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MSU Eli Broad Student Research is produced by undergraduate students in the Eli Broad School of Business at Michigan State University. Articles submitted to this site are the result of considerable work and research by Broad students who are very interested in business, securities and in the functioning of markets. MSU graduate student, Jacob Rayis is Managing Editor. Advisor: Kenneth E. Scislaw, PhD - Dr. Scislaw is currently a Visiting Assistant Professor of Finance at Michigan State University.
By Paige Strube
Paige Strube is an undergraduate student majoring in Marketing in the Eli Broad School of Business at Michigan State University
In summer 2017, Bazaarvoice and Advertising Age published their findings on the changing marketing landscape. After interviewing 300 marketers with varying levels of experience, the report, “More Data, More Problems: Trust, Transparency & Targeting in 2017”, identifies a data-driven trend within the industry.
American Express (Sym: AXP), a distinguished global financial corporation, is one example of a company embracing the trend found in Bazaarvoice and Advertising Age’s report. On November 7, American Express announced a new data-driven platform they appropriately named Amex Advance. This technology meets the needs of marketers who request data insights to better their campaigns. It has the potential to advance marketers’ understanding of buyer preferences and predict purchase intent.
The Data-Driven Trend
It is first important to realize the main driving factor for data-driven marketing. According to 2017 research conducted by Adobe and Goldsmiths, 75% of Chief Marketing Officers feel negative or neutral about their understanding of consumers and changing behaviors. Clearly this is a major concern since the overall goal of marketing is to know the customer.
Adobe and Goldsmith had 130 senior marketer survey respondents from companies with more than 3000 employees from a variety of countries, including the United Kingdom, Germany, France, the Benelux region and the Nordics. With the input from a diverse sample, it shows how the demand to better understand the consumer is an international trend.
Bazaarvoice and Advertising Age’s report offers a viable solution. The study revealed that 95% of marketers are utilizing first and third-party data services in hope to improve performance. The number of campaigns not using data has significantly dropped from 2016-2017, as shown in Figure 1 below, and the number is expected to continue to decrease. This verifies how much marketers value consumer purchasing information to focus their marketing campaigns and highlights their increasing demand for first-party data.
Figure 1: Bazaarvoice and Advertising Age’s Findings on Data-Driven Marketing Campaigns
Amex Advance satisfies marketers’ need for first-party data. American Express has a closed-loop network that can analyze more than $1 trillion of card member purchases every year. In the past American Express has provided this consumer buying data for internal and third-party companies, but now the new platform will go beyond their internal data and cumulate information from American Express’s partners as well as public records. Amex Advance will utilize first-party and third-party data to achieve even more specific results.
A 2015 Forbes Insights report also touched on the data-driven marketing trend. In the study, 162 U.S. senior executives of companies with an annual revenue greater than $250 million were surveyed. Of the 162 respondents, it was found that 64% strongly agreed that data-driven marketing is a crucial component to their company’s success.
Recognizing this trend, Amex Advance offers many beneficial services, as stated in American Express’s November 7 press release. The business will help clients identify and predict consumer spending trends, measure real spend outcomes, develop and assist with target market strategies and help with consumer acquisition and retention campaigns.
The Need for Personalization
The 2015 Forbes Insights report also predicted the objectives tied to data-driven marketing. The study anticipated marketers would want to use this concept to focus on an audience-centric mindset with personalization.
The report was accurate with this prediction and Amex Advance can personalize its data to the client’s needs with the help of an independent third-party. Acxiom, an innovative data-driven leader, is known for its utilization of modern technology to increase marketing effectiveness. It will host the Amex Advance platform to provide a personalized audience service for companies with unique marketing goals. The company can combine multiple sources of purchase records and consumer spending information to help point marketers towards the most fitting target market.
The most distinguishable characteristic of Amex Advance, in comparison to other data-driven options available in the market, is that its business model encompasses customization. As competition increases within an innovating world, personalization has become a more important aspect to consumers.
As more and more brands are outsourcing their data research to third party companies, marketing clients have clarified what they are looking for in a partnership. First, businesses that use outside data companies struggle with transparency. Referencing Bazaarvoice and Advertising Age’s report, 64% of marketers employing a third party do not understand the origins of their data sources.
The second concern is regarding the freshness of the provided information. 26% of brand marketers do not know how updated the data sources are. If companies like Amex Advance can address these concerns with their clients, the data-driven ideology has the potential to greatly impact marketing strategies.
Obviously, privacy also becomes a large concern to consumers when companies are utilizing their credit card purchasing information. Using Amex Advance as an example, to avoid this issue, American Express confirmed all data will be made anonymous and the company will use encryption to ensure privacy. Additionally, Acxiom helps mitigate this concern. Being an independent third-party, the data is analyzed in a separate environment, according to American Express’s November 7 press release.
The Potential Impact of Amex Advance
The Amex Advance technology platform has great potential to influence the strategy behind marketing. As Marc Ginsberg, the VP of Amex Advance, states in the Acxiom’s press release, “partnering with Acxiom reflects how important innovative solutions are for marketers to exceed customer expectations and underscores how valuable big data analytics and predictive data science are in changing customer experience for the better”.
The trend of using personalized data in marketing strategies is relevant today. With this realization, Amex Advance will provide a unique service with the hope to positively contribute to the evolving marketing landscape. As the future is predicted to be engulfed by innovation and technology, customized data incorporation will become an even more adamant characteristic of business.
“Acxiom and Amex Advance℠ Launch New Data-Driven Offering to Predict Consumer Purchase Intent.” Acxiom, Acxiom, www.acxiom.com/news/acxiom-amex-advance-launch-new-data-driven-offering-predict-consumer-purchase-intent/ .
Burnand, David. “Reinventing Loyalty: Understanding Consumer Behaviour in the Experience Era.” Adobe, Adobe Systems Incorporated, 13 Sept. 2017, Reinventing loyalty: understanding consumer behaviour in the experience era | Digital Marketing Blog Europe .
“Data Driven and Customer Centric: Marketers Turning Insights Into Impacts.” Forbes Insights, pp. 1–17., https://images.forbes.com/forbesinsights/StudyPDFs/Turn-DataDrivenCustomerCentric-REPORT.pdf.
“More Data More Problems: Trust, Transparency and Targeting in 2017.” Bazaarvoice, 2017, pp. 1–10., http://resources.bazaarvoice.com/rs/848-PGD-174/images/More%20Data%20More%20Problems_Bazaarvoice_AdAge_Research%20eBook.pdf.
Tufts, Ashley. “American Express Launches Amex Advance℠ Personalization Services to Companies Across the Advertising, Travel and Service Industries.” American Express, American Express Company, 7 Nov. 2017, http://about.americanexpress.com/news/pr/2017/american-express-launches-amex-advance-personalization-service.aspx.