We are creating more data each day than we created in entire decades or centuries in the past. How did we get here? Is it just a hype curve, an overfrothy bubble that will burst and then we will go back to good old small-sized structured data? Will social media keep buzzing? What if we do not find any way to make money from selling big data? Is there a crash coming? I have heard many doomsday scenarios about privacy, cost, overhyped sales promises, and boredom. Before we create a nice shiny picture of how marketing will be transformed by big data, it is important to examine the drivers for big data and the longevity of this tsunami.
In many ways, the foundation for big data was laid in the dot-com boom and bust. While some elements of big data may be overhyped today, the structure of society is fundamentally changing with big data. During the dot-com boom, telecom organizations bet on large capacities of dark fiber in anticipation of an all-electronic commerce vision. Since the dark fiber was available at an exorbitant sunk cost, the excessive supply of dark fiber crashed the costs of carrying bits from point A to point B. Storage companies invested heavily in faster and cheaper storage devices, leading to a major reduction of storage cost. The Internet for quite a while was the “World Wide Wait” as everyone rushed to mechanize their physical brochures, but then Google and Yahoo began to use their search engines to organize data. All in all, the dot-com boom and bust gave us the fundamental tools for big data, and told us the world had to be reengineered and not just mechanized.
Telecommunications executives often lament that their data transmission revenues have been capped due to an ultracompetitive marketplace, while the data carried by them has exponentially increased, leading to an unprecedented cost pressure on existing operations. Similar stories come out of media content and distribution companies— television producers, newspapers, magazines, and cable operators. In another way of viewing these changes, the combined market capitalization of Apple, Google, Amazon, and Facebook in 2013 exceeded $1 trillion, nearly all of it created in the last 20 years. Real-time bidding for online advertisements was unheard of ten years ago. Now it is more than half of online advertising business, which in turn is climbing to double digits in comparison with traditional advertising media as they lose their share of advertising revenue.
This chapter examines the market, social, and technological forces that have led to the data tsunami we see today. The chapter also examines the characteristics of big data and its use, and how it is different from the traditional data sources we have seen in the past. The lines of causality are never clear in retrospect. It may almost sound like a conspiracy theory, but we the marketers may have created the next wave. The time has come for the chief marketing officer (CMO) to come to the center stage.
So how are CMOs faring amid such turbulence? IBM conducted face-to-face interviews with 1,734 CMOs, spanning 19 industries and 64 countries, to find out what they are doing to help their enterprises cope with the fundamental shifts that are transforming business and the world. These interviews reveal that CMOs see four challenges as pervasive, universal game changers: the data explosion, social media, the proliferation of channels and devices, and shifting consumer demographics.1 These challenges are driven by a set of environmental factors. In this chapter, I will examine these factors and show how they create both challenges and opportunities for marketers.