How to Build a Marketing Analytics Competence

I am often asked how a company can build and develop a Marketing Analytics competence to reach a world class level. There are several aspects to consider when making that decision.

• Should we build a centralized marketing analytics function? Or should analytics be decentralized?

In my experience, a company needs to create a centralized Marketing Analytics Center of Competence (CoC) group that can provide services to all internal stakeholders. This ensures that best practices are developed once and shared throughout the organization, that there is no waste of resources working on the same problems, that the information produced is consistent, and that insights are created based on solid, scientific methods. This is especially true in larger organizations where coordination and competing priorities among different business units could quickly cause conflict. That said, in very large organizations it is also a best practice to have marketing analytics liaisons within each internal business unit to work with the centralized group to communicate priorities, maximize business impact and ensure implementation.

• Should we use analytics tools from outside vendors? Or should we develop everything in-house?

There is a delicate balance between using tools from outside analytics vendors and losing intellectual property. For cases where analytics vendors have developed a software tool that is state of the art, it will probably make sense just to pay license fees and use the tool rather than to develop it in-house and spend millions of dollars and years of development –unless you want to enter that market. For example, when I was working for a high tech company, we decided that we could build the best social media analytics tool in-house and then sell that service to our customers. In this way, we maintained our competitive advantage and our IP. In other cases, we would partner with marketing analytics software vendors and license their tool for internal use but innovate around it. Even when you use an analytics software tool from a vendor, there is still room for innovation in the way that you use the tool, what data to use, and how you combine it with other tools and methods. In this manner, you can still create a competitive advantage and potentially patent those methods.

• Should we outsource analytics resources? Or should we hire internally?

In this case, again there are tradeoffs between the benefits of outsourcing versus the drawbacks of losing competitive advantages. A recent study[1] showed that outsourcing analytics had many benefits like being able to quickly fill up analytics needs and bring in expertise but it also showed many perils like losing control of core competencies. As anybody in the analytics field can attest, hiring top analytics talent is getting harder and harder these days due to increased demand. Outsourcing could be a solution for being able to quickly increase capabilities. In particular, offshoring could allow you to tap into another market for analytics talent. The downside of using analytics vendors is that if the analytics process that you are outsourcing is one of your core competency processes, the vendor could learn your process and potentially turn around and sell that same method to your competitors. One way to prevent this could be to outsource low level analytics processes that could free up internal resources for more advanced methods. Other options are to tap into the experience of outsourced vendors for internal training and knowledge transfer, or to sign exclusivity agreements where the vendor can’t get another client in the same industry.

In sum, to build and develop a Marketing Analytics competence to reach a world class level it is best to create a centralized marketing analytics organization, utilize the best of software tools from outside vendors unless you plan to develop your own to lead the industry, and carefully select when to outsource analytics to avoid losing intellectual property or competitive advantages.