What is Data-Driven Marketing?

Samantha Pena

October 21, 2015

What is Data-Driven Marketing?

You’re probably doing marketing all wrong. I don’t mean this in the generic sense – like you’re doomed if you’re not doing social media marketing/content marketing/[insert other type of digital marketing] – because that ship has pretty much already sailed.

No, I mean taking your marketing to the next level, being smart about where you put your advertising dollars, and understanding why a campaign is or isn’t working.

Let’s take a step back.

How many of you have one (or all) of the below problems:

You don’t know how to get your target audience to notice you OR how to get a new target market to notice you

You actually don’t know who your target audience is

You strongly believe that your target audience is not online

You’ve tried online marketing before, it hasn’t worked, and you’re disillusioned by it all

You’d be surprised how many businesses – small and big – struggle with the above. That’s because digital has complicated the marketing landscape. Where before you could get away with simply running a billboard ad or purchasing ad space in a magazine, now those “marketing” efforts just seem lazy and contrived.

Consumers are over-sensitized. They know all the tricks up marketers’ sleeves and they want nothing to do with it. They want more.

So what does ‘more’ entail? Well, it varies. Nearly anyone can produce something captivating, but it’s up to brands to find their most engaged audience and discover what resonates.

This is where data-driven marketing comes in.

Consumers no longer rely on brands to tell them what products they want. Now, they have the Internet to inform their purchasing decisions, and instead of brands dictating, people are the ones calling the shots. They tell brands exactly what they need and expect brands to respond accordingly.

Data-driven marketing enables brands to understand customers on a much deeper level through data collection and analysis.

For example, if brands learn exactly what consumers want and how they want it, they can make educated guesses as to why. If a brand can accurately answer the ‘why’ of its customers’ purchases, the marketing possibilities are endless because the brand understands its customers’ buying motivations.

Data has thus become the most useful marketing currency, not to mention an invaluable business asset.

Let’s break this down further, starting with data.

While data is integral to many of our day-to-day business processes, the concept of data is much more complex when applied to digital marketing.

When I talk about data, I’m really referring to information that helps me better understand a business’s industry and market. At the risk of oversimplifying it, here are some preliminary questions to get you started in thinking about your data:

Market data

  • Who are your audience segments?
  • Where does your audience hang out online?
  • What factors motivate (or deter) them to purchase?
  • How do they engage with your brand (online and offline)?

Industry data

  • Who are your competitors?
  • What is their business model and how does it differ/compare to yours?
  • What is your share in the market in comparison to your competitors?
  • How are your competitors leveraging digital to engage customers?

However, contrary to all the buzz, big data in and of itself does not mean better marketing. You still need the why.

You need to connect your data to paint a coherent picture of your customers, namely:

  • Who are they?
  • What do they care about?
  • Why should they care about you?

Now we get to the second portion of the term: marketing.

How does data-driven marketing differ from regular ol’ marketing?

Let’s start off by defining what regular ol’ marketing is.

Traditional marketing is the process of promoting a business’s products or services, through methods like catchy radio jingles, flashy ads, and other attention-grabbing tactics. And marketing like this has worked for hundreds of years – until now.

So why did marketing change?

Well for starters, there is an influx of products. We see more company buyouts, less product diversity, and more businesses competing for the same exact customers. I mean, how many different types of toothpaste brands are there? What differentiates Colgate from Crest, Oral-B from AquaFresh? Other than their marketing initiatives, they’re the same.

Secondly, as online usage steadily increases, consumer behavior has shifted away from traditional marketplaces (i.e. TV and radio ads, phonebooks, paper directories). Most consumers use the Internet to locate businesses, find services, and purchase products, so businesses must translate their offline business to an online brand in order to have any chance of competing.

This means two things for business:

1. Businesses must work harder to captivate customers (especially using digital). 

2. Customers must not feel like they are part of a marketing ploy.

What does this mean in terms of data-driven marketing?

It means that the people formerly known as the audience now have a say in what they will and will not accept from brands. For the first time in history, there is an open and direct line of communication between brands and consumers, allowing consumers to tell brands exactly what they want.

The value derived from such a relationship is three-fold.

Business value: Loyal and long-lasting customers who keep buying your products and refer friends to you.

Marketing value: You can attribute success to a particular marketing effort through quantifiable data.

Customer value: They receive quality products from brands they care about with minimal interruption to their daily lives.

While data is integral in modern digital marketing, tread carefully. Many businesses and even agencies become obsessed with and reliant on big data. They talk endlessly about percentages, KPIs and rates and eventually lose sight of the human aspect of marketing, which would be fine…if we weren’t marketing to humans.

Instead of crunching numbers, data-driven marketing should be the intersection between data and creativity.

Your data should inform your marketing, not create it. The distinction is that for your marketing to be successful, it can’t be just based on facts. You also need to look at emotions and motivations, because people have both. And again, we’re dealing with people, not robots.

Some questions to shift your strategy to a data-driven marketing mindset:

Don’t ask: What makes my target demographic engage?
Ask: Why does this specific audience segment engage?

Don’t wonder: Will people click on my ad? 
Hypothesize and test: This audience segment is more likely to buy this specific product/service because of __[insert data-backed reason here]_____.

While these questions may seem too broad or emotional, the answers are actually derived from real data. The trick is drawing a logical conclusion from the information you have to inform your marketing efforts.

Here’s an example of what a data-driven marketing strategy looks like in 8 steps:

Step 1: Research your market and industry

Step 2: Come up with a campaign and choose specific metrics to measure (ex. I hypothesize that our online sales will double if we do X campaign)

Step 3: Execute campaign

Step 4: Step back, have a coffee, go on with life until you you’ve collected conclusive data

Step 5: Analyze campaign results

Step 6: Infer insights about your customers (i.e. what they like, how they behave, etc.) based on the data

Step 7: Use data from campaign to test out more hypotheses about your audience

Step 8: Rinse & repeat

Without a lean, data-driven strategy, your marketing efforts are far less calculated and much riskier. That's why we leverage data in all our clients' marketing initiatives

So, what is data-driven marketing?

Data-driven marketing is the process of collecting user data, extracting market insights from that data, and then using those insights to guide future business processes and marketing initiatives.

Samantha Pena

This article was published by Samantha Pena.

Samantha Pena is a Content Strategist at Hudson. Her main focus and passion is creating amazing content that is accurate, up-to-date, and (most importantly) interesting. Her main obsessions are social media, trending topics, and anything web-related. When she has the time, she likes to read, write, and travel. Follow her on Twitter.