📌Anyone involved in marketing knows the adage as old as advertising itself: “Half the money I spend on advertising is wasted; the trouble is I don't know which half.” The reality may be worse though - not just a half, but an absolute majority of marketing budgets is wasted on customers that don’t generate enough profitability, says Peter Fader of the Wharton school of economics at the University of Pennsylvania.
The rise of big data and analytics technology promises to change that situation. Today, decision-makers are increasingly able to tell a wasted marketing budget from an effective one.
Nevertheless, few companies have what it takes to tap into big data riches, and the consequences may be dramatic. Singapore-based data science firm DATAVLT says that 99 percent of corporate data is wasted and never used to draw knowledge from it. Only one percent of the data companies collect and store is ever analyzed. This, according to DATAVLT, will cause as much as 96 percent of businesses that exist today to fail in 10 years.
Worldwide, big business is coming to realize the importance of data analytics. According to a 2017 Gartner study, “Out of 13 marketing capabilities, chief marketing officers [polled by Gartner] allocate 9.2 percent of their total marketing expense budget on marketing analytics — the most of any capability.” Only a couple of years earlier, analytics occupied 4th place in terms of marketing spending.
In absolute numbers, spending 9.2 percent of a marketing budget of, say, $10 million is $920,000, and not an uncommon price tag for data analytics projects. Amazon spends $7.2 billion on marketing worldwide, and data analytics is Amazon’s core competency. Data science truly becomes the secret weapon of large corporations to cut costs and anticipate customer expectations.
Be with the light 💡
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