the research to the buying phase. So, the question is, how do you project the most salient image of your business while integrating mobile technology?"

The answer to breaking through the noise, she asserts, involves making your advertising more mobile, personal, and local. "Those three words," she writes, "hold one of the keys to maximizing your ROI in 2013." She explains:

"The 'mobile' is obvious, of course – ... the mobile market is booming both in terms of usage and consumers using various mobile devices to make purchases. But if you pair it with 'personal' and 'local,' you can ride the mobile reinvention train to a huge boost in sales. A recent Clickz article discussed the concept of 'personalization' in recent years, as we've shifted to integrate multiple devices and huge amounts of technology into our lives. The author suggested that recently, the idea of personalizing a consumer experience has started to shift from the 'if you liked this book, you’ll probably like this one' that we're all familiar with from sites like Amazon, to a model of a 'user experience' that creates a unique system for each individual. This system crosses over domains from one device to another, and in some ways even from the physical world to the digital and vice versa. And therein enters the 'local' aspect. Mobile technology like smartphones and to some extent tablets have already bridged the divide between the physical and digital worlds; we have the internet with us everywhere, safely in our pockets. For businesses, the trick is to now make a personalized digital experience based on a physical location."

The most personalized experience you can offer a customer is making them feel like they are your only customer -- a market of one. For more on that topic, read my post entitled Marketing to the Individual. Beans writes, "Conceptually, location-based advertising sounds great." Do you sense a "BUT" coming on? There is one, but it's not as deflating as you might think. Beans explains:

"Let's say you run a brick-and-mortar store. Your customer gets an alert for a sale at your store, or they receive an awesome coupon that will expire in half an hour, when they come within a mile of your physical location. They throw on the brakes, pay you a visit, make a purchase, and your location-based ad campaign is a resounding success. [A] Forbes’ article on whether or not location-based advertising is the future of mobile marketing complicates the matter a little bit. For the most part, consumers apparently will not stop what they're doing just because they get an alert on their phone saying that they're near one of their favorite stores. The vast majority of purchases are planned, say the authors, not impulsive, so you're not likely to catch that many customers who weren't already thinking about buying from you. And of course, there are myriad privacy concerns when it comes to tracking potential customers' locations. However, location-based advertising remains a very attractive next step in mobile advertising, and it’s already happening. The recent launch of Google Now offers a function to alert Android users to nearby attractions, events, and even photo opportunities. JiWire, a company that specializes in location-based ads, has already brought this kind of targeted advertising to multiple airport hubs in the United States, using WiFi hotspot locations rather than phone-based location services to advertise for nearby businesses."

Given the fact that shoppers on unlikely to stop what they're doing to respond to an advertising alert near them, it would be appear that location-based advertising may best be used in a mall-like setting (i.e., when consumers are already involved in a shopping environment). Nevertheless, Beans insists, "Now is the time to adopt a location-based advertising strategy. The key here is to make sure that your ads are not only relevant to your audience, but are hard-hitting enough to make potential customers stop in at your business as they're driving or walking past it." She offers "a couple of concrete ways that you can optimize your location-based ad campaign." They are:

• Use predictive analytics. Physical location is a narrow field, sure, but you want to make sure you’re targeting the customers who really want to buy. Pay attention to behavioral data, and use it in conjunction with location data to direct your efforts to relevant consumers.
• Make strong, short-term offers. Potential customers are more likely to turn into definite customers if they receive a location-based offer that requires them to act now, and provides an impetus to do so.
• Optimize local SEO. Even if you decide to forego your own campaign, make sure your web presence carries all the necessary information about your location and hours, so that third party searches like Google Now will alert nearby potential customers to your existence.

I would add that you take a page from Macy's playbook and tailor your inventory to your location. It doesn't matter how close to your store a consumer approaches, he or she won't walk in if what you offer does not suit their tastes or preferences. The more tailored the inventory, the more likely it is that a consumer will become a customer. In the Forbes' article cited by Beans, Sense Networks CEO David Petersen, told its author, Steve Olenski, "Some of the early failures in mobile advertising are due to poor timing and sending irrelevant offers to consumers because they aren’t based on behavior and location data." Sending irrelevant offers to consumers is the opposite of what targeted marketing is all about.