Data driven marketing is an economy of its own. Marketing is essential to business and data is essential to marketing. Every business in America relies on data-driven marketing to survive and prosper. The new “The Value of Data, Consequences for Insight, Innovation and Efficiency in the U.S. Economy,” study commissioned by Data-Driven Marketing Institute and authored by Professors John Deighton of Harvard Business School and Peter Johnson of Columbia University.
An overview of the study and its methodology and findings was presented in a policy forum hosted by DMA at the National Press Club in Washington, DC this morning (October 29, 2013). This was the first time that the findings were used in context of a policy discussion.
The study was commissioned to answer two key questions, said Rachel Thomas, executive director of DDMI:
The study found that the Data-Driven Marketing Economy (DDME) added $156 billion in revenue to the U.S. economy and fueled more than 675,000 jobs in 2012. Importantly, the real value of data is in its exchange across the DDME. It found that 70% of the value of the DDME – $110 billion in revenue and 478,000 jobs – depends on the ability of firms to exchange data across the DDME.
“There is an enormous amount of data that we DIDN’T look at,” Professor Deighton said. “They are essential, but they don’t form part of what we investigated here. We looked at data that makes markets work – connecting buyers and sellers. We looked at companies that could play a role between producers of goods and sellers of services that support the use of data.”
About 650 companies – large and small – were identified, he said. About 10% of them (65) were interviewed for the report. “We found two kinds of data – the individual level consumer data that is personally identifying information and that which is pseudonimized information (data that is not identified to an individual person),” he said. The authors focused on revenues generated by the exchange of data – that which contributes to the Data Driven Marketing Economy.
“The power of data has transformed our lifestyles,” said Professor Johnson. “‘Consumer’ was an abstract concept invented because marketers and advertisers had no way of knowing who they were talking to. For the first time, individuals are being recognized as individuals, thanks to data.
“In fact, the producer is the consumer and visa versa. The lines are blurred and both business and consumer are producers and consumers of data that is used in the DDME,” he said.
“The offline and online worlds are moving rapidly into one world. You must efficiently take insights from one to the other in order to understand how to provide value to the consumer,” said Professor Deighton. Now we are seeing in all the environments where our money is working and not working. That is an enormous value to the economy and innovation – the more efficient a business is, the more value to customers and stakeholders it can provide, he said.