Understanding IBM’s big analytics bet

It’s a fairly substantial bet the company has made, investing some $14bn in acquiring analytics-focused companies, including the likes of Unica, a marketing automation firm, web analytics provider Coremetrics and analytics software developer SPSS.

These acquisitions are designed to meet the needs of CMOs who feel that they are unprepared for the deluge of data that flows from social media and the huge growth in the number of communications channels.

Marcel Holsheimer, a former Unica and SPSS executive now working in the enterprise marketing management division of IBM, describes the world today as one that offers up as many threats as opportunities for companies. Failing to adapt your business to the online world could mean eventual demise, he says, but embracing Facebook and Twitter and heavy-duty analytics tools offers new avenues for growth.

All this data is “a great asset for companies once they are able to use it properly,” says Holsheimer.

But reaching that level of capability is a challenge in itself. To succeed in what Holsheimer calles “the age of the smarter consumer” requires companies to have a much sharper focus on understanding their customers and prospects as individuals – not as markets.

In IBM’s survey, 14 out of the 19 sources of data used by CMOs to influence strategy provide a market-level understanding – things like market research, competitive benchmarking and campaign analysis. The sources IBM sees as important for understanding individuals – analysing consumer generated reviews, blog posts and online communications – appear much further down the most-used list with only customer analytics ranking in the top five.

“CMOs are still reaching out to traditional sources which they have been using for many years,” says Elaine Fletcher, an IBM global business services partner, “but I think we will see a different picture in two or three years.”

Asked about the technologies they plan to invest in, over 80% of CMOs cited social media, customer analytics, customer relationship management and mobile applications. “Marketing is becoming much more of a technology play than it was in the past,” says Holsheimer – and technology is clearly an area IBM knows well. He sees a future where software is put to use in ways to make marketing “so good it feels like a service”. Examples in use today include the analytics tools that allow online retailers to make product recommendations to customers based on their own buying habits and those of similar customers; or the bricks-and-mortar retailers that dispense personalised coupons based on purchase history.

Holsheimer goes further and suggests a company might follow up and offer help and advice to a customer who drops out half-way through completing an online form, or where a web user who visits a bank’s mortgage site a certain number of times can be presented with a personalised offer that might bring in a sale.

Such a vision might be welcomed by some, while making others shudder – though you could argue that knowing your customers well enough means knowing when those types of tactics are likely to succeed or backfire.

In among all this, there will still be a place for market research, Fletcher reckons, but it’ll be in providing companies with the macro view, rather than the micro.

Researchers, however, might resist such pigeonholing. CMOs aren’t personally looking to become experts in either social media or technology, preferring instead to hire in staff or partner with organisations that have those capabilities. This is particularly true of ‘customer and data analytics’ and ‘tracking and measurement’, where respectively 92% and 54% of CMOs expect to increase their use of external resources over the next three-to-five years.

But of course that’s ground IBM is looking to occupy. And going up against Big Blue is not an option many firms would relish.

• IBM’s Global Chief Marketing Officer Study is based on hour-long face-to-face interviews with 1,734 CMOs from around the globe. Click here to download a copy.