We see a paradox in two important analytics trends. The most recent results from The CMO Survey conducted by Duke University’s Fuqua School of Business and sponsored by Deloitte LLP and the American Marketing Association reports that the percentage of marketing budgets companies plan to allocate to analytics over the next three years will increase from 5.8% to 17.3%—a whopping 198% increase. These increases are expected despite the fact that top marketers report that the effect of analytics on company-wide performance remains modest, with an average performance score of 4.1 on a seven-point scale, where 1=not at all effective and 7=highly effective. More importantly, this performance impact has shown little increase over the last five years, when it was rated 3.8 on the same scale.
Why Marketing Analytics Hasn’t Lived Up to Its Promise
Research indicates that the percentage of marketing budgets companies plan to allocate to analytics over the next three years will increase from 5.8% to 17.3% — a 198% increase. These increases are expected despite witnessing only a 3.1% increase in the actual impact of analytics over the past five years. How can it be that firms have not seen any increase in how analytics contribute to company performance, but are nonetheless planning to increase spending so dramatically? Two competing forces explain this discrepancy—the data used in analytics and the analyst talent producing it. Companies face an unprecedented opportunity to delight their customers by delivering the right products and services to the right people at the right time and the right format, location, devices, and channels. Realizing that potential and the associated performance benefits, however, requires a proactive and strategic approach to marketing analytics. This promise is achievable but companies need to invest in the right mix of data, systems, and people to realize these gains.
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