Data Driven Marketing a Boon to U.S. Economy, Landmark Study Finds


It’s official: data-driven marketing is huge business and it’s only going to get bigger. That’s the picture from the Data-Driven Marketing Institute (DDMI), an initiative of the Direct Marketing Association, which released a study this week that highlights the rise of marketing analytics and its growing impact on the U.S. economy.

The digital marketing industry in the U.S. was valued at an estimated $62 billion last year, according to the study, which aims to educate lawmakers and reglatory officials on the industry’s value amid growing consumer concern over online data collection.

The estimate totaled the value of the data market – including publisher sales of demographic information and revenue from online advertisements and e-mail subscriber targeting – based on an assessment of 650 companies that work in personal data. The findings, while stunning, would hardly surprise those companies that already are leveraging data science to drive sales.

According to the analysis, the data-driven marketing economy, which is comprised of firms that exist to help U.S. companies use individual-level consumer data to acquire and retain customers, added $156 billion in revenue to the U.S. economy and fueled more than 675,000 jobs in 2012. However, according to the report’s authors, the ability to freely collect, assess and share customer information also has a multiplier effect and stimulates economic growth beyond the simple movement of goods and services.

Among these tickle-down benefits is a revenue boost to companies that successfully apply Big Data to their marketing efforts. The analysts determined that the return on investment to brands for spending on data-driven initiatives regularly exceeds 30% and can reach as high as 60%.

What’s more, marketing analytics:

  • Drives sales of server and storage hardware,
  • Fuels the flow of venture capital dollars,
  • Lowers the barriers to market entry for small businesses; and,
  • Reduces the cost of doing business.

“The data-driven marketing revolution has eased access to advertising, and advertising-dependent capital,” wrote authors John Deighton of Harvard Business School and Peter Johnson of Columbia University. “Products and publications that deliver value to users can be launched and grow at a pace unchecked by the need to find a large pool of customers willing to make immediate payment for the value they receive, because entrepreneurs and investors have confidence that customers or audience can be built incrementally, and when they build over time, they eventually have value to advertisers.”

More than two-thirds of the economic benefits of data-driven marketing are directly tied to the ability of firms to exchange data, and the DMA has warned that impediments to the open flow of information could lop billions from current output levels. Among their recommendations, Deighton and Johnson urge lawmakers to educate themselves on the economic consequences of limiting data access and fluidity.

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