Data-Driven Marketing: What Is Data-Driven Marketing?

Data-driven marketing is a type of marketing strategy informed by customer data. Through the use of internal data collection and purchased third-party data, today's corporate strategists have myriad tools for crafting marketing messages, observing customer behavior, and steering their digital marketing campaigns.

In previous generations, traditional marketing campaigns may have lacked data analytics tools and customized algorithms, but they still had ways to reach new customers, inform them of new products, and entice them to make a purchase. Consider some of the core differences between traditional marketers and today's data-driven marketers.

• Traditional marketing: Traditional marketing focuses on a combination of commissioned market studies and marketers’ expertise. A study is a marketing tool that often involves focus groups, customer experience surveys, and an analysis of past sales trends. When it comes to crafting the right message for a target audience, traditional marketing teams combine such study information with their own instincts and anecdotal experiences. Traditional marketing has been immensely successful for countless brands, and it remains popular to this day.
• Data-driven marketing: Data-driven marketing involves drawing upon the vast amount of data collected over the internet to define a marketing strategy. Marketing data can be found in media channels ranging from web browsers to phone networks to smart TVs and routers. Companies may spend chunks of their marketing budgets establishing data sources, analyzing data sets, and basing their decision-making around this collected data. This can help them optimize their use of online marketing channels, email campaigns, and search engine optimization (SEO) with the hopes of reaching the right customer demographics and improving conversion rates.

New data marketing tools offer companies many new avenues for reaching the right kind of customers.

1. 1. Real-time feedback: Companies can launch marketing campaigns and, through the use of marketing analytics tools, see real-time visualizations of customers interacting with those campaigns.
2. 2. Easy to try different marketing options: Thanks to data-driven marketing, companies can draft two different marketing templates and conduct A/B testing to see which version leads to more customer interactions and customer conversions.
3. 3. The option to track a customer journey: E-commerce marketers can use custom URLs to see how customers are reaching their websites. This is a form of marketing attribution; the URLs can tell marketers whether customers are clicking on banner ads, email marketing links, or hyperlinks in articles—among other options.
4. 4. The ability to create personalized experiences: Many data-driven marketers use customer relationship management (CRM) software to track the full customer journey of individual clients. Marketers can quickly see how the customer first interacted with the company, their purchase history, and notable demographic information. By knowing its exact marketing audience, the company’s odds of customer retention increase.

While data-driven marketing has revolutionized commerce, it does come with certain drawbacks.

1. 1. Flaws in marketing automation: It’s possible for banner ads or promoted social media posts to feel irrelevant to some targeted consumers. These issues often trace back to automated marketing campaigns that miss the mark on consumer metrics. Data-driven marketing often requires human oversight to truly succeed.
2. 2. Not sufficient for organic reach: Some companies find that the best way to reach interested customers is via content marketing, where the business provides consumers useful online tools like articles, videos, and podcasts on topics that they care about. High-quality content marketing requires creativity and sustained human effort—something a data-driven marketing algorithm cannot yet provide.
3. 3. Not a substitute for a great product: Some of the most valuable marketing comes via word of mouth, as friends tell friends about high-quality products and services. It’s important to supplement data automation with strong customer relationships by providing excellent products and customer service.

To see how the right data-driven marketing strategy can improve marketing reach and customer engagement, consider the following examples.

1. 1. Targeted ad buys: Large online platforms have amassed gigantic data troves about their users. Businesses can use this data to run customized ad campaigns laser-focused toward certain demographics, personas, and interests. Successful data analysis should lead to new customer acquisition, but if it does not, businesses can recalibrate their marketing outreach and try retargeting toward a different type of customer.
2. 2. Replicating past success: A company may review its sales data points and find that it has traditionally recorded more sales on weekends than on weekdays. Knowing this, it can plan a series of marketing initiatives that run from Fridays through Sundays.
3. 3. Creating customer profiles: As a company gains more insight into its existing customers, it can begin creating customer profiles of its target audience. The company can use demographic touchpoints like age, gender, geography, political preferences, and hobbies to describe the kind of person who would potentially buy their products. It can then launch targeted marketing campaigns to reach more of the same people.

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