IBM's Vision For The Marketer And New Coremetrics Lifecycle Product With CSO Squire

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Coremetrics CSO John SquireJohn Squire is Chief Strategy Officer of Coremetrics, an IBM company.

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AdExchanger.com: Why should marketers care about "big data"?

JS: I think that marketers have spent a tremendous amount of time trying to figure out what data is really helpful to them. There's tons of it. And, there are certain people inside the organization with the propellers on their head that are like, "I can dig through this and find some really unique characteristics of our customers."

But, you hear some of the leading marketers in this space saying, "Look. I started clustering my customers. I used five, 10 or 30 vectors, and with that I was able to discern there are certain classes of customers that interact very differently with certain types of marketing treatments and will accelerate my business if I can just go out and reach them." So, a few companies have figured that out.

But, most marketing departments say, "I can barely handle the performance data that I get back on my marketing programs, let alone understand all these data points about the customers, the audience and the market."

So "big data" is that promise of, "If we can harness the big data that's actually available inside the organization, we'll find out a lot more about our customer set and the market. And it will actually point us in the direction of where we should place the next marketing dollar we have."

Whereas two years ago, the refrain was, "Should we have taken that marketing dollar from that specific channel?"

I think the problem, though, is that the data sits in many different places. It's not a skill-set of a marketer to go, "How am I going to pull all these together?" Excel doesn't pull all of this together for you...

Do actionable insights that are mined form data - does that responsibility ultimately fall on the marketer, or do you think there can be solutions put in place today that can help them with these actionable insights?

The insights today aren't something that the Business Intelligence (BI) group is going to come up with. The BI group in an organization typically says, "I can give you services to get at this data, help build reports and metrics about it, but I don't know enough about the business, or what you're specifically doing in marketing to say 'Here are the insights that you're going to draw from this.' That's what you all should do in marketing." Historically, when you look at people that have been in marketing, it's not like they have spent a ton of time in the math department in college.

What you're starting to see is a lot of folks who are doing new and exciting things within marketing departments that came from computer science and engineering backgrounds. But they still don't understand the pieces around, "What's marketing psychology? What's creative? How do I meld these pieces together so I can take those insights and actually do something really creative with them?"

The place where we're focused at IBM and Coremetrics is the part around bringing the data and helping normalize it so that all of our clients have a very similar view into how consumer behavior is happening on their site. And, they can compare it to the rest of the web. So our benchmark data is something that becomes really important to marketers so that they can say, "I, as a marketer, believe I'm doing well." Or – "I've got a lot of room to grow," etc.

Another side of this is that the technology vendors need to say, "Hey, we can help you do this faster and provide insights."

What is the problem that Coremetrics' Lifecycle product (see release) is solving in particular?

The big thing that Lifecycle is helping our clients focus in on is the concept around milestones - that consumers are going to go through a certain set of milestones. What Lifecycle does is then break down the milestones so you can look at how different segments - along with a time component - move through those milestones.

The thing that's really compelling around it is that it's visual. Marketers can see how their consumers are migrating and understand what were the marketing treatments that helped. What were the exact marketing programs that moved them? Could we replicate that, or help make the velocity through our system that much faster?

One of our clients in the health and beauty area is very interested in social media. So the question became – "How do people who come from social act on our site and in our business compared to those that just find our site and come without clicking through from Facebook?"

What they found is that the people who came through social tended to come more frequently, but converted less often. But when they converted, they bought more products.

This insight changed the way the client started marketing to those people who come from social versus the ones that came directly. And the milestones in Lifecycle told them about it – just as it told the client that people who write reviews buy six times more than those that don't write a review.

Is there an audience-buying connection with Lifecycle?

Let's take a step back, first. We released a product about two years ago called Ad Target. Now, across the 2,500 clients that we have, their tags, the instruments that are on their site, can serve up to 30 different, behaviorally-targeted ad networks.

When they strike a deal with X, Y, or Z ad network among the 30 networks, the client's like, "Great. My tag's already there. Coremetrics takes care of it. Now all of a sudden, we're going to go out and we're going to re‑target based on actions people take on our site. "

For an organization such as a behavioral ad network, they might say, "We're going to help you expand your audience and find the 'look‑alikes' across the web." So - the audience buying piece.

