Big data has come to advertising. Marketers use computers and algorithms to collect and analyze reams of data on customer behavior. That information is funneled into sophisticated software that can, in real time, adjust online ad design to the preferences of specific browsers in order to maximize the chance of a sale.
Big data can be and is powerful. But marketers must avoid becoming overly dependent on it. There are important complexities within the human character that no computer can comprehend and there's more to marketing than math. It takes a level of creativity that only humans possess to interpret big data and make it meaningful.
Big Data Alone Doesn't Mean Bigger Sales
Research from my company, Adobe, shows that companies that embrace creative marketing are 3.5 times more likely to see their annual sales revenue grow by 10 percent or more compared with companies that exclusively rely on big data. Buyers' behavior isn't always rational. People make strange decisions that defy neat algorithmic understanding. Often, customers are not simply looking for the highest-quality product for the lowest possible price. Indeed, the burgeoning field of behavioral economics is revealing on an almost daily basis how irrational consumers can be—and how seemingly irrelevant factors can influence purchasing decisions. Savvy marketing adapts to these nuances.
Take, for instance, an ad commissioned by The Economist. It marketed an online-only subscription to the magazine for $59, a print-only subscription for $125, and a combined print-and-web subscription for ... $125. Those offerings defy logic. Why let subscribers pay the same amount for print-only as for both print and Web? But this pricing scheme was designed to make the combination more appealing. It worked. Subscriptions increased, and The Economist secured its position as one of the few profitable newsweeklies.
There are similar quirks when it comes to choice. A strictly rational marketing approach would call for providing customers with as many options as possible in order to maximize the chance that they'll see something they like, but there is such a thing as too much choice. People can feel overwhelmed—and decline to buy anything at all.
One study compared a group of customers selecting from 24 types of gourmet jams with a group choosing from just six. The former were 90 percent less likely to make a purchase. Marketing based solely on big data may fail to account for such behavior.
Finally, big data can never replace the very human work of establishing an individual, emotional connection with a customer.
A landmark 1993 Harvard Business Review article coined a term for this connection: "customer intimacy." Researchers looked at a protocol at Home Depot that encouraged clerks to spend as long as necessary with guests to make sure they found the right product, even if the sale in the end was minimal. Home Depot doesn't just sell products. By spending so much time with each customer, the retailer is also selling the information and service its shoppers are demanding. That kind of personalized attention engendered fierce loyalty to the Home Depot brand—loyalty that translates to profit. Tellingly, when Home Depot replaced knowledgeable employees with part-timers, it hurt sales—and Home Depot is trying to fix the problem by, guess what, having clerks once again spend more time with customers.)
Marketing In 2025
Even in a world of supercomputers and powerful software, human creativity still has a crucial role to play in marketing. The advertising strategies of the future will incorporate the best of both worlds, coupling sophisticated technology with old-fashioned intuition. Such an approach may require companies to fundamentally rethink core parts of their business.
Take, for instance, the design of brick-and-mortar stores. Despite the rising popularity of e-commerce, customers still value the physical retail experience. Eighty-five percent actually prefer brick-and-mortar-stores to online retail. People don't want to choose between online and offline shopping. They want both. Research indicates that 72 percent of millennials research and shop their options online before going to a store or the mall.
There's a real hunger for a quality in-store experience. Yet most retail businesses don't deliver one. For years, they've stuck with the same uninspired flyers and television commercials—as well as the same old layout, with row after row of barely organized products. Creative firms could enhance the in-store experience to drive sales. For instance, they could develop a smartphone app that allows users to navigate stores and compare features of specific products. That's the best of both worlds.
The marketing of the future will couple the best of big data with the best of human intuition. That's the formula for establishing long-term customer loyalty in an ever-more competitive marketplace.