The success of advertising has and always will be directly tied to a company‘s ability to target the right people with the right message. Sometimes it works and other times it doesn’t, but thanks to big data analytics, most companies are getting higher and more consistent returns on their investments than they ever did in the past.
How Big Data is Changing Advertising
In the late 1990’s and early 2000’s, professional baseball scouts thought they had it all figured out. In order to find talented baseball players, they sought out certain physical attributes like big biceps, broad shoulders, high pitch velocity, and even good looks. Then Billy Beane came along and changed the way professional baseball looked at scouting.
Beane, the general manager of the Oakland Athletics from 1998 to 2016, was severely limited in what he could spend on players. So, instead of looking for the same surface level factors that other teams were seeking, he decided to dig deeper and let data, algorithms, and complex mathematical formulas guide his decision making.
Pretty soon, the A’s were flush with talent. They went from averaging 60- and 70-win seasons in the 1990’s to an average of 95 wins per year over a seven-year stretch in the early 2000’s “ despite the fact that they were spending just $33 million in team payroll when teams in New York, Boston, and Los Angeles were spending closer to $110 million.
What does all of this have to do with advertising?
Well, perceptions aren’t all they’re cracked up to be. It’s easy to get caught up in thinking something is true simply because it looks that way on the surface, but the reality is that there’s often much more going on beneath the surface. Just as Billy Beane used analytics to change the business of baseball, many of today’s leading businesses are using big data analytics to shift the way they approach advertising.
We’re at an interesting point in history where we have access to lots of historical data, while also swimming in a sea of real-time information.
The global volume, velocity and variety of this data is astounding, industry expert Rob Livingstone explains. This data, and the real-time insights and patterns that can be extracted from it, is the basis for tomorrow’s digital alchemy.
One of the biggest trends over the past few years has been the rise of programmatic advertising, which is essentially the real-time buying and selling of ads with advanced algorithms that take into account variables like gender, age, income, past purchase habits, and location.
Marketers can create algorithms that automatically purchase ads across the Web based on these criteria, instead of having to pay for a specific number of ads, as was the practice with traditional ads, advertiser Keith Kirkpatrick notes. Furthermore, while a campaign is ongoing, these algorithms can evaluate what is working best, in terms of geographic segmentation, daytimes, audience segments, and publishers, to help marketers narrow their target so they are paying only for highly effective ads.
Thanks to the numerous tools and platforms available on the market, most businesses have no problem collecting data. It’s using this data that becomes problematic. If companies aren’t careful, they can end up suffering from analysis paralysis. As such, businesses are learning the importance of turning to media buying agencies that can interpret data and turn it into actionable insights.
It’s also wise to keep an eye on predictive analytics platforms, which have become more sophisticated over the past few years. Some businesses are using these platforms to decide when and where to spend their advertising dollars for the highest return on investment. As a result, they’re able to save time, energy, and money that would otherwise be wasted on low-returning prospects.
The Future of Advertising is Here
We’re only in the beginning stages of this data revolution. When we look back in 10 or 15 years, 2018 will be seen as a period of infancy. Having said that, it’s important for businesses to get involved now. By adopting advanced strategies at this early stage of the game, companies can greatly enhance their knowledge of how big data analytics influences advertising and creates strong, sustainable strategies that thrive both now and in the future.