Now looking at Lifecycle, it takes you through those milestones and says, "Here's all the ways I want to look at consumers that have been here 8 to 10 times," for example. And then, the next step is they wrote a review on our site. It can be any type of milestone you want to look at. Ultimately, those are groups of people - audience segments.

We think that audience buying piece is what's helping fuel the whole personalized display advertising space. Our customers are saying, "There's only so many people I can go out and re‑target with a message. But once I saw that I could expand it and look for other people that have never experienced me before, all of a sudden, this became very valuable."

Where does the vision you are describing for Coremetrics and its products fit within IBM's strategic vision?

IBM's made a huge investment around the concept of Smarter Planet, which refers to being able to instrument a wide variety of different industries, meaning collecting information – the "big data" component you talked about earlier – and then interconnect that data and add intelligence on top of it.

An initiative of Smarter Planet is something called Smarter Commerce, which helps solve problems such as, "How do we improve the buying and selling? How do we improve marketing? How do we improve service?"

And that's where Coremetrics and Unica - the Enterprise Marketing Management group – fit. They solve the big marketing problems that we see today around automating marketing.

For example, Coremetrics is collecting real‑time data about customers on the site. The intelligence piece – such as the one in Lifecycle - says, "Hey, here's what we just learned about the customers, and now you can go and reach somebody through email based on where they're at in the cycle or through display advertising."

Also, today, over 400 online retailers use the Coremetrics personalization product called Intelligent Offer. They're doing cross-sale recommendations which can be changed on the site. This is the intelligence piece.

The last piece is that it's all interconnected. We pass that information on to the ad networks and email service providers that our clients work with which drive this whole continuum of instrument, intelligence, and interconnection.

So, "How do we fit in a larger IBM?" Smarter Planet, Smarter Commerce, is going to be a very, very big initiative. The marketer has to compress how quickly they respond to smarter consumers. Consumers are smarter.

Finally, coming back to "big data," think about IBM's Watson [supercomputer]. Watson is all about big data and beat the Jeopardy champions. Now, IBM just announced on Friday we're going to spend $100‑million on big data and commercializing Watson.

Is there a "Watson For Ads" in the works?

As we look ahead, the question will be, "How can Watson support marketing decisions?" How do you automate marketing decisions that 10, 100 or 1000 people couldn't get as fast as Watson. In terms of marketing or advertising, we can use that big math or big data to help make a decision about what's the next best thing.

It can also say, "What creatives should we think about?" The marketer has to grab the emotion of a consumer or a buyer. "How do I convince or persuade somebody that my service or my brand is something that you should trust and that you should go out and talk about?"

I think Watson's going to be one of those areas that we'll look at and say, "How can they help us dig through this data faster than 10 or 100 analysts?" A whole bunch of CPUs applied to it can go faster than a whole bunch of humans trying to type away at it. It's going to be amazing.

Looking at trends in the past year or two, what's surprising to you in digital advertising today?

I was just looking at some data during a recent trip to the UK which showed that although both countries have about the same amount of sales going to retail sites, the number of visitors is about half in the U.K. as compared to the U.S.

Put another way, people coming through from "social" in the U.K. have a much higher buying propensity than consumers in the U.S. And, I also looked at mobile penetration, mobile sales, mobile commerce. Mobile commerce in the U.K. is double what we see in the U.S. on a percentage basis.

We know that about 50 percent of "social" is from a mobile device. And, the U.K. consumer uses mobile a lot more and is engaged in "social" at about the same percentage as the U.S. is buying a lot more. You start to see those little trends, and what it tells you, at least what it told the U.K. brands that I talked to... They're like, "Yeah, we're investing more in social. We saw these little tiny blips, and we start to see those trends." So you see that.

Probably the second area is how fast Android has grown and not just in terms of its own numbers, but how it's driving mobile. So before, iPhone or iDevices, were driving almost all mobile at the expense of Blackberry and Palm. But Android, instead of stealing share from any iDevice, is just adding to share. It's driving more consumers.

