Marketing Analytics: Meaning:

Marketing analytics comprises the processes and

technologies that enable marketers to evaluate the success of their marketing initiatives.
This is accomplished by measuring performance (e.g., blogging versus social media versus
channel communications). Marketing analytics uses important business metrics, such as
ROI, marketing attribution and overall marketing effectiveness. In other words, it tells you
how your marketing programs are really performing.

Marketing analytics gathers data from across all marketing channels and consolidates it into
a common marketing view. From this common view, you can extract analytical results that
can provide invaluable assistance in driving your marketing efforts forward.

Marketing Analytics is the process of using data collected from consumers and on
consumers to perform analysis. Marketing analytics is used to make key marketing
decisions, such as how much money to spend on advertising.

Characteristics of Marketing Analytics

1. Ensure high-quality data

Your analytics rest on your data. That means you need a tool that
mines both structured and unstructured customer data from all possible sources, including
various interactions and touch points.
2. Get real-time insights
Your marketing analytics solution also needs to deliver real-time
insights to you. You can’t be effective if your information is out-of-date; tracking the right
metrics at the right time is key.
3. Perfect your dashboard
While it may be tempting to track as many metrics as possible, your
analytics will not be as useful if you do. Rather, define your goals and measure results for
the use cases most important to you.
4. Choose the right analytics visualization
Marketing teams and stakeholders must be able to
make something of the data if you are to gain meaningful insights from it. The key is to
choose the most appropriate data visualizations so you can find patterns and interpret the
data. Thus, you must choose a marketing analytics solution that allows you to choose or
customize your visualizations instead of using default charts for displaying data.
5. Use a tool featuring machine learning and AI to predict and prescribe
Marketing must
be real-time and predictive to be effective today. You must be able to make accurate
predictions, analyze the data, and make data-driven decisions to enhance each step of the
customer journey.
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 Advantages of Marketing Analytics
1. Granular Segmentation
Marketing departments depend on the right segmenting to deliver
impactful messaging and relevant communications to leads and customers. After all, one
email that targets males aged 20–55 probably won’t incite as much engagement compared
to a message targeting a smaller age bracket, an audience with a shared interest or audience
with similar spending activity.
2. Tailored Messaging
Effective marketing has always been about persuasion. But instead of
trying to persuade the masses, marketing today is about delivering personalized messaging
and offers to both customers and potential customers alike.
Send something irrelevant to a lead and they’ll disregard the message and probably your
business along with it. Do the same thing to an active guest and they’ll think you’re not
paying close enough attention, damaging your rapport.
3. Multi-Channel Customer View
The more a marketing department interacts with leads and
customers, the better understanding they have of their audience base. This is especially
helpful in our digital age because, just like the preference of communication medium,
consumers tend to spend time in different places.
4. Marketing Analytics with Thought Spot
Leveraging a marketing data analytics tool offers
knowledge at scale for an entire marketing department and beyond. Platforms like Thought
Spot allow marketing teams to better segment audiences deliver tailored messaging and
gain a complete view of customers across channels.

Disadvantages of Marketing Analytics

1. Misidentifying Market Needs

You also may misidentify the need that is being met. Don’t
overlook the uniqueness of your own offering. Just because competition wants the same
customer you do, that doesn’t mean you are satisfying the same need.
2. Evaluating Market Growth without Market Share
Your marketing analysis will include
a look at how the overall market is growing, which can give you some idea of your range of
opportunities. If your analysis discourages you, however, it can be a disadvantage. You can
successfully compete in a limited market if you capture market share. An analysis of the
market size alone is not enough to indicate your opportunities. Improved market share can
compensate for a slow-growth market.

