How to approach decision making based on data

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How should we be using data in digital marketing (and wider business matters) to inform our strategies and goals? Sarah Clarke explores in her latest article.

The importance of data in digital marketing (and taking it with a pinch of salt!)

Digital marketing and data analytics are a seamless match which, on paper should lead to endless year-on-year uplift and an ever-evolving picture of consumer behaviour. Performance marketing is built on data – because of course, without data, brands would have nothing to report back on and without anything to report back on, how do we know our digital marketing activity is working? 

This means that data ultimately rules in the brains of marketers, with KPIs taking front and centre in updates, reports and strategy. That is not to say that this shouldn’t be the case, but sometimes we need to exercise caution and take data with a pinch of salt, especially when attributing meaning or doing any decision making based on data.

Why do we need to be careful with data interpretations?

One of the most dangerous things to do when looking at data is to make sweeping generalisations. Our general nature is to construct a clear story which makes sense and fits either a hypothesis or the testing that has been conducted and, sometimes, this means important elements of the data are overlooked.

There is also a challenge that has become more prevalent over the last few years, where lots of marketers have learned that the past is not always the best prediction of the future. Nearly every year since the COVID-19 pandemic has been referred to as ‘unprecedented’, meaning the validity and reliability of YoY comparisons have been challenging. It means we have been left doing 2022 vs 2019 comparisons in some cases, which do not reflect the situation we’re currently in.

The other risk with data analysis is compounded by the fact that we’re surrounded by data all the time. This means we are constantly searching for trends and conclusions and, when we combine this with already having a story that we want the data to show, we’re then more likely to fit the data into this narrative, rather than reviewing the data without considering the end story.

Where can we see decision making based on data in real life?

One real life example of this is with car colours and how correlations in data can lead to some interesting stories.

Red Cars vs. Grey Cars

Red cars are the most dangerous car to drive, with grey being the least accident-prone. When looking at this at first glance, you might think it’s a strange trend, as red cars are brighter and more visible and stand-out more than grey cars, so how are they involved in more accidents?

To understand, it requires a little bit of psychology and understanding human behaviour, which suggests that people are much more likely to buy sports cars in red as opposed to family saloon cars. People who buy sports cars are completely different in terms of their behaviour. Typically, if someone buys a sports car, they tend to be younger, but also have likely bought the car for a specific reason and this produces a specific behaviour. They may be less likely to practice defensive driving, and more inclined to test their vehicle's speed capabilities than focus on safety.

What is interesting about this data is that, at first glance, you may draw the right conclusion (based on the type of cars likely to be red), but may also draw the wrong conclusion (red cars being more visible) and run with that, which then takes you down an unexpected path.

What is the impact on digital marketing?

The challenge with digital marketing is that no matter how often we plan, strategise and implement, we don’t know the future and a large proportion of all future customers will be unknown to brands and advertisers. We therefore need to be cautious and thoughtful when using data in digital marketing.

Customer journey paths are getting longer, brand loyalty is becoming stronger, and retention needs to be considered alongside acquisition. However, we often fall into the trap of avoiding ideas, strategies, and approaches where the results are not instantly quantifiable and give us validation through quick-wins. The danger of being so focused on using data in digital marketing brings out the probabilistic and measurable side.

In turn, this means most of the time, we’re vastly overweighting digital marketing activity that is close to the point of purchase, because we can measure it and attribute it back to the source, whilst underweighting longer-term digital marketing activity where the effects are more broad and less defined in terms of their impact.

This isn’t to say that conversion focused, short-term promotional activity is a bad thing because we use the marketing funnel. There isn’t much point in continuing to add people to the top of the funnel, if the bottom of the funnel isn’t optimised, as the broader efforts will end up going to waste. Ultimately though, the goal of marketing is to get people who didn’t know about your brand, product or service to purchase and a lot of this means touchpoints and digital marketing actions which aren’t instantly, directly attributable, but contribute to the overall journey.

This is also where creativity comes in. Although we can optimise, strategise, and plan against what we know, sometimes the most interesting and successful ideas are based on something we don’t know or haven’t experienced before.

Sometimes we fall into the trap of marketing to the people who are most valuable and attributable to our activity, as opposed to those who are the most valuable to the brand and the business. Sometimes we have to take a risk and try something we haven’t tried before, to an audience we haven’t directly spoken to before, to generate success.

So what can we take from this?

Being a performance marketer through and through, one of the biggest reasons I settled into paid advertising was due to the measurable nature of the activity and I still agree that being able to see the performance of activity is the greatest side-effect of digital marketing. However, remembering to take this data with a pinch of salt, reviewing it with an unbiased lens and taking both the short-term and long-term performance into consideration is the best way to ensure data is being used to super-charge your activity.

If you’d like to speak to our experts about digital marketing and data analytics, and discover how you can make sense of your data, get in touch here

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Photo by Lance Asper on Unsplash

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