Response To MarketingNPV's Predictive Analytics Predictions

If I’m the first person to point you to Pat LaPointe’s MarketingNPV site, go there and spend a few hours perusing the great content on that site.

On his blog, Pat posted his predictions for the “Path of Predictive Analytics.” I wanted to share some of those predictions, along with my thoughts on them.

Pat says: “Analytics are increasingly the lifeblood of a CMO’s accountability process.”
My take: Analytics could be the lifeblood — but it isn’t. For now, the analytics focus in many organizations is at the campaign level or at the investment level (i.e., what was the impact of last quarter’s media spend). For analytics to become the lifeblood of the accountability process, the focus needs to shift from a micro- (investment level) to macro- (enterprise-wide) perspective.

Pat predicts: “The corner office will go from interested to involved to participating in marketing decision making. The analytics underlying resource allocation recommendations will need to more clearly articulate and justify what you need, why you need it, and the payback.”
My take: Pat is mostly right on here, but his prediction misses the nuances of C-level behavior. CEOs don’t want to be involved or to participate. They just want the process to work smooth, and to produce results. Smart CMOs will utilize (not rely) on analytics to build trust. How many CEOs really understand the models that CFOs use to make financing decisions? Certainly not all — but they trust that their CFOs are making smart decisions with these models. CMOs need to be comfortable in explaining their analytical models (as Pat says “sans the geek interface”) so they, too, can build the trust that CFOs have gained.

Pat predicts: “The near future of analytics will go beyond one-time, ‘what’s going on today’ metrics to present real-time continuous results. A new ‘test and learn’ framework is also helping marketers capture feedback and adjust to it more quickly.
My take: For me, ‘real time, continuous results’ doesn’t capture the essence of where analytics needs to be headed. Instead, it’s something more like ‘dynamic measurement window.’ Analytics must do a better job of tracking and tying together the investments that were made last year (and the year before) that have an impact on this quarter’s results, and forecasting and projecting out results into the future. Again, it goes back to the micro-focus of today’s analytic efforts (“how did THIS campaign do?”).

Here’s the bottom-line: Looking ahead, analytics has a huge opportunity to:

  1. Shift the discussion from the micro- to the macro-. Instead of talking about how the last campaign did, CMOs can start talking about how the firm is doing as a result of marketing investments.
  2. Improve transparency. CEOs and CFOs hate to admit this, but they have no clue how marketing spends its money, let alone how it decides to spend its money.
  3. Build trust. Regardless of how sophisticated your modeling techniques are, if the senior management team doesn’t trust marketing, then marketing isn’t succeeding. Analytics can help build this trust — but it isn’t a panacea.
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9 thoughts on “Response To MarketingNPV's Predictive Analytics Predictions

  1. Ron: Nothing smart to add to the discussion except to say that your take is on the money. I particularly like #1, it is extremely hard for humans (C’ level or otherwise) to not want to dig deep instantly. I suspect it is because thinking at a macro level is extremely hard, too many variables, strategic and competitive implications, have to know a lot (amazingly) about the business and the environment. I think we dive deep because at a “campaign” level it feels warm and comfortable because it is “simpler” environment and we love simple and not really the complex.

    Great post.

    -Avinash.

  2. Avinash –

    Thanks for visiting and leaving a comment. I have a more mundane explanation for why analytics groups focus on the micro vs. the macro: It’s what they get paid and incented to do. The staffing realities of most marketing departments just doesn’t provide for people dedicated to the more strategic matters. But, as I was trying to say in the “Investing Beyond The Four Wall Of Marketing” post, good senior execs find a way to make things happen. Smart CMOs will find a way to let their analytics folks start addressing the “big picture”. The ability is there — I know it is.

    – Ron

  3. Ron–Pat does have great stuff; I’m glad you point to it. I agree with you that most CEOs are unlikely to delve into marketing details. But CFOs love that kind of thing, and will certainly want to validate any macro models presented by marketing. Everybody just needs to work together: ultimately, marketing is still the expert on marketing analysis.

  4. Ron,

    Very insightful post.

    The challenge with macro analysis is that it is far more complex and has to integrate quantitative as well as qualitative inputs – and most of organizations do not have the skills and experience to be able to do such type of analysis. In my opinion, it is a litte bit deeper than just an incentive problem.

    -Amaresh

  5. Thanks for the comment, Amaresh. I think you’re spot on that the issue is deeper than just an incentive problem. But even in some of the firms I’ve worked with where the skills and experience ARE there, the analytics folks get pigeonholed into the “micro” bucket.

    What I’m trying to do is advise CMOs to bootstrap their way out of the micro- bucket. One way they could do that is by hiring firms like yours, Amaresh, to work on specific projects to demonstrate to the sr mgmt team what “analytics” could bring to the table.

    To David: Maybe marketing “should be” the expert on marketing analysis, but in many firms today, they aren’t. Just one more problem to add to the list.

  6. Pingback: Analytical Engine » Micro to Macro

  7. Pingback: Enterprise Decision Management - a Weblog

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