Big Data – buzzword or useful information?
The development in Big Data is fast-paced. But what is it exactly, and who does it make sense for?
We guide you through the confusion and look at Big Data from a marketing perspective.
Talk of the town
It is safe to say that the concept of Big Data is very much a hot topic of conversation. Countless articles have been written about how the future is data based, and how we must all jump the bandwagon in a hurry. Therefore, it is appropriate to step back and look at what the term actually covers.
The future is data based
In a newly released report from the Danish Business Authority, the Danish companies who do best in the work with Big Data are mapped, and the results are quite remarkable. They reveal that, in reality, extremely few companies in Denmark use Big Data for so-called data-driven business development.
There is no doubt that the future is data based, but the use of data in a business context is still very much in its infancy. At least, reality shows that only a negligible fraction of Danish companies actually work with Big Data as a strategic and operational tool.
What is Big Data?
In itself, using large amounts of data in your business development is nothing new. Previously, it has been a natural part of companies’ work, mainly through CRM systems. The novelty of Big Data is the combination of different types of data, and the ability to translate them into concrete insights.
Big Data is the result of a huge increase in data production, after society has been heavily digitised and all our movements are now registered (e.g. by sensors, web shops, digital cameras, measuring instruments, the public sector, etc.). In fact, 90 percent of the world’s data has been generated within the last two years.
However, Big Data is more than just large amounts of data. Big Data is the way one combines and processes large, complex and diverse data types.
Big Data can be divided into two main groups:
- Structured data, such as sales and transaction data, can be recorded in standard units.
- Unstructured data like photos, videos and texts, for example from social media.
The large differences in the data itself also mean that, in a commercial and business context, Big Data is not just a measure of how large amounts of data each company has gathered. Big Data is the company’s ability to create algorithms that couple their own collected data with large amounts of external data. That insight creates the possibility for data-driven innovation, and also enables management to make decisions based on knowledge rather than intuition.
What can it be used for?
There is no doubt that Big Data has the potential to revolutionise the future approach to marketing. And if you look to the United States, then the first ripples started to show up in the waters there – indeed, one might even call them waves.
For example, Big Data was the cornerstone of both the Democrat and Republican campaigns during the last presidential campaign in the United States. Here, the Privacy Act is more liberal than in Denmark, and party offices therefore have access to voters’ personal information. In Obama’s office, they actually dug so deep in the data, they could determine voters’ political preferences based on the type of beer they drank.
Another example from the US market is major mobile phone company T-Mobile, who truly understands how to use Big Data to do away with one of the telephone companies’ biggest challenges: cancellation by subscribers after the minimum contract period. T-Mobile combined several of their IT platforms with transaction and interaction data from social media. The result is that T-Mobile can now market the perfect solution to customers at the expiry of their minimum contract period, and these efforts have halved the cancellation rate.
Big Data seen in a marketing perspective
As mentioned earlier, the proliferation of Big Data domestically is limited. However, there are companies whose results underline the potential of Big Data. One of them is the Coop supermarket chain, which reaps the fruits of many years of structured data collection.
Among other things, this has been achieved through transaction data and through their customer club, which has nearly 1 million members. Until the end of 2013, Coop primarily used the data for simple measures, but they are now gradually getting ready for Big Data initiatives. The first test will be in connection with non-food seasonal goods.
Here, Coop will use Big Data to respond faster to sales trends in individual stores, so they can continuously adapt the subsequent marketing. The analyses included clarification of the overall effect of the campaigns – including declining sales of other products in the same category. For Coop, the ambition is to eventually combine this internal data with external data from e.g. Facebook, web and publicly available data, in order to target consumer habits and preferences more accurately at the season level.
Coop plans to translate the same insight into individual marketing in the various shops. It is logical that the customers in Holte are a different type of consumers than those in Hobro – and with Big Data as a tool, Coop can analyse and identify these differences and use the knowledge to develop tailored marketing solutions and product offerings.
What do consumers say about it?
Another movement within Big Data is consumer back pressure to the whole registration mindset. According to a study conducted by Adobe in June 2013, 82 percent of users globally said that companies already collect too much information about them.
For example, we are already seeing outdoor brand Patagonia market themselves on not using tracking software out of consideration for customer privacy. And quite recently, trend agency TrendWatching touted concept of No Data as a consumer trend. In connection with your Big Data strategy, you must thus be aware of your customers’ and target audiences attitude to Big Data.
How to get started?
At its current stage, Big Data is both an expensive and time consuming process. And the discipline demands that, from the beginning, you master some of the main things.
First, you must have collected a large amount of internally generated data, and not least have a systematic setup around the discipline. Without an internal data base, Big Data is not an option. In addition, you must have come to terms with the fact that it is a time-consuming and costly process, which requires input from external suppliers.
In other words, Big Data is the future – in one way or the other. Regardless, however, it is still some way off in time, waiting. And it is currently not a discipline that makes sense for everyone. So, it is up to you to judge whether it is just a buzzword or actually useful.
5 sharp facts about Big Data
- 91% of Chief Marketing Officers in the UK believe that Big Data will be a key tool in the future.
- 90% of the world’s data has been generated in the last two years.
- 75% of US companies say they prioritise Big Data in 2014.
- 70% of UK Chief Marketing Officers say their marketing approach is being revised.
- 3.2bn dollars were spent on Big Data in 2010. That figure is believed to be 16.9bn in 2015.