The last thing I would say is the growth of QR codes overseas is astounding. For example, we had a client who ran a TV commercial, and in one day they had 30,000 people who responded to a QR code that's in a TV commercial. Think about what had to happen. There's no way you could have taken the picture that fast. Somebody had to pause the actual DVR, walk over to the TV with their phone, take the picture of the QR code, and then go to the site, which - count how much value was generated for the marketer.

This will be the biggest thing that you see by the end of this year. It will be everywhere. I've been surprised how far behind the U.S. has been on it. But now, things are changing.

Going back to Lifecycle, and the ad product, would it make sense, at some point, for IBM to acquire a buying function?

Certainly, the industry discussion is that IBM is moving that direction. I don't think it's lost on anybody that technology is really helping in that area. I think, as we move forward at IBM and Coremetrics, we're really looking to see, "What are the key technology pieces that help automate or help improve the effectiveness of the CMO?"

That's the big thing, is the CMO and marketing function is going to buy a lot of technology to do what they need to do -everything's moving faster -consumers are getting faster.

And the way in which we're talking about ad networks, email, paid search, and every digital point of presence that you can come across, all those things are getting interconnected. We're trying to get to this point where we can say that Wanamaker was wrong, that 50 percent isn't wasted. Maybe a few percent are tested, but we're not wasting 50 percent.

In doing that, potentially DSPs become a really important piece of this. The market may swing the other way where that's something that is the sole function of an agency. I think that the market is still really early stage and not something where there's clear delineation of where it's going to go.

There are much larger things that we're really focused in on from the marketing standpoint. Marketing automation is a huge piece of it. What Unica does today from the campaign side, and the detect side, and the ability to do interaction across all those channels, there's a massive market in that. What [Coremetrics] is doing from an analytics and a personalization standpoint in a retargeting piece, there's still a tremendous market for it.

What have been the biggest surprises since Coremetrics was acquired by IBM?

The first one was just the breadth of IBM.

Think about it… Here's a company, Coremetrics, that's been running for 11 years. We've funded the entry into different countries. And then, in joining IBM, all of a sudden there are over 170 countries available.

The second surprise is that as an acquired company you quickly realize that here's a company that does big things. When the "ship" starts looking at big initiatives such as Smarter Planet or Smarter Commerce, all of a sudden there are a lot of people who are focused in on it. When the company decides to do something big, it rolls forward. It's completely against what you would think would happen.

When you get inside, you're like, "Wow. I'm actually running a little bit faster than I was running before. And I'm running in 170‑plus countries at the same time."

Last question, and related to the Coremetrics product line, what does the future agency look like, in your opinion?

What's neat about the agency skill-set of the future is revealed by what we've seen over the last five or six years... Initially, if you looked at the usernames that were using Coremetrics' products - the [login] email addresses associated with them - they were almost all individuals inside a brand that were using the analytics. Over the last two or three years, I've started to see a lot more agency names.

Certainly, agencies have gotten a lot more sophisticated. We're starting to see a lot more agencies using the analytics. Also, there's a lot more data being exported for our clients to go into other systems.

I think what we're seeing is that the quant skills are going up inside the agencies and they're starting to use the information that's available in real-time in their systems.

Going forward, I think you're going to start to see this melding of the agency and the customers, and the use of data at a faster pace. It used to be the agency went out, did some focus groups, looked at things, came back in a couple of months. Today, you can do a focus group of 10,000 people in less than an hour online.

In that case, the agency has to be closely aligned with the brand and have access to this information, or they're not going to be able to turn things around very quickly.

From an IBM standpoint is, we're selling technology to Global 2000 brands, which obviously use a lot of agencies. We need to make things that are easy for them to consume and learn, and allow them to differentiate their creative side through the use of data that they're able to get out of [our systems].

As you move forward, we're going to see a lot more quant guys joining the agency world.

Like I said before, when you go to college and you're in marketing, it's not like you're sitting there going, "Hey, how many more math classes can I take?" It's not the thing that you typically look at.

There is going to be some pushback until [agencies] can start to see, "Here's the path, and here's what we need to do to be successful."

Follow Coremetrics (@coremetrics) and AdExchanger.com (@adexchanger) on Twitter.

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