By Bruce Newman
All organizations today need to use a wide array of databases available to learn everything they can about their target audience in an effort to make wise marketing decisions. The Obama Model has introduced the business world to a technological breakthrough in marketing that both startups and established organizations have much to learn from.
We live in a world where most businesses will either prosper or collapse on the basis of their use of marketing-related technology. In just the past seven years, the political world witnessed changes in analytics that many would have thought was impossible in a pre-Obama era. For example, in 2012, Barack Obama won with only slightly over 50% of the popular vote, but with 332 Electoral College votes, when only 270 was necessary to win. How did this happen? By relying on the use of micro-targeting technology, and only focusing on the states where he knew he had a chance of winning by a small margin, Obama was able to use his advertising dollars more effectively and efficiently than his opponent, Mitt Romney. The Obama Model has introduced the business world to a technological breakthrough in marketing that both startups and established organizations have much to learn from.
This is How the Obama Model Worked
In both runs for the presidency, the Obama campaign determined early on that by using data to pinpoint voters with greater specificity, it could run its organization with better precision and efficiency. So instead of relying on the more traditional political and socio-demographic categories of voters, such as those who call themselves Democrats or Liberals, Obama’s marketing gurus instead relied on voter analytics to target political commercials and appeals to carefully defined segments of voters. Strategists were able to use data to determine all facets of strategy, including where to target direct mail, e-mail, and other voter contacts and what messages to use.
For example, during the 2012 campaign, Obama used nontraditional media outlets to reach the less “politically inclined” population. The Obama team pulled together a new coalition of voters that included Hispanics, single women and African-Americans, all of whom may have voted for Obama because of politics he advocated, personality traits he possessed, or promises that resonated differentially with each of the various segments of voters. He was interviewed on many morning shows, Spanish-speaking radio stations, sports radio shows, and urban-aiming radio shows. The content of these interviews was decidedly nonpolitical as he answered questions about pop culture and sports, reflective of his focus on regionally significant outlets. Romney, on the other hand, chose to focus on more traditional media, making appearances on national programs, local news broadcasts and conservative talk radio, a decidedly more outdated approach.
The promotional campaigns in both elections used big databases to cull information from voters’ viewing patterns to develop advertising appeals that they were confident would resonate with the desired audience. These same methods were used throughout both campaigns to send requests for funds and volunteer support to social media sites that were frequented by voters who were most likely to support Obama. Using close to 1,000 variables to dissect their target audience, obtained from voter registration records, consumer data warehouses, and prior campaign contacts made with voters, the Obama brain-trust built an Internet dashboard that provided persuasion scores used to change advertisements in real-time on their website as targeted voters surfed through website. Decisions by strategists were built into the system to reinforce existing beliefs.
With a reliance on similar marketing-related technology, the Obama teams determined that their branding was most effective when the targeted audience shared their enthusiasm with others, in effect creating ambassadors for its product, giving it the best possible chance of being seen in a positive light by others, including those who may not initially have had a positive view of it. This played out in many ways for the Obama campaign, whether it was through word of mouth between people in a social setting or online interaction in some chat room. For example, in response to the infamous Clint Eastwood speech, where the actor spoke to an empty chair, ostensibly meant to represent Obama, the Obama campaign cleverly produced its own version which wound up playing out all over the Internet.
The imperative of any marketing organization is to implement the marketing concept which states that customer needs and wants must be understood before development of products and services. Customer analytics will provide business the same success Obama had if it is used with the same level of precision and technological savvy, which rested with a constant testing of assumptions as part of the strategic culture. It is now no surprise to political experts that on election night in 2012, the Obama team knew they had the election won if they won a few key districts in swing states, the result of their modeling of the electorate.
Similar Strategies are Being Used in Business
A decade ago, companies had to rely on surveys to gauge consumer sentiment. Today, companies are able to measure sentiment by analyzing online activity to see what consumers are shopping for. Take BlackRock, an investment group that is using Big Data to run diagnostics on tens of thousands of stocks and effectively using the Internet to build stock portfolios to respond to the needs of their clients. This was made possible by bringing onto the investment team Ph.D.’s who had expertise in areas outside of finance, stitching together a team of professionals who complemented one another. The abundance of data has existed for some time, but corporations now have both the technological capability and human expertise to mine the data to make smart marketing decisions in the same manner as described in the Obama Model.
