IBM's Not-So-Secret Weapon: Big Data Marketing

By Darryl K. Taft  |  Posted 2013-02-26

IBM's Not-So-Secret Weapon: Big Data Marketing

Secreted on one of the floors at 590 Madison Ave. in New York City is a team any number of major business-to-business companies probably wish they had in place: IBM's strategic big data marketing team.

No, it's not the team that markets big data, but the team that includes both marketing and IT people working together to apply big data to IBM's own marketing efforts.

Marketing has become one of the first disciplines to make use of big data in a meaningful way, as companies look to big data and business analytics to help personalize their approach to the customer. In short, the customer is king, and companies are battling over who can provide the best customer experience.

Customer care, marketing and sales departments are increasingly driving demand for big data, according to a recent Microsoft study. Microsoft surveyed more than 280 U.S.-based IT decision makers at midsized to large organizations on the topic of big data.

The survey showed that although the IT department (52 percent) is currently driving most of the demand for big data, customer care (41 percent), sales (26 percent), finance (23 percent) and marketing (23 percent) departments are increasingly driving demand. The percentages add up to more than 100 because individuals were able to enter multiple responses, and though the lion's share of big data goes to IT, the IT department also services sales, marketing, etc., on big data-related issues.

And IBM's stealth-ninja big data wrangling team in New York is working in agile sprints to deliver material out to Big Blue's target customer audience. That team is comprised of half IT staff and half marketing pros.

"The partnership here between my team—the CIO team—and the marketing team is really allowing us to help the business with much more targeted decision making," Jeanette Horan, IBM's CIO, told eWEEK.

More organizations are embracing big data to drive their decision making and to provide the optimal mix of products and services to customers. Companies are using big data and analytics to sift through mountains of Website traffic data, social media and other sources to gain a deeper understanding of their customer bases. The goal is to identify trends in their customers' online viewing, social media postings and purchasing behaviors.

"When it comes to marketing, what you're really looking at is trends and anomalies," Horan said. "This is obviously the realm of analytics. So one of the things that my team has done to support the business is to build a Cognos and SPSS environment that's both a business reporting and analytics tool to build an environment that we've connected all our internal information warehouses to."

That internal environment, known as Blue Insight, came about following IBM's acquisition of Cognos. Since then, nearly every major group at IBM asked Horan to provide them a unique Cognos server. Instead, she set up a cloud-based environment they could all tap into and later added SPSS for predictive analytics.

IBM's Not-So-Secret Weapon: Big Data Marketing

Working with one of IBM's analytics centers of excellence, Horan's team is helping IBMers determine what questions they should ask about the rivers of data that come in every day. "The answer is in there somewhere, but if you don't know what question to ask, you're not necessarily going to get the most use out of the data," she said.

Take sales, for instance.

"We certainly are looking at historical information and trends around sales performance and how salespeople are assigned to different geographic territories or to different clients," Horan said.

Based on the big data analysis, the team has recommended targeted changes to its assignment of salespeople, as the data showed that the territories that embraced the big data analytics strategies showed a 10 percent improvement in sales over those that did not—at least in 2011, she said. A breakdown of 2012 numbers is still being compiled.

The team at 590 Madison is a collaboration between marketing and the CIO that works in two-week sprints. They are the very definition of agile, Horan says, as they are using a lot of the concepts from agile software development.

"So the projects to either bring some new content to or change some elements of the infrastructure or some elements of the look and feel for, the projects are all designed as two-week projects to be deployed," Horan said. "And that tight partnership is what enabled us to move much more rapidly with respect to deploying new capability and functionality."

Big data is the term increasingly used to describe the process of applying serious computing power—the latest in machine learning and artificial intelligence—to seriously massive and often highly complex sets of information.

As the focus on the customer increases, so does the focus on marketing and getting targeted information out to customers—thus the emergence of the role of chief marketing officer (CMO) in companies. The CMO is on par with and often works closely with the CIO in many companies.

IBM CEO Ginni Rometty recognized this and her first major customer-facing event as CEO last year was an event for both CIOs and CMOs. With that elevation in status, CMOs are looking at the same issues as CIOs, particularly big data and analytics.  

