Insight/ Analysis & Measurement

For CMOs, 'Big Data' Is A Very Big Deal


by Alfredo Gangotena

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More than any other aspect of retailing, marketing is data-driven.

As marketers, we distribute surveys, conduct interviews, listen to focus groups, and analyze behavior. Based on all of that information, we make decisions on how best to attract and keep customers. Of course, it’s not an exact science, but it does take skill, experience, and even a little inspiration to put those insights to work. In the end, however, there is no substitute for good information.

That’s why marketing executives should be particularly excited about an emerging development called “Big Data.” It refers to a whole, new category of information and information-processing capabilities that are changing the kinds of questions marketers can ask and have answered. Big Data’s impact is being felt in many fields, but what matters here is how it will change the work we do as chief marketers.

Let’s start with consumers. According to Gartner research, over the next 10 years, some 300 million people will join the middle and upper classes worldwide. Well before then—by 2014—more than 3 billion people will be able to make payments electronically, most of them by using mobile phones.   

This enormous mass of consumers will conduct their transactions in ways that are immediately captured by a processor—and that means generating data that will be available for analysis. The MasterCard data warehouse contains in excess of 100 terabytes of information and grows by 22 billion transactions a year—in other words, 12 times the size of Amazon’s database. Data sets of this size allow researchers to develop insights of unprecedented accuracy, speed, and granularity, while getting answers to questions we never thought we’d be able to address. To protect individual privacy rights, these insights are created on “anonymized” data.

For example, MasterCard SpendingPulse is an analysis incorporating all forms of spending: payment cards, cash, checks, and even online payments. It is a macroeconomic indicator of national retail and service sales in the U.S. and the U.K. based on aggregate sales activity in the MasterCard network, plus survey-based estimates on other forms of payment.

Armed with that kind of Big Data, marketers can tell how much consumers spent, the markets or regions in which they spent it, when they spent it, what they spent it on, and in which channels.

Among the most important questions marketers are asking are about the increasing importance of the digital world for both advertising and shopping: How is the rise of e-commerce affecting brick-and-mortar stores? How does multichannel shopping impact a customer’s total spend? Does it have an impact on store loyalty?  Does shopping season matter? Do different customer segments make use of multichannels in different ways?

Big Data can deliver the answers to all of these questions and more. Until recently, we have only been able to make rough estimates as to how the digital and physical channels interact. A Big Data approach, however, enables analysis of where millions of transactions are taking place, creating a picture of real buying patterns tied to millions of real consumers.

A detailed understanding of aggregated anonymous customer behavior by channel, geography, and season can help inform both long-term business strategies and short-term decisions about marketing and merchandising: when and how to ramp up, and when to play defense.

If we use the luxury goods category as an example, here again the Big Data analysis offered by MasterCard SpendingPulse helps merchants and marketers connect the dots. In a segment where spending is highly discretionary and sensitive to swings in the economy, data shows that luxury purchases have slipped this year after rebounding in 2010 from the sharp declines seen in 2009. Prices moved higher at the beginning of 2011 before pulling back as demand softened. The majority of luxury purchases are confined to just 30 calendar days out of the year—during the holidays, graduation and wedding seasons, and right before Valentine’s Day and Mother’s Day. When these purchases involve gifts, they are made just 10 days before they’re given.

Big Data analysis reveals not only what is happening when customers reach the point of sale, but what gets them there.  Measuring the effectiveness of advertising has always been difficult, but it’s become particularly challenging with the advent of Internet and social media advertising. Now techniques are being developed that can analyze not just the effect of individual ads and offers, but their cumulative impact and effect on further purchasing behavior: Do multiple offers lead to increased spend or to exhaustion? Do offers through sites like Groupon lead to repeat business? Under what circumstances? These insights can have an enormous impact on the effectiveness of your advertising, identifying exactly what your message should be, and how and when to get it across.

In the same way Big Data is transforming market research, it also will revolutionize niche marketing. Transaction data enables the development of sophisticated models of consumer behavior and comprehensive profiles of likely customers. Combine that with real-time analysis and GPS location services, and you are able to provide customers with a virtual personal assistant that makes both relevant and timely purchase recommendations. All the while, of course, tracking customer responses and refining your understanding makes targeting increasingly accurate. 

This new data environment allows you to understand and respond to customer sentiment as it develops. Are consumers tweeting, posting, or blogging about you? Are they “signing in” when they visit your store? Are they “liking” you when they leave? 

With Big Data, you won’t have to wonder—you’ll know. “Voice-of-the-customer analytics” extracts intelligence from every comment made about your brand on e-mail surveys, blogs, company Web sites, Facebook, and Twitter. These applications look for spikes in negative or positive words associated with your brand. These days, too much is being said about stores and products, and it’s being passed around too quickly for you not to be paying attention. A person can take a look at some of what’s on the screen and take a guess at what it means; data-intensive techniques analyze it all.

These techniques are not science-fiction—they are being developed now, and some are already being used by particularly savvy retailers. The new wave of Big Data is upon us, and it offers tools and insights that have the power to redraw the competitive landscape. The new winners will be those who learn to harness the power of that wave early. Everyone else will be left high and dry.

About Alfredo Gangotena

Alfredo Gangotena is Chief Marketing Officer of MasterCard Worldwide. He can be reached at