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3. Market Segmentation Versus Target Markets
You must identify the segments of the
market that have potential customers for your products or services. This will help you
understand the varied approaches you may need to take to reach different types of
customers. The downside is that you may spread yourself too thin. Few businesses can
afford to market to every single potential customer. Identify a target market that you choose
from among the available segments, and go after that target market in a focused manner.
4. Improper Interpretation of Data
A marketing analysis is only as good as the analyzer. You
can collect a lot of data in market surveys, but interpreting that data correctly is vital. You
will be at an extreme disadvantage if you misinterpret facts and make decisions based on
that misinterpretation. Run your analysis past a trusted adviser or two. Make sure your
analysis is not wishful thinking.
Primary Market Research
Primary research is research that is conducted by you, or someone you pay to do original
research on your behalf. In the case of primary research, you are generating your own data
from scratch as opposed to finding other people’s data. You might choose to gather this
data by running a survey, interviewing people, observing behavior, or by using some other
market research method.
Secondary Market Research
Sometimes called “desk research” (because it can be done from behind a desk), this
technique involves research and analysis of existing research and data; hence the name,
“secondary research.” Conducting secondary research may not be so glamorous, but it
often makes a lot of sense of start here. Why? Well, for one thing, secondary research is
often free. Second, data is increasingly available thanks to the Internet; the US Census and
the CDC (health data), for example, are two great sources of data that has already been
collected by someone else. Your job as a secondary researcher is to seek out these sources,
organize and apply the data to your specific project, and then summarize/visualize it in a
way that makes sense to you and your audience. So, that’s what secondary market research
is all about. The downside, of course, is that you may not be able to find secondary market
research information specific enough (or recent enough) for your objectives. If that’s the
case, you’ll need to conduct your own primary research.

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Sources of Secondary Data

Secondary data comes in all sorts of shapes and sizes. There are plenty of raw data sources
like the US Census, Data.gov, the stock market, and countless others. Internal company
data like customer details, sales figures, employee timecards, etc. can also be considered
secondary data. Published articles, including peer-reviewed journals, newspapers,
magazines, and even blog postings like this count as secondary data sources. Don’t forget
legal documents like patents and company annual filings. Social media data is a new source
of secondary data. For example, the New York Times collected Twitter traffic during the
2009 Super Bowl and produced this stunning visualization of comments throughout the
game. Secondary data is all around us and is more accessible than even. It is increasingly
possible to obtain behavioral data from secondary sources, which can be more powerful and
reliable than self-reported data (via surveys and focus groups).

The New Realities of Marketing Decision Making Market Sizing: Data Sources
Every business has a market. From businesses like Amazon, whose audience could be
anyone, to niche businesses selling specialized, custom products, knowing your market is
essential to establishing a successful business. Many organizations believe their product is
so novel or useful that their market is everyone, but more often than not, the customer base
will actually exclude certain demographics. If your product is extremely expensive, that
means the product is probably only going to be bought by people in a certain income
bracket. If your product can only be used in certain areas (like boats as opposed to cars),
you’ll likely only sell that product regionally. This is why it’s important to understand your

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 target audience and estimate your market size and type when setting up your business and
marketing plans.

Market Size

Market size can be simply defined as “the number of people likely to buy a product or
service.” Many businesses have a rough idea of who their market is or how many
individuals it might involve, but it’s important to accurately estimate market size in order to
plan for things like budgets, sales goals, marketing efforts, and staffing. Knowing how large
your market can be directly proportional to your business efforts. Using smart market size
estimation techniques is an important planning step.

How to Evaluate Market Size?

There are several kinds of market sizing techniques that businesses should consider and use
in their market size analysis. The most important step, before considering anything that will
help you estimate your market, is having good data that accurately paints the picture of the
marketplace or industry. Having good data and research is necessary to understanding how
to estimate your market size. Before working with any market size estimation techniques,
make sure you have solid information to draw from and analyze. With good data, you can:

 Look at the competition: Are you the only provider of your business or service locally?
Regionally? Nationally? This will tell you a lot about the potential size of your market. If
you have a lot of competition, you know you are competing with other businesses for
customers, effectively reducing or limiting your potential market.
 Understand your product: Be realistic about things that will affect who will buy your
product. Things like cost, usefulness, reliability, or availability will influence how many
people are truly in your market.
 Understand your customer: Similar to understanding your product, you must know
something about your customer when doing market size calculation. Are your customers
likely to be male? That tells you something about your market. Are they likely to be
college-educated? Found in cities? Make a certain salary a year? Knowing your target
customer always leads to helping you estimate your market size.