IBM has been keen on this trend. Jim Corgel, IBM's general manager of entrepreneurs and ecosystem, told eWEEK IBM's former CEO Sam Palmisano, identified analytics as the number one opportunity Big Blue had ahead of it prior to his leaving the post last year.

Big data and analytics are transforming marketing at IBM, enabling faster, highly targeted interactions with clients that are helping create new markets. This capability has evolved over the last decade as IBM has worked to become a globally integrated enterprise.

In the process, every part of IBM—from development and manufacturing to sales, customer support, and now marketing—has been transformed to run more quickly, efficiently and smarter.

Indeed Linda Sanford, IBM's senior vice president of enterprise transformation, told eWEEK that her initiatives have delivered $8 billion back to the business since 2005 through such moves as reducing IBM's data centers from 155 to five, trimming total applications from 16,000 to 4,500, and consolidating approximately 6,500 servers.

IBM's Not-So-Secret Weapon: Big Data Marketing

The ubiquity of data in an increasingly instrumented world are driving a new business landscape in which CMOs can now target customers as individuals instead of clustering them within vague demographic categories. This makes marketing feel more like a welcomed service instead of an intrusion.

"I think the B2B world has traditionally thought more about companies than people," Horan said. "What we are increasingly recognizing is that it is individuals within companies that are making decisions. And it's those individuals that are the ones that have different levels of knowledge or different roles within the company and different levels of influence over decision making. And what we are starting to think about is, how can we start to build up that body of information about people as individuals, so that we can start to present much more targeted offers."

Social media has also made the CMO responsible for building an internal employee culture that represents the company's brand in online interactions. Technology and creativity are fusing to drive a new interdependence between two seemingly diverse business disciplines, the CIO and the CMO.

"Data could be really, really key to using social media to better understand the nature of your market, using device data to optimize your supply chain, etc.," said Tony Baer, an analyst at Ovum. "The potential upside is huge. But there are some important "buts." There is the danger in euphoria over big data. There is the need to know what data to use, how to realize patterns and analyze the data, and of course—the more solvable issue, master the underlying technology. These are not trivial issues."

At IBM, the CIO and CMO partnered to create campaigns that on average have reduced marketing emails by 93 percent in 2012, shifting from a "spray and pray" approach in delivering a message via automated marketing. This targeted email strategy, which analyzes factors such as purchase history, buying power and customer behaviors, is delivering a response rate that is 14 times greater than the traditional approach.

"Big data, like BI before it, has provided marketing—and to lesser extent, operations—new tools that deliver visible results to the business," Baer said. "Of necessity, CIOs are drawing closer to CMOs, thanks to the power of data and the need for technology to harness that power."

"When it comes to big data, CMOs are becoming to big data practitioners what CIOs have been to CTOs," said Andrew Brust, founder and CEO of Blue Badge Insights and big data guru. "CMOs are focused on the marketing application of data and insights and, in the process of discovering it, have become mavens on some of the products and technologies.  But their motivation is the application of it to more effective marketing. So if CIOs focus on the biz application of data, and much of that space is dominated by big data these days, it's no wonder that CMOs and CIOs are finding their paths crossing and their jobs overlapping."

IBM's Not-So-Secret Weapon: Big Data Marketing

As the CMO has moved up the learning curve, often knowing more about certain technologies than the CIO, it's not so much that the two intersect but rather that they need to work together to deploy an effective enterprise solution, said Jonathan Yarmis, an analyst with HfS Research.

"Marketing is just one element of the overall corporate picture, so even as the CMO has come up the technology curve, the imperative for the CIO is to understand how those marketing technologies are going to affect the rest of the enterprise," Yarmis said.

Precision marketing at IBM relies on home-grown data management and analytics technologies, plus capabilities the company has acquired through the purchase of companies, such as Unica, Cognos, SPSS and CoreMetrics. IBM software manages and integrates cross-company marketing campaigns—and the sales leads that follow—across digital, social, mobile and traditional marketing channels and the productivity of lead-development representatives. This approach improved the productivity of lead-development representatives by 250 percent last year, while the value of leads created is up by percent.

