FEATURE11 October 2011

Understanding IBM’s big analytics bet

An IBM study finds chief marketing officers unprepared to deal with the data explosion caused by social media. Just as well, then, that the company has invested $14bn in buying analytics businesses. How can market researchers hope to compete?


It’s a fairly substantial bet the company has made, investing some $14bn in acquiring analytics-focused companies, including the likes of Unica, a marketing automation firm, web analytics provider Coremetrics and analytics software developer SPSS.

These acquisitions are designed to meet the needs of CMOs who feel that they are unprepared for the deluge of data that flows from social media and the huge growth in the number of communications channels.

IBM says that to succeed in ‘the age of the smarter consumer’ requires companies to have a much sharper focus on understanding their customers as individuals – not as markets

Marcel Holsheimer, a former Unica and SPSS executive now working in the enterprise marketing management division of IBM, describes the world today as one that offers up as many threats as opportunities for companies. Failing to adapt your business to the online world could mean eventual demise, he says, but embracing Facebook and Twitter and heavy-duty analytics tools offers new avenues for growth.

All this data is “a great asset for companies once they are able to use it properly,” says Holsheimer.

But reaching that level of capability is a challenge in itself. To succeed in what Holsheimer calles “the age of the smarter consumer” requires companies to have a much sharper focus on understanding their customers and prospects as individuals – not as markets.

In IBM’s survey, 14 out of the 19 sources of data used by CMOs to influence strategy provide a market-level understanding – things like market research, competitive benchmarking and campaign analysis. The sources IBM sees as important for understanding individuals – analysing consumer generated reviews, blog posts and online communications – appear much further down the most-used list with only customer analytics ranking in the top five.

“CMOs are still reaching out to traditional sources which they have been using for many years,” says Elaine Fletcher, an IBM global business services partner, “but I think we will see a different picture in two or three years.”

Asked about the technologies they plan to invest in, over 80% of CMOs cited social media, customer analytics, customer relationship management and mobile applications. “Marketing is becoming much more of a technology play than it was in the past,” says Holsheimer – and technology is clearly an area IBM knows well. He sees a future where software is put to use in ways to make marketing “so good it feels like a service”. Examples in use today include the analytics tools that allow online retailers to make product recommendations to customers based on their own buying habits and those of similar customers; or the bricks-and-mortar retailers that dispense personalised coupons based on purchase history.

CMOs aren’t personally looking to become experts in either social media or technology, preferring instead to hire in staff or partner with organisations that have those capabilities

Holsheimer goes further and suggests a company might follow up and offer help and advice to a customer who drops out half-way through completing an online form, or where a web user who visits a bank’s mortgage site a certain number of times can be presented with a personalised offer that might bring in a sale.

Such a vision might be welcomed by some, while making others shudder – though you could argue that knowing your customers well enough means knowing when those types of tactics are likely to succeed or backfire.

In among all this, there will still be a place for market research, Fletcher reckons, but it’ll be in providing companies with the macro view, rather than the micro.

Researchers, however, might resist such pigeonholing. CMOs aren’t personally looking to become experts in either social media or technology, preferring instead to hire in staff or partner with organisations that have those capabilities. This is particularly true of ‘customer and data analytics’ and ‘tracking and measurement’, where respectively 92% and 54% of CMOs expect to increase their use of external resources over the next three-to-five years.

But of course that’s ground IBM is looking to occupy. And going up against Big Blue is not an option many firms would relish.

  • IBM’s Global Chief Marketing Officer Study is based on hour-long face-to-face interviews with 1,734 CMOs from around the globe. Click here to download a copy.


13 years ago

A major part of any campaign analysis to understand ROI is, and will increasingly be, online analytics, making the collation of data fundamental to measurement and evaluation – and essentially marketing strategies as a whole. Fuel are finding marketing departments are being challenged to prove to the CFO and the board of directors that campaigns are working and the effect that marketing is having on the bottom line. If the evidence is not there then what is the commercial reason for a CFO and a board of directors to sign off more budget. Where measurement and evaluation strategies, along with the mechanics of these, have not been put in place at the beginning of the campaign, the only way to analyse the full campaign effect is by doing a very detailed analysis diving deep into the business – something that is both time-consuming and costly. To gain a true insight, web metrics need to be combined with business metrics such as revenue and lifetime value. There is currently no “off the shelf” solution for directly linking offline to online behaviour, although a lot of data can be gained through methods including QR codes, coupons and phone tracking. As we move away from “last click” towards “multi-touch”, so the need for expert analysis becomes even greater. By addressing the measurement and evaluation strategy before the start of any campaign, along with agreeing with all parties on how they define success, all future budget sign-off and measurement of success will be better achievable.

Like Report

13 years ago

I could not have said it better myself, Edmund. It seems that the CMO's job is evolving into one that makes the case that offline behavior is being affected by online behavior. How its being affected and to what degree it is being affected is also part of the CMO's new job description.

Like Report

13 years ago

The kind of holistic campaign measurement being described is the holy grail of marketing right now. It sounds so alluringly simple! Unfortunately the world can be more complex - e.g. in mature categories heavy advertising might be what is required just to hold share. Unless this is framed correctly a CFO might see that as a reason to cut the budget, which could be disastrous. Agree with Edmund therefore that success measures therefore need to be agreed upfront.

Like Report