I n t e l l e c t u a l c a p I ta l f r o m o g I lv y auguSt 2009
The New Landscape of Marketing Analytics
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Introduction Over the last two years, we have witnessed the publication of a number of books that describe the revolutionary impact that mathematics is having on all aspects of everyday life, from online dating, shopping,wine tasting, baseball and gambling to health care, antiterrorism initiatives, human resources management and marketing. In Super Crunchers, Ian Ayres describes how companies such as Capital One and Harrah’s use advanced mathematical techniques on large volumes of data to optimize their marketing efforts.1 In Competing on Analytics, Thomas H. Davenport and Jeanne G. Harris demonstrate how some ofthese companies are now using analytics to create a real competitive advantage.2 And Stephen Baker’s The Numerati describes a new breed of mathematicians who are “in a position to rule the information of our lives.”3 These are just a few examples of the many recent publications that have created a real buzz around Math Marketing. This paper provides a practical view of the Math Marketing landscapetoday. It first describes a brief history of Math Marketing, and shows that some of its techniques have been around for a long time and how the large volumes of data generated in today’s digital world have dramatically increased their potential. It then looks at some of the Math Marketing challenges that lie ahead. They come in the form of fragmentation, myopia, data deluge and a talent crunch.The next chapter describes some of the organizational issues
C2 companies face in trying to build their Math Marketing skills. This includes
an overview of the different Math Marketing players and a description of what companies should look for when searching out Math Marketing partners. The last chapter has a series of practical tips that can help companies use Math Marketing to improve theaccountability of their marketing efforts and generate powerful insights.
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The First Era of Math Marketing
The Early Days of Direct Response
It’s probably fair to assume that Math Marketing started soon after the invention of the first direct response campaigns. The first mail-order catalog was invented by Aaron Montgomery Ward in1872, and it was copied by Richard Sears and Alvah Roebuck in 1886. While there is no real evidence of how the early catalog pioneers measured their success and optimized their catalogs are around today suggests they probably did a good job at it! Claude Hopkins’ Scientific Advertising (1923) was one of the first Math Marketing books. It opens with the following words: “The time has come whenadvertising has in some hands reached the status of a science. It is based on fixed principles and is reasonably exact. The causes and effects have been analyzed until they are well understood. The correct methods of procedure have been proved and established. We know what is most effective, and we act on basic laws.” Hopkins and, later, John Caples—with his Tested Advertising Methods (1932)—wrotemainly about mail-order and other direct response vehicles.5 They measured what was easy to measure and therefore focused mainly on short-term effects. Unfortunately, from a measurability POV, the primary focus of marketing efforts would soon be directed toward mass media, and hence new techniques would be required to maintain the same levels of marketing accountability.
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operations, they had the ability to do so, and the fact that both
Math Marketing History
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The Second Era of Math Marketing
Mass Marketing Effectiveness
The first applications of more advanced mathematical techniques in marketing can be traced back...