Big data, algorithms and the future of advertising

Big data has and will change how advertisers work and businesses market.

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There are plenty of words online about how big data will change every facet of our lives, and a substantial chunk of those words are devoted towards how big data will affect advertising. But instead of haphazardly leaping on the change bandwagon, advertisers need to sit down and understand what big data has changed and yet what still remains the same.

At its core, advertising is about communication as it seeks to inform consumers about a business’s product and services. But different consumers want to hear different messages, which becomes all the more important as new customers join the internet thanks to the growing popularity of mobile.

Big data can refine those messages, predict what customers want to hear with predictive analytics, and yield new insights in what customers want to hear. All of this is certainly revolutionary and will change how consumers and marketers approach advertising. But it will still be up to advertisers to create messages in the name of their clients.

Algorithms and targeting

Some things which many people do not think about as advertising are in fact a conflation of big data and marketing. Netflix is a terrific example of this. Netflix obviously does not have advertisements, but it heavily relies on algorithms to recommend shows to its viewers. These algorithms save Netflix $1 billion per year by reducing the churn rate and marketing the right shows to the right customers.

Netflix’s efforts to target consumers with the right shows is hardly unusual, as websites and online stores like YouTube, Amazon, or Steam do this all the time these days. But the key here is the reliance on algorithms to make targeting more accurate.

These algorithms require a constant stream of data to stay up to date. But now that data is everywhere. Internet users leave a constant stream of data not just on social media websites, but anywhere they go in the form of digital footprints.

This represents new opportunities and challenges for advertisers. On one hand, the digital footprints which everyone creates offers new insights to advertisers into what we truly want which can be more accurate than what we say on social media. But at the same time, advertisers do have to worry about protecting consumer privacy and security. This is not just a moral thing; advertisers or websites that are flagrantly cavalier with their user data will spark a backlash that will hurt business.

Advertising targeting has already been in place for some time now. But as advertisers collect more data, targeting will become more personalized and thus effective. Advertisers will fight not just to collect as much data as possible, but to collect data which accurately represents individual customers to market to their individual tastes.

Changing forms of advertising

Big data can uncover new information about each individual customer, but the advertiser must craft a message to appeal to said customer. But with these new insights, advertisers can entirely change how they approach marketing as they craft entirely new strategies.

This is not completely new. The rise in content marketing is often cited as a major beneficiary of big data, but content marketing as a concept is older than the Internet. Nevertheless, the rise in content marketing as well as other strategies like native advertising or the endless dance around search engine optimization.

These rising advertising strategies are fascinating because just as advertisers rely on data to craft new strategies, they give data right back to the consumer. Content marketing is all about giving consumers details about a business such as how they make food, what it is like to work there, and so on. By sharing this data, the company makes the customers feel like they are part of a group which knows common information. And in turn the customer ends up giving up his data to the company which lets it construct new advertising strategies.

This symbiosis between consumer and company shows that data is not just about cold analytics, but is about creating a bond between the two groups like all advertising sets out to do. Similarly, businesses must take the complexity of big data, analyze trends, and then create simple guidelines which their customer staff can use. All the advertising in the world will not make as big of an impression on a customer as one surly or confused customer representative.

Big data has and will change how advertisers work and businesses market to consumers through more personalized and targeted advertisement as well as creating new forms of advertising. But big data is less important than smart data and strategy. Business leaders who can break big data down into small chunks, come up with a smart strategy, and formulate an effective message will still thrive just as much as they would have in the past. In this way, big data is not quite the revolutionary change that many think.

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