Opinions expressed by Entrepreneur contributors are their own.
Explore the dynamic landscape of data-driven marketing and its transformative impact on businesses of all sizes and industries. From harnessing consumer insights to optimizing ad spend and driving engagement, this article delves into the strategies and technologies that empower modern marketers to thrive in the digital era. Discover how data-driven campaigns, including programmatic advertising, are revolutionizing the way brands connect with their audiences and achieve remarkable results.
What is data-driven marketing?
Data-driven marketing puts data at the heart of all marketing decisions with the goal of making every marketing effort relevant to a brand’s audiences, interests and behaviors. Consumer data determines which creatives will be used, which marketing channels the brand will select, and how those creatives will be presented.
As opposed to listening to input from in-house teams such as finance or product development, data-driven marketers prioritize insights gained from actual customers. Their goal is to optimize each aspect of their strategy for consumer connection.
The impact of data-driven marketing
Leading brands have been using data-driven marketing for a few years to great effect. Just five years ago, those brands were in the minority. A 2018 study by Boston Consulting Group (BCG) found only 2% of businesses qualified as ‘best-in-class’ at data-driven marketing. However, these few were rewarded with up to 20% more revenue and 30% more cost savings compared to their competitors.
Since then, the pandemic disrupted virtually every industry. As customer behaviors changed rapidly, older data-driven models were no longer working. As a result, some brands reverted to mass marketing while others doubled down on targeting and tried an even more precise approach, according to marketing specialists at McKinsey & Co.
Over the past two years, consumer behavior has shifted, retaining some of the pandemic-induced changes but also starting to become more predictable once again. Consequently, brands are adapting their marketing strategies.
A 2023 survey by Hubspot showed that far more brands are now using a data-driven approach. 36% of marketers confirmed that data was essential for understanding customers. 32% believed that investing in data gathering boosted ROI.
Harnessing consumer insights
So, how can brands use data to maximize ROI?
Harnessing consumer insights to inform campaign planning and implementation is one of the most effective ways to increase ROI. Brands can gain those insights by analyzing consumers’ behaviors, opinions and thoughts and encouraging consumers to share real experiences with a brand.
Encouraging customers to share online reviews, distributing surveys or analyzing social media comments can all be part of a brand’s approach to data collection. While not all feedback may be positive, each piece of information gives the brand team a concrete insight into the consumer’s mind.
These insights remove any guesswork from decisions relating to marketing campaigns, prioritizing one product over another and targeting the most promising audiences with campaigns.
Driving consumer engagement
Before digital marketing channels revolutionized how brands connect to their audiences, marketing could be seen as a one-way street of brands talking to audiences. Today, consumer engagement has become one of the essential ingredients of successful marketing.
Social media platforms are ideal for real-time consumer engagement. They give brands unparalleled access to consumers in a natural environment instead of a focus group, for example. The most successful brands in this area understand what type of content drives engagement the most and deliver this type of content to their audience.
Optimizing ad spend with programmatic advertising
Maximizing ROI from digital ads is another item high on the priority list of marketing teams. Effective media buying is one of the keys to this, but it is also a strategy that has traditionally been time-consuming, involving requests for proposals, tenders, negotiations and quotations.
Programmatic advertising is starting to change this. In simple terms, programmatic advertising uses automation and algorithms to streamline media buying. Software takes over instead of a human buyer choosing or bidding on digital advertising space. Website and social media traffic data, information about consumer behavior, demographics and other contextual data support the software’s purchase decisions.
Using this procedure, brands can target their audiences more precisely and cost-efficiently. The success of this approach is reflected in the growing programmatic advertising spending across the United States. Experts believe that spending is set to increase from $127 billion in 2023 to $168 billion in 2024.
Brands can use this approach to optimize their campaigns in real-time based on the feedback received by the software. It is an excellent opportunity to enhance a campaign’s ROI.
Applying programmatic advertising in practice
If that sounds a little too technical, here are two examples to bring programmatic advertising to life.
- Dynamic Creative Optimization. Even if you have not heard of dynamic creative optimization, it has almost certainly targeted you. Assuming you searched for flights to a tropical island. A resort chain on that island then uses DCO to present personalized accommodation adverts in that destination. As you continue browsing, you see more of their adverts. The content changes dynamically, displaying updated prices and limited offers to convince you to book a vacation.
- Retargeting Abandoned Shopping Carts. Potential customers abandoning orders can be a significant problem for eCommerce businesses. Programmatic advertising allows those businesses to place adverts in front of you, reminding you to complete your purchase. Sometimes, brands may even offer incentives to persuade consumers to pick up where they left off.
Data-driven marketing allows brands to target consumers more precisely than ever before. As digital marketing and advertising platforms continue to evolve, data collection and analysis must adapt to new environments and circumstances. One thing is clear: few brands, if any, will thrive without solid data-driven marketing practices. Start putting yours in place now!