Take the MetLife insurance company that was working in the dark for some time, not knowing which customers had multiple policies with them, and even lacking the ability to communicate on a regular basis with customers. In 2012, the company implemented a new application called the Wall, which similar to a Facebook application provided sales reps with a profile of customers to use when communication with them. Similar to the dashboard that sat online for all Obama strategists in 2012, MetLife agents had a similar dashboard that enabled them to integrate different databases, bringing up a customer’s history with the firm with only one click instead of 40. In the words of one MetLife executive, he said, “we’re a 145 year-old company that’s acting like a startup…Technology is not just an enabler. It’s the fabric of the company – and the future.” The same advances can be found in the airline industry, which have been investing in technology that allows them to mine the personal data of flyers on their aircraft. But there are limits, as British Airlines found out when frequent passengers were greeted by name at the gate as they entered the jet, a practice that was soon stopped after passengers became concerned about privacy issues. The point is that each organization has unique and different ways of using marketing-related technology, depending on the nature of what is being sold, how often the organization comes into contact with its customers, and the requirements and constraints imposed by privacy issues.
American Airlines is another case of an airline who worked with clickstream technology, an advanced system that allows a company to record everything a user does while navigating on a company’s website. This helped the airline to determine what may drive customers to purchase a ticket on American or to take their business elsewhere. The specific technology used by American, Hadoop, records all information for a limited number of users on their website, including the amount of time a user’s cursor sits on particular parts of the computer screen. If the person then leaves the site without making a purchase, Hadoop can track where the same customer went to next on the web. Similar to the system used by Facebook, Hadoop relies on software that runs on clusters of low-cost servers, allowing it to manage large amounts of information.
Text Analytics is a company that uses digital branding. For many companies, it is a challenge to process data, and they need people who understand the language of technology. Text Analytics relies on the use of patterns and trends to form conclusions about information that is generated by texts. One example of this is “sentiment analysis,” a system that allows a company to predict trends based on the attitudes of users communicated on social media.
Using social media to brand products is certainly becoming much more popular as the world of commerce continues to take advantage of the marketing strength that comes with consumers’ endorsements of products to their network of friends. At the same time, many companies have failed in their attempt to brand through social media campaigns by making a few wrong moves. Some well-known mistakes include those by companies such as the Gap and Urban Outfitters, who tied certain promotions to Hurricane Sandy, a move that rubbed people the wrong way. Also, trying to trick users into liking and tweeting alienates more potential customers than it brings in. This is the modern version of extremely gimmicky marketing, and people aren’t falling for it. Companies also fail to realize that social media campaigns are not a Monday-to-Friday effort, as everyone has learned by observing the successful use of this technology by the Obama strategists.
For example, a company cannot afford to take off a few days. If someone posts something on the Friday of a holiday weekend, it can accumulate a wave of responses over the weekend while it may be as many as three days before anyone even notices. The social media world moves so quickly it can produce unwelcome surprises. At the same time, if their brand takes an unjustified beating on social media, companies should not be afraid to strike back. The successful use of social media by the Obama campaigns leaves marketing managers with a strong message, and that is to be careful not to assume that any product or service can continue to rely on the same marketing tools to build up a company’s brand.
In general, all organizations today need to use a wide array of databases available to learn everything they can about their target audience in an effort to make wise marketing decisions. They need to know where their customers hang out; what inspires them; what motivates them and shapes their decisions; and any other piece of information that provides insight into a market segmentation strategy. This information must then be used to micro-target messages that allows a company to establish a meaningful connection with each unique segment of customers, fine-tuning it down to a segment-of-one in many cases where relationships are built with one customer at a time.
The possibility exists today for companies to use Big Data and customer analytics to look at their many different segments of customers with a new level of accuracy that did not exist before. This is well documented with the Obama Model, where professionals were hired from different industries, not only from the political world; relying on finely-tuned targeted messages that were adapted to different media depending on the voter segment, instead of utilizing a mass-marketing campaign; who always tested assumptions, whether it was the subject line in emails to prospective donors or text messages to volunteers who had to continually be motivated. We live in a new era where the technological gains made in marketing will determine the difference between success and failure in the marketplace.
The article is an excerpt from the book The Marketing Revolution in Politics: What Recent U.S. Presidential Campaigns Can Teach Us About Effective Marketing and is reprinted with permission from the author.
Bruce Newman, author of The Marketing Revolution in Politics: What Recent U.S. Presidential Campaigns Can Teach Us About Effective Marketing (Rotman-UTP Publishing/ University of Toronto Press), is a professor of marketing and a Wicklander Fellow in Business Ethics in the Kellstadt Graduate School of Business at DePaul University and founding editor of the Journal of Political Marketing.