Data-driven marketing is a strategy in which marketers use statistics and metrics to assess the effectiveness of marketing campaigns and help make better decisions about future campaigns.
Before the creation of the Internet, advertising data was much harder to come by. Determining how many people saw a newspaper or television advertisement required estimations, based on consumer panels assembled by research companies. With today’s digital advertising, discrete and granular data is captured about every impression, click and conversion.
Data-driven marketing utilizes a customer feedback loop to improve the effectiveness of digital marketing campaigns. First, digital marketers instrument campaigns to capture key metrics, such as impressions, clicks, conversions and conversion rate. Marketers assess the quality of those metrics across advertising campaigns, content types and content topics. These assessments result in insights, which are fed into future campaigns, thus creating a continuous loop.
Data-driven marketing is used by all marketers who have access to meaningful data about their campaigns. Predominantly, data-driven marketing is practiced by digital marketers, given the vast amount of data available from digital marketing campaigns.
Offline campaigns can still use a data-driven approach, however. For instance, billboard advertising (also known as out-of-home advertising), can utilize data, such as how many cars drove by in a given month, to gauge the effectiveness of current campaigns and make decisions about future ones.
Tools for data driven marketing insight
While small-scale data-driven marketing is possible by manually tracking metrics, large-scale data-driven marketing requires automation provided by software systems. These systems include marketing automation platforms (MAP) and customer relationship management (CRM) systems.
Marketing automation platforms track customers’ activity data, which is then associated with customers’ records in a customer relationship management system. Popular marketing automation vendors include HubSpot, Marketo, Pardot, ActiveCampaign and SharpSpring.
Why data-driven marketing is important
In the past, marketers planned future campaigns based on anecdotal feedback or based on intuition. Data-driven marketing is important because it uses real-world evidence such as data, collected at scale, to tell marketers what’s working and what isn’t. This helps marketers increase the effectiveness of future campaigns.
A famous example of data-driven marketing took place in early 2014 when Google ran experiments on which shade of blue was most likely to encourage users to click on a link. They gauged which shades users liked most based on how many times they clicked on them. Using the collected data, Google found that a slightly more purple shade of blue had a high clickthrough rate than a greener shade of blue. As a result of their findings, the switch to the more popular shade of blue increased their ad revenue by $200 million a year.