As businesses become increasingly data driven, they are working to bring about a conscious change and optimise strategy management and resource allocation. One of the biggest investments of any big company is marketing and promotion, of which advertising is very often one of the more important components. Today we are seeing that even the advertising industry is joining the data revolution and beginning to use data to make smarter decisions. And even though using data analytics in the advertising industry can be very complex, it can solve serious business questions and maximize customer experience as well as profit. From better allocating advertising spend to more efficient budgeting, data once again seems to have all the answers.
To better understand how exactly data analytics can be used in the advertising industry, let’s look at a simple example. Supposing a company has invested a huge chunk of money in advertising for a particular brand. They spend most of the budget to air ads on TV, followed by Radio, Newspaper, Hoardings, Social Media, special offers, online marketing and so on. Now, what if the company wants to know which of the advertisements and marketing activity has done better, so that in future they can make better spend allocations, thus directly impacting budgeting and business? This is where Data Analytics comes in. They use the data at hand to understand how much return they are going to get on every dollar spent. Simply put, this is nothing but calculating the Return on Investment or the ROI.
Through a regression model, provided one has the necessary data, data scientists will be able to not only capture marketing/ advertising effectiveness but they will also be able to predict and forecast sales. In the above example, such a model will capture the effectiveness of the marketing activities on sales. Supposing the TV campaign and the Radio campaign are running parallel, this study will be able to capture how much of the sales were driven by the TV ad and Radio ad together as well as how much of the sales were driven by the TV ad per say vs. the Radio ad.
In real life, the marketing is very dynamic. Not only does a manufacturer need to deal with his own promotions but obviously the competitors are also advertising at the same time and he needs to consider that in his overall advertising strategy. Sometimes the manufacturer himself wants to promote his different brands together. But will that be optimal? How will it impact his sales, revenue and ultimately profit and ROI? These questions can be answered best by analysing the available data, using sophisticated statistical techniques and tools such as SAS, R and SPSS.
We must remember that Data analytics is widely consumer driven. Wherever one needs to derive insights to enhance the customer base, influence their decisions, or for retention and expansion, and there is available data, analytics can be used. In the coming months we will definitely witness several innovations in the data analytics space which could impact the way business is conducted in the advertising industry. Watch this space for further updates….
Found this article interesting? Want to learn about other industries that are using data analytics? Take a look at the article How Online Retailers can use Analytics by Jigsaw trainer Kiran PV.