Not only does IBM use big data and analytics internally, the company has invested heavily to pursue this line of business in its products and services. Internal projects like the team at 590 Madison and Blue Insight help IBM "walk the talk," Horan said. "We want to have good proof points and examples of how we're leveraging some of the new capabilities and helping IBM's business, as well."

However, "the common thread across our entire portfolio is the essential role of analytics," Mike Rhodin, senior vice president of the IBM Software Solutions Group, told eWEEK.

SHOP.CA, a Canadian e-Commerce marketplace, is using IBM analytics software to help engage online consumers in a unique shopping experience that builds loyalty and a sense of community. IBM's technology powers SHOP.CA's consumer storefront, multi-merchant product catalog and SHOP.CA Rewards program. IBM also provides analytics on how site visitors behave and interact, as well as track their searching and buying histories. This data will give SHOP.CA insight on how, when and where to reach shoppers with content and when to make offers that are personalized to their tastes and preferences via mobile or social vehicles.

"We believe we had a team that could build an e-commerce platform from scratch, but we decided to focus on our unique IP, which is in building customer experience, and leverage IBM's technology," said Trevor Newell, SHOP.CA founder and president.  "Our CIO and CMO work closely together on this every day. We built the company that way."

According to IBM's State of Marketing survey, 48 percent of marketers believe that improved technology infrastructure will enable them to better meet the needs of customers, who are increasingly interacting with brands via multiple channels.

Tools like IBM's Marketing Center combine digital analytics and real-time marketing execution in a single integrated offering that can be deployed without taxing the resources of the CIO. Once live, marketers can turn data provided by customers into personalized offers via email or Website personalization—including the mobile Web, all with just a few clicks.

IBM's Not-So-Secret Weapon: Big Data Marketing

"With the rise of digital technologies in all aspects of the customer lifecycle, a greater collaboration has been required between the marketing and IT teams," said Stephanie Pike, vice president of global e-commerce for Office Depot, which also uses IBM's big data analytics technology. "As such, our CIO spends much of his time understanding the business impact of a given project while the CMO must understand the complexity and scalability of technical solutions."

"In the last year, I probably spent more time with the VPs of marketing than I had ever spent before, and probably more time with the VPs of marketing than I spent with any other function," Horan said. "That is definitely a change."

Meanwhile, other projects that are behind data-driven marketing at IBM include IBM Market Basket, which analyzes the purchase patterns of customers to identify those that are likely candidates for cross-sell opportunities, especially in services. It is highly driven by statistics, facts and data.

Instead of relying on chance or hit-or-miss success, Market Basket gives IBM a systemic process to proactively leverage open sales leads as a source of potential new business. This is especially important for IBM, which has acquired more than 100 companies in the past decade and can easily cross-sell products and services to clients of the acquired companies.

IBM COBRA (COrporate Brand and Reputation Analysis) is a Web-based tool that measures and analyzes social media content (blogs, message boards, Twitter, etc.) related to a company's brand, its competitors and influencers. COBRA enables IBM to extract insights, root causes and greater understanding from postings/conversations in online communities. The insights are then analyzed to identify opportunities and sales targets, converting aggregated information into individual and personal outreach.

IBM Client ID connects disparate types of data about IBM clients to produce broader insights and support targeted outreach based on customer needs, purchase history, changing market dynamics and other factors. Before Client ID, customer data had existed in multiple silos, without a common linkage tying them together.

IBM set out to better understand the various "touches" a client received from the company while implementing a predictive model to assess the market opportunity by client. Besides enabling targeted outreach, the common profile within Client ID increases collaboration among marketing, sales and finance by providing a common basis for coordinated customer interactions.

IBM's big data strategy has included the expansion of R&D, acquisitions and business initiatives across its software, hardware and services portfolio.  In the last five years, IBM has invested more than $16 billion in 30 acquisitions to boost its big data analytics portfolio.

"I still have more project requests stacked up for business automation. But there are increasingly many more projects that are requests for 'help me understand how I can make smarter decisions,'" Horan said. "That's all about big data and analytics."

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