Estimating your market size is an important step in establishing and growing your business,
including planning budgets, forecasting goals, and creating marketing plans. In addition to
being something businesses should do as they launch, it should also be reevaluated
regularly as your business gains customers and recognition. Customer market size is never a
static thing and can grow, change, and shrink based on anything from the economy to
available technology, so always be mindful of market size for your business.

Data Sources

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Your selected approach will dictate the necessary sources to estimate market size.
Secondary research or desk research searches for existing data and is the most commonly
used form of research in this type of exercise because it is quicker to obtain and therefore
usually more cost effective. Through general web searching, a wealth of information can be
found at little or no cost. Subscription-based or syndicated research is a great place to start,
but there are also free sources that contain valuable information. Articles about companies
or products in the target market will often quote data from these sources. You might also
check whitepapers and product announcements for similar information. Publicly held
companies are required to share information in analyst and investor reports. Quarterly and
annual reports are typically available on these company websites as well as through the
SEC filings. Also, trade associations will often conduct market research and aggregate
industry data.

Primary research, also called field research, is often used in addition to secondary research.
The primary research can take on many forms and can strengthen your understanding of the
market, allowing you to make better informed assumptions. The most versatile form of
primary research is in-depth telephone interviews that can be used to capture more sensitive
information. If possible, on-site visits can be used to confirm or contradict market sizing
estimations or determine key information on market trends, such as technology, market
performance, relative competitive position or other information dealing with understanding
scope and defining the target market.

Stakeholders
A stakeholder is a party that has an interest in a company and can either affect or be
affected by the business. The primary stakeholders in a typical corporation are its investors,
employees, customers and suppliers. However, the modern theory of the idea goes beyond
this original notion to include additional stakeholders such as a community, government or
trade association.

Stakeholders can be internal or external. Internal stakeholders are people whose interest in a
company comes through a direct relationship, such as employment, ownership or
investment. External stakeholders are those people who do not directly work with a
company but are affected in some way by the actions and outcomes of said business.
Suppliers, creditors and public groups are all considered external stakeholders.

Internal Stakeholder

Investors are a common type of internal stakeholder and are greatly impacted by the
outcome of a business. If, for example, a venture capital firm decides to invest $5 million
into a technology startup in return for 10% equity and significant influence, the firm

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becomes an internal stakeholder of the startup. The return of the company’s investment
hinges on the success, or failure, of the startup, meaning it has a vested interest.

External Stakeholder

External stakeholders are a little harder to identify, seeing as they do not have a direct
relationship with the company. Instead, an external stakeholder is normally a person or
organization affected by the operations of the business. When a company goes over the
allowable limit of carbon emissions, for example, the town in which the company is located
is considered an external stakeholder because it is affected by the increased pollution.

Conversely, external stakeholders may also sometimes have a direct effect on a company
but are not directly tied to it. The government, for example, is an external stakeholder.
When it makes policy changes on carbon emissions, continuing from above, the decision
affects the operations of any business with increased levels of carbon.

Problems with Stakeholders

A common problem that arises with having numerous stakeholders in an enterprise is their
various self interests may not all be aligned. In fact, they may be in direct conflict. The
primary goal of a corporation, for example, from the viewpoint of its shareholders, is to
maximize profits and enhance shareholder value. Since labor costs are a critical input cost
for most companies, a company may seek to keep these costs under tight control. This
might have the effect of making another important group of stakeholders, its employees,
unhappy. The most efficient companies successfully manage the self-interests and
expectations of their stakeholders.

