Warning: Over-Consumption of Data can Lead to Short-termism

One thing is certain about the realities of digital advertising and marketing, the abundance of data our industry generates is often likened to drinking from a firehose. How do advertisers focus on the data that matters to make informed decisions while leaving the “noise” behind? IAB Canada was pleased to host an in-depth discussion on the matter of “Dataopia” at this week’s Community Uninterrupted with David Phillips, President and COO of NLogic.

Phillips kicked off the presentation by explaining a concept he called the “sombrero syndrome.” He described it as when something works in a given situation or environment but does not translate to real life. He used the analogy of buying and wearing a sombrero while on vacation making a ton of sense but bringing it back into day to day at home – not so much. The same effect is true around data application as some ideas may sound great in theory but do not always make sense in practice.

Common mistakes organizations make when it comes to data often stem from simply asking too much of it. Many have come to expect that data will provide us with knowledge where, at best, it plainly offers us information. Phillips suggested that data should be thought of in a similar vain to weather forecasting where we learn from the patterns of behaviour. Brands should ask less about whether data is right or wrong and instead, ponder whether the data is appropriate for the questions we are asking?

On the flip side, some advertisers ask too little of their data. Phillips advised that as a priority, more time should be spent on determining what a brand really wants to know before senselessly pouring over data to find something of interest. Having a clear understanding of what is being looked for can save a lot of time and resources.

Phillips boldly stated that organizations should not have a data strategy. Brands should have a strategy, first and foremost, which is then supported by data, not the other way around.

He went on to explain that brands can place far too much importance on data, with the idea of “data or it didn’t/doesn’t happen.” and summarized this under three points:

  • Dataopia can overstate the importance of some areas of business while creating blind spots in others and in turn cause marketers to spend less time looking at other important areas.
  • More data does not always equate to higher accuracy or making the right decisions. More data often creates higher levels of confidence, which can result in more confidence in poor decisions.
  • Since we are fixated on more data, we tend to focus on what we can measure, rather than what is important to measure. The acronym WYSIATI, what you see is all there is, is particularly true with data and we tend to give more weight and credit to the things that are right in front of us. What you can measure doesn’t always matter, and what matters cannot always be measured.

Phillips stated that while brands are more important than ever, marketers are not always confident in brand building. Campaigns are becoming less effective, and there is a correlation between a decrease in effectiveness and focus on ‘shorttermism.’ Brands are making poor decisions due to a metric fixation, where it is desirable to replace judgement with data. Phillips specified that appropriate decisions come from a combination of professional judgement and data.

To fix the blind spots, it is important to remember that the role of data is to help drive the right decisions, and what brands don’t know is just as important as what they do know. Brands should use data to help support their strategies and determine which areas of the business can be supported and explained by data and which ones cannot. Sometimes, numbers are not enough and similar to paint-by-numbers not providing a masterpiece of a painting, branding-by-numbers will not develop much of a brand. The human element of judgment and intellect is incredibly important to help fix blind spots. Lastly, it is important to look at the data available to the brand right now. Does the data show that some areas are under or overinvested? This helps to gain perspective and once you know where the gaps lie, it paints a clearer of what gaps are important to fill, and which are not.

Phillips closed out the presentation by reiterating that relying on large amounts of data does not always lead to better decisions, but more confidence in poor decisions.

IAB Canada is committed to working with the Research and Data Analytics Committees to help provide deeper perspective on the pitfalls of short-termism when it comes to leveraging data. Moving from ROAS to a more sophisticated, nuanced understanding of media investments is critical to making the right decisions for all types of activity from brand building to direct response.