By Harry Henry
VP & Practice Leader
Harwich Port, Massachusetts
A number of companies have received new funding to drive development and products to market focused on data and analytics for the CMO. Key strategies behind the investments include a focus on ‘Big Data’, the use of predictive analytics to drive marketing efforts, cloud based offerings, and the marketing holy grail of being able to measure the results of every marketing and advertising campaign. A closer look at one of the key players in the space illustrate how all these elements are coming together.
Important Details: Last year (see Insights 13 December 2012, Money Flowing to Customer Insights, Analytics and Big Data) we highlighted a list of firms that had recently received VC money to develop offerings in the data space. One of those was Lattice Engines, a company founded in 2006 which attracted $20 million in funding on top of an earlier funding round of $15 million. The company had already shown success as it built an impressive client list, and is making headway into B2B markets where most of the earlier action among CMOs had been with consumer product companies.
A key driver behind the growth of firms vying for the CMO dollar lies in what digital advertising, social media and web based marketing can do for a corporation. First and foremost, the marketer gets direct and real-time feedback from customers as to whether a campaign is really working. With other forms of advertising and marketing that was not often the case, and the ROI of a dollar spent was never clear. With the shifting of advertising and marketing expenditures to the web and digital marketing, more activity can now be measured. In turn, because more activity can now be measured, marketers want everything to be measured, which drives the developments we are now seeing in the markets. Some industry reports have pointed out that marketing may be responsible for more technology spend than IT in the next few years.
Lattice Engines is a great example of a company going after this opportunity where four key components of data management platforms are necessary in order for a solution to be effective for CMOs and their marketing organizations — technology, client data, third party data, and analytics.
Implications: Increasingly, today’s solution is a SaaS/cloud based service and not an enterprise software offering which is key these days in order to get directly in front of the using organization (marketing in this case) and avoid the dealings of an IT organization. Until recently, solutions for the CMO have had a large consulting component but today’s products have to have a technology platform. Lattice Engines started out as a consultancy like many others and found its way to building a technology, having a platform in order to be able to handle the data, build an engine and offer a service.
Another component is the ability (and client willingness) to use the client’s internal data. This is often a combination of customer data, prospect and CRM data as well as other islands of marketing data floating around inside an organization. It is often ugly, never kept updated, and not usually matched or reconciled. Once an organization starts pulling all these pieces together, it is amazing to see how much data exists; sometimes this is labeled as part of the Big Data phenomenon. Until now, little attention has been paid to this internal data, and the technology has not been available to do much with it. A great example of this is shown in what EMI Music set out to do last year (see Insights 25 July 2012, Market Research Meets Big Data and Social Media). Some companies have begun looking hard at their internal data via solutions from providers like Scout Analytics or nPario, but for the most part, they have not really begun mining the gold in their internal data. More offerings in marketing automation will unearth more value in the internal data.
Matching external third party data match up to the client’s internal data is another hallmark of marketing solutions. Given the amount of web-based transaction data, the number of database offerings being generated from ‘web exhaust’ and the desire of information publishers to monetize their data assets, there is plenty to choose from. On the B2C side, one might find consumer data from Neustar Information, Acxiom or Epsilon, all providing unique attributes of customer behavior. Additionally, the third party data involves a robust set of cookies and tracking data used to identify interests and activities.
Finally, there is the analytic engine. Offerings in this category are not simply about providing a new set of targets for advertising or direct marketing. It is about how good a predictor the service can be. In the case of Lattice Engines, they are providing the marketer some real direction for his/her sales teams as to what opportunities will close quickest. In some other products, it may be about which advertising media will yield the highest return. Each supplier will have their own version of a predictive analytic engine to help drive results which can now be measured by marketers.
In all, we expect 2013 to be quite active, with more marketing money being made available to find the best solutions and plenty of well-funded suppliers stepping in to help.