Stakeholders vs. Shareholders

Stakeholders are bound to a company with some type of vested interest, usually for a longer
term and for reasons of greater need. A shareholder, meanwhile, has a financial interest, but
a shareholder can sell a stock and buy different stock or keep the proceeds in cash; they do
not have a long-term need for the company and can get out at any time.

For example, if a company is performing poorly financially, the vendors in that company’s
supply chain might suffer if the company no longer uses their services. Similarly,
employees of the company, who are stakeholders and rely on it for income, might lose their
jobs. However, shareholders of the company can sell their stock and limit their losses.

Application and Approaches (Top-Down and Bottom-Up)

Top-Down

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Top-down analysis generally refers to using comprehensive factors as a basis for decision
making. The top-down approach will seek to identify the big picture and all of its
components. These components will usually be the driving force for the end goal.

Overall, top-down is commonly associated with the word macro or macroeconomics.

Macroeconomics itself is an area of economics that looks at the biggest factors affecting the
economy as a whole. These factors often include things like the federal funds rate,
unemployment rates, global and country-specific gross domestic product, and inflation
rates.

An analyst seeking a top-down perspective will want to look at how systematic factors are
affecting an outcome. In corporate finance, this can mean understanding how big picture
trends are affecting the entire industry. In budgeting, goal setting, and forecasting the same
concept can also apply to understand and manage the macro factors.

Top-Down Investing

In the investing world, top-down investors or investment strategies focus on the

macroeconomic environment and cycle. These types of investors usually want to balance
consumer discretionary investing against staples depending on the current economy.
Historically, discretionary stocks are known to follow economic cycles with consumers
buying more discretionary goods and services in expansions and less in contractions.

Consumer staples tend to offer viable investment opportunities through all types of
economic cycles since they include goods and services that remain in demand regardless of
the economy’s movement. Comprehensively, when an economy is expanding, discretionary
overweight can be relied on to produce returns. Alternatively, when an economy is
contracting or in a recession, top-down investors will usually overweight to havens and
staples.

Investment management firms and investment managers can focus an entire investment
strategy on top-down management that identifies investment trading opportunities purely
based on top-down macroeconomic variables. These funds can have a global or domestic
focus which also increases the complexity of the scope. Typically, these funds will be called
macro funds. Generally, they make portfolio decisions by looking at global then country-
level economics. They further refine the view to a particular sector, and then to the
individual companies within that sector.

Top-down investing strategies typically focus on profiting from opportunities that follow
market cycles while bottom-up approaches are more fundamental in nature.

Bottom-Up
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The bottom-up analysis takes a completely different approach. Generally, the bottom-up
approach will focus its analysis on specific characteristics and micro attributes of an
individual stock. In bottom-up investing concentration is on business-by-business or sector-
by-sector fundamentals. This analysis seeks to identify profitable opportunities through the
idiosyncrasies of a company’s attributes and its valuations in comparison to the market.

Bottom-up investing begins its research at the company level but does not stop there. These
analyses weigh company fundamentals heavily but also look at the sector, and
microeconomic factors as well. As such, bottom-up investing can be somewhat broad across
an entire industry or laser-focused on identifying key attributes.

Bottom-Up Investors

Most often, bottom-up investors are buy-and-hold investors who have a deep understanding
of a company’s fundamentals. Fund managers may also use a bottom-up methodology. For
example, a portfolio team may be tasked with a bottom-up investing approach within a
specified sector like technology. They are required to find the best investments using a
fundamental approach that identifies the companies with the best fundamental ratios or
industry leading attributes. They would then investigate those stocks in regards to macro
and global influences.

Metric focused smart-beta index funds are another example of bottom-up investing. Funds
like the AAM S&P 500 High Dividend Value ETF (SPDV) and the Schwab Fundamental
U.S. Large Company Index ETF (FNDX) focus on specific fundamental bottom-up
attributes that are expected to be key performance drivers.