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Spotty Analytics Usage in the Era of Data-Driven Business

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Analytics might be a term on the tip of every marketer’s tongue these days, but results from the February 2015 CMO Survey make it clear that using marketing analytics remains a challenge for companies and, in fact, analytics usage appears to be infrequent.

The CMO Survey, conducted by Duke University in partnership with the AMA, finds that marketing budgets are expected to increase at the highest rate in three years, and a major component of this growth reflects the spending on marketing analytics, which is currently 6.4% of marketing budgets and is expected to grow to 11.7% by 2018.

At the same time, companies are not using all of the data that they have, and report lower than expected levels of contribution for this strategic investment. In fact, survey findings indicate that the percent of projects using available or requested marketing analytics has decreased over time, with respondents to this latest survey indicating that only 22% of their projects use marketing analytics, down from 37% in 2012, the first time that this question was asked. Given this decrease, it is not surprising that marketing leaders also rate the contribution of marketing analytics to their company’s performance as decreasing, as well.

The CMO Survey asked marketing leaders to rate four possible reasons that prevent their companies from using more marketing analytics: “Marketing analytics do not offer sufficient insight,” “do not arrive when needed,” “are overly complex” and “are not highly relevant to our decisions.” Although all of the reasons were rated as occurring at nearly equal rates, I used these responses to predict reported marketing analytics’ usage levels in companies.

Results from this analysis indicate that when marketing analytics are deemed insightful, usage levels are 33% compared with a 22% rate for analytics application when analytics are considered not insightful. Likewise, when they’re deemed to be relevant, marketing analytics usage levels are 36%, versus 12% when analytics are not relevant. Both findings are logical enough, but it’s interesting to note that neither complexity, nor timing has a statistically significant effect on usage levels.

Improving the relevance and insightfulness of marketing analytics requires, most fundamentally, improving the relationship between users and providers. In many organizations, analysts do not work closely enough with product, brand, customer or sales managers to derive an understanding of their most important or interesting questions for managing their businesses.

One reason for this problem lies in organizational structure and the lack of proximity that it creates between managers and analysts. Marketing analytics personnel often are located in corporate functions and managers are located in business units. Co-locating providers and users of marketing analytics can help—either by making them physically proximate, or by requiring that analysts spend a certain amount of their time with the decision makers who use their work.

Another reason for this problem is that analysts often are focused on the numbers and not on managers’ strategy questions. To make matters worse, many managers do not know a slope from an intercept and often do not ask good questions.

The best analysts can turn complex research reports into actionable insights, and the best managers can crunch some numbers and guide analysts in their work to make marketing analytics a valuable strategic asset for their companies.

 

Christine Moorman is director of The CMO Survey and the T. Austin Finch Sr. Professor of Business Administration at Duke University’s Fuqua School of Business. To access the full findings from The CMO Survey, visit CMOSurvey.org.

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