Data-driven marketing spending has been surging, and new research [download page] from Dentsu Aegis Network confirms the importance that CMOs around the world are placing on data to power their growth initiatives. But not without risk…
The Dentsu Aegis CMO Survey examined the views of 1,000 CMOs and heads of marketing from 10 countries, half of whom are from companies with at least $500 million in annual revenues.
The CMOs were asked which of 5 strategic opportunities they foresee to be their biggest over the next 2-3 years. The largest share of respondents pointed to the ability to use data to reach real people, rather than proxies or customer segments, making this their single most strategic opportunity.
Indeed, roughly 8 in 10 consider the effective use of data to target real people as important to maximizing consumer engagement in the next 2-3 years. In this context, it’s encouraging to see that the majority of CMOs (ranging from a low of 66% of Automotive CMOs to a high of 90% of Capital Goods CMOs) agree that they have sufficient impact on the direction and delivery of their data strategy.
Data Presents Challenges and Risks, Too
While the opportunity offered by data-driven marketing is huge, it doesn’t come without its own challenges and risks.
For example, close to two-thirds of CMOs agree that while there is now more consumer data available, it’s harder to extract insight from it. Difficulties deriving meaningful insights from data (the subject of several reports – such as this one) appear to be especially large for CMOs in the Retail (74%), Pharma & Biotech (72%), Financial Services (71%) and Telco (70%) industries. By contrast, fewer than half of the CMOs surveyed in Healthcare (49%), Transport (46%) and Media (45%) agreed that it’s harder than before to derive insights from their data.
Beyond the challenge of making use of the data, there’s the privacy risk inherent in its use. When CMOs were asked which of 6 identified strategic risks they worry most about over the next 2-3 years, a clear winner (if it could be called that) emerged. Some 29% of respondents said that a data breach / misuse of consumer data is the strategic risk that worries them most, far ahead of the share (19%) selecting the next-biggest worry, increasing levels of competition.
Aside from the regulatory implications of a breach, there is also the loyalty aspect to consider for CMOs who are trying to foster more meaningful engagement with consumers. Recent reports suggest that a sizable share have boycotted a brand because it suffered a breach, an event that’s also considered by consumers to be one of the most damaging scenarios to a company’s reputation.
As for the regulatory side of data-driven marketing, 6 in 10 CMOs agreed that data protection legislation such as the GDPR will make it harder to build a direct relationship with their consumers. CMOs from the Financial Services (74%) industry felt the strongest about the impact of GDPR and other such regulation; these CMOs were also among those to be the most apt to have difficulties deriving insights from data.
Interestingly enough, while data protection regulation will make things more difficult to CMOs, it takes a backseat to other key barriers to building better consumer relationships. Chief among those are increasing levels of competition, though many also worry about consumers’ intolerance for advertising and information overload.
AI and Machine Learning to Drive More Efficient Spending
Meanwhile, returning to the strategic opportunities foreseen by CMOs in the coming 2-3 years, and another data-driven opportunity comes to the fore. Close behind the ability to use data to reach real people, the second-largest opportunity, as cited by 26% share of CMOs, is the potential of artificial intelligence, machine learning and blockchain to drive more efficient marketing spend.
Now, it’s just up to marketers to feel a bit more prepared…