Even if you're not familiar with the term "data-driven marketing," there's a good chance you've used this strategy before.
The practice of using customer information to develop targeted advertising has sparked a new age of online marketing — helping marketers connect customers with products and services like never before. Market Thunder estimated that $20 billion is spent annually on this type of marketing. In recent years, that money has caused seismic shifts in the digital marketing world, which affect both how we reach customers today and how we will in the future.
Customer Behavior Leads the Way
Presently, customers know that the ads they're seeing are based on their own history of interests, and data increasingly shows that not only are they fine with data-driven marketing, but they expect it. According to Accenture Interactive, "75 percent of [customers] are more likely to buy from retailers that" recognize them by name, know their purchase history and recommend options based on their recent purchases.
In the past, businesses worried that personalized advertising might scare off customers who were concerned about their privacy, but it seems that in the social media age, the most effective ads are those guided by customer behavior. Content that is increasingly unique to the user is gaining traction in the present-day marketing world.
The Rise of Split Testing
Split testing uses minor content changes to test how competing ads perform against each other. It's a simple strategy for ad optimization and has become an essential tool, assuming a central role in data-driven marketing.
The Drum highlighted Netflix as an example of a company that has seen significant returns from the extensive use of split testing. The streaming giant has used A/B testing of images among selected subscribers — to see which ones attract the most viewers — before rolling them out to all members. Although this seems too easy to be true, Netflix reported that the strategy has led to a 20-30 percent increase in video viewing on the service. That's a massive shift, and it shows just how crucial this type of testing can be when crafting content with a data-driven marketing strategy.
Predictive Behavior and the Future
Though much of today's data-driven world is still focused on mining current behavior to make short-term forecasts, predictive analytics tools are getting better at using advanced modeling and statistics to predict longer-term customer behavior. Retargeting works well when attempting to influence customers to convert in the days after viewing a specific product or service.
But in the future, marketers will be able to pull additional data from multiple sources that will inform decisions regarding what ads will be most effective for a specific product at a particular time — almost completely eradicating wasted capital. While we don't yet have such a holistic tool, predictive technology is constantly being improved, and it's possible that this evolution will be completed in just a few years.
The world of data-driven marketing is changing every day. While learning from the past, marketers must also look toward the future to guide their decisions and better serve their customers.