Trends 2015, #1: Big Data Converts ROI and becomes the tool for marketers

My examples then used the collaboration between American Express and Uber, with American Express extending an offer which allowed card-holders to use their cards on public transport provided by Uber. In this instance, looking at marketing trends which appear poised to become major players during 2015, the big data referred to is not necessarily data on a greater number of people (though it is of course always possible that people joined American Express for the, forgive me, express purpose of taking advantage of the public transport offer); American Express will have had access to more information via their collaboration with Uber, but that information will only be on the people who have cards.

ROI, which stands for Return On Investment, is, according to Investopedia, “a performance measure used to evaluate the efficiency of an investment or to compare the efficiency of a number of different investments”. ROI is calculated by taking the benefits or returns on an investment and dividing it by the initial cost of making the investment to see whether or not a profit has been made from the process. While this may seem to be a one-note method of determining profit, it is likely that different companies, since they have differing marketing strategies and of course different products, would most likely define “profit” differently in each case. To this end, the actual calculation of returns versus costs will differ for every company. While this does allow for greater flexibility and usage of a single calculation, the very fact that it can be modified so much means that there is a potential for the calculation to be twisted to say whatever people want it to say. However, this article is concerned only with the proper use of the ROI calculation.

As we move forward into 2015, our task is to decide how big data and ROI (Return on Investment) coincide in digital marketing, and how we as companies and individuals can use that information. Big data is commonly spoken of as being comprised of five different areas: volume, velocity, variety, variability and complexity. Each of these areas represents a possible way to enhance ROI calculations, since the more data these calculations have, the more accurate they will be in their predictions of profit and loss.

The increased accuracy of ROI calculations due to the use of big data will have several side-effects: as well as giving companies more information for the final calculation, it will allow for greater digital maturity because the sheer breadth of information available will allow the company in question to be more discerning in what it actually means when it talks about the gains of an investment versus the costs of one; the use of big data in these calculations will also allow for companies to connect the dots between the various areas of investment.

Big data is an area which is growing, and which I predict will breathe new life into digital marketing during the year ahead of us. While this article shows one potential way in which it could revolutionise ROI as used in marketing, it remains to be seen what will happen.