What Problem do you Want to Solve?

Earlier this week, I did a little light reading on big data. I’ve been hearing a lot about big data lately so I thought I’d investigate.

Truthfully, reading about big data is hardly light reading. Big data presents a big challenge and is emerging as a hot topic in marketing and general business management circles.

What is big data? Well, it’s not about presenting numbers in larger fonts to make it easier for people over 40 years old to read, although I’d probably appreciate something like that. Big data relates to the fact that businesses (and not-for-profits, and governments, etc.) operate in a data rich environment featuring increasingly voluminous, complex and diverse data.

For many organizations, there is more data coming at them than they can handle. The data is evolving rapidly and outgrowing their ability to analyze and glean the insights they need from the data to make better business decisions.

I liked the closing section in this article from which I’ll paraphrase advice from Christer Johnson, IBM’s head of advanced analytics in North America. To get started in tackling big data, first decide what problem you want to solve. That’s great advice in many aspects in life, including big data and it certainly applies to marketing measurement.

I’m reminded of the oft-quoted John Wannamaker, a pioneer of the department store concept in Philadelphia in the 1860s, who famously said:

“I know that half of the money I spend on advertising is wasted; the trouble is I don’t know which half.”

I think of John Wannamaker as one of the founders of the discipline of marketing measurement, as he may have been the first one to define the problem. I’m not convinced he ever solved the problem, but at least he knew what he needed to know. Here’s my take on the problem he was trying to solve.

For context, John’s quote comes from a time with a much less complex marketing environment, before there were any broadcast, internet or mobile media. John’s choice of advertising tactics was probably limited to a few simple options such as:

• newspaper ads
• flyers handed out to passers by
• outdoor signs
• a guy with a sandwich board on the sidewalk in front of the store
• a boy cycling around the store, yelling out this week’s specials (a very primitive form of Tweeting)

Yet, in that simple world, John Wanamaker didn’t know which half was wasted. If John were alive today, he’d probably admit that he didn’t even know if it was half, or one quarter or two thirds that was wasted. All he really knew was that some forms of his advertising were more effective than others, and he wanted to know which they were.

With all due respect to John Wannamaker, I’d like to restate his well-known quotation as:

“I know that some of my advertising programs are more effective than others; the trouble is I don’t know which ones. Mostly, I just want to know the best way to spend my money.”

We can modernize this problem statement by substituting the word “advertising” with “marketing” and then it can serve as a starting point for most companies’ marketing measurement efforts. Like John, all managers with a marketing budget need to determine how to optimize that budget to meet or exceed their business objectives.

In these more complex times, with many more marketing tactics to choose from, there is also a lot more data to analyze and understand. Each program may target different customers, using different tactics with different objectives and performance metrics. Gathering the data for those metrics can involve a variety of sources, analytics tools and research techniques.

All that diverse data, big or otherwise, can certainly be a big mess if you don’t have a way to organize and analyze it. The analysis needs to happen in a way that enables comparing each program’s outcomes to the others, so you can identify the best ways to spend your marketing budgets.

A well-designed marketing scorecard can solve this problem. The key is to design your scorecard in a way that makes comparisons between diverse programs meaningful, and helps you to solve the same problem John Wannamaker was trying to solve all those years ago, to find the most effective ways to spend his money.