What Is Data-Driven Marketing & Why Is It Important?

What Is Data-Driven Marketing & Why Is It Important?

Data-driven marketing allows companies to optimize information about their customers and use it to develop their marketing strategy.

The marketing industry has undergone a massive change in recent years, and there is no longer a need to work off assumptions or gut feelings.

Marketers today seek information from the most reliable source:

Customer data.

What Is Data-Driven Marketing?

Data-driven marketing is a marketing strategy based on consumer data and trends and focuses on collecting and using information to drive marketing decisions.

Data-driven marketers can study what consumers buy, how they react to ads, and how they behave. The purpose of data-driven marketing is to provide actionable answers to questions about their target audience, like who, when, and where.

The data will then be used to forecast customers’ future needs, desires, and behavior, allowing a marketing strategy based on data collected about the ideal consumer to deliver the highest possible return on investment (ROI).

A data-driven approach has three main benefits:

  1. Reach customers more effectively
  2. Increase efficiency
  3. Improve performance
benefits of data-driven marketing

What Is the Difference Between Data-Driven Marketing and Traditional Marketing?

Traditional marketing and data-driven marketing have the same goal: to attract a target audience and get them to make a purchase decision.

How do they differ? Let’s find out.

traditional vs digital marketing

Traditional Marketing

Traditional marketing is any marketing activity that isn’t online. This includes print, broadcast, direct mail, phone, and outdoor advertising, like billboards or yard signs.

When identifying and crafting the right message for a target audience, traditional marketing combines data from focus groups, customer satisfaction surveys, and past sales trends with first-hand experiences and gut instincts rather than data.

A variety of methods are used to reach targeted audiences, from newspapers to radio and television commercials.

Data-Driven Marketing

Data-Driven marketing is a way of using data as the primary source of your marketing activities.

By analyzing data, marketers can:

  • Determine what types of copy will be successful among internet audiences
  • Determine the effectiveness of audience segmentation in reaching the intended audience and generating the desired response

Marketing data can be found through various media channels, including web browsers, phone networks, social media, and smart TVs.

marketing data

Here are a few specific examples of data-driven marketing:

  • Using demographic data to better target your ads
  • Using one marketing channel to inform another (like using a PPC campaign’s results to inform your SEO strategy)
  • Using customer data to increase engagement and revenue (like the ever-popular Spotify Wrapped campaign)

The data can also be used to improve search engine optimization (SEO), enabling a better understanding of the target audience.

In summary, traditional marketing has very high overheads and low profit margins and generates fewer results than data-driven marketing.

Data-driven marketing is not only cheaper with higher profit margins, but also has a much wider reach than traditional marketing. Which ends up helping a business generate more sales at a lower cost.

What Are the Benefits and Challenges of Data-Driven Marketing?

Data-driven marketing is a fantastic tool for marketers and should be incorporated into every marketing strategy to some extent. But, like any other tool or strategy, it has its benefits and challenges.

1. It Allows You to Better Target your Audience

The main benefit of understanding your target audience is the guarantee that you’ll be able to create a message that resonates directly with them.

With data-driven marketing, marketers can gain a razor-sharp understanding of their target audience.

CRM (customer relationship management) insights allow a marketer to better understand a consumer’s behavior by analyzing customer history data and using this data to improve business relationships with customers.

In traditional marketing, marketers have an idea of who their target audience is, but aside from past trends, there is no actual data to back it up.

You can use a tool like Semrush’s Market Explorer to learn about specific audience demographics.

Including and and sex:

Consumer data like age and sex can be used in data-driven marketing to improve a business's marketing strategy. 

Social media preferences:

demographics social media

And audience interests:

demographics audience interests

You can use this information to determine which customers to target on which social media platforms.

2. It Helps You Create Relevant Content for Your Audience

Collecting data will help marketers deliver the right content to the right audience. If they understand the problem that their audience is facing, they can present solutions to it.

As a result, marketers can make more effective product decisions and better understand their clients.

By evaluating consumer data, marketers gain insight into:

  • What styles of content (short-form, long-form, beginner, advanced) drive user interaction
  • What types of visuals (real people, graphs, diagrams, memes) resonate with users
  • What types of formatting (infographics, lists, case studies, videos, guides, blog posts) affects engagement

3. It Helps You Deliver a Personalized Brand Experience

Data-driven marketing helps an organization increase customer retention and build a stronger connection with its audience by creating personalized messages and content for a specific target audience.

Like this example from Mejuri:

personalized brand email

Consumers often become frustrated with brands that send out generic messages to their audience, so delivering personalized messages to your audience is essential. And it can lead to purchases or conversions.

With data-driven marketing, marketers can deliver personalized messages and experiences to their audiences by seeing how/when customers interact with the brand, purchase history, and demographics.

4. Understand Which Channels to Market Through

CRM software—like Semrush, Salesforce or Hubspot—allows data-driven marketers to track a client’s journey from initial contact to final sale.

Here’s what Semrush’s free CRM looks like:

Semrush’s free CRM

Using a CRM helps you track your current or potential customers’ actions and behaviors through your website, social media, or email marketing campaigns.

Which then sends triggered emails or alerts a sales rep if a customer is interested in the product.

By collecting this type of data, marketers can determine which marketing channels will work best for their target audience.

And which channels will lead them from their initial contact to their eventual purchase.

Challenges of Data-Driven Marketing (and How to Overcome Them)

1. Gathering Data

Collecting consumer data can become overwhelming, and many marketers question where to find this data.

Even the most sophisticated data integration tools have a limited number of sources available for data collection, resulting in your team having to perform manual data entry.

Because of this fear, marketers can overthink data-driven marketing and develop a fear of even starting it.

How to overcome this challenge: 

Analytics tools, advertising tools, social media software, and your CRM can provide insights into consumer interactions. Utilize these tools to get real data and avoid being overwhelmed by too much information.

Semrush’s Traffic Analytics tool is a good place to start.

Enter your domain and click the “Search” button.

traffic analytics tool

Then navigate to the “Audience Insights” tab.

audience insights in traffic analytics

Here, you can find out the following about your audience.

Social media and interests:

audience insights social media and interests

Audience demographics:

audience insights audience demographics

Household and income level:

audience insights household and income level

Employment status and education level:

audience insights employment and education

And domains they’ve visited:

audience insights domains

Once you’ve gathered all of the data from these tools and software, identify and manually locate the areas where you still need to collect data.

You can analyze the data you collected and apply it to your marketing plan to ensure you’re reaching the right people, spreading the right message, and making the right content.

2. Managing the Data

To maintain the benefits data-driven marketing brings, you must ensure your data is as up-to-date as possible.

You should ensure you’re using real-time data. Otherwise, it’s not relevant.

That said, manually pulling data is tedious and can become difficult for companies to maintain.

How can you overcome this?

Creating a marketing dashboard is a great way to keep data refreshed and up to date.

Marketing dashboards are used to visualize key metrics and key performance indicators (KPIs) in real-time.

Combining data from multiple sources allows you to present it in a way that is visually appealing, compelling, and easy to understand. When you have the option to customize the data views, it is easier to drill down into the data.

With marketing analytics and visualization platforms like Semrush, all your data sources can be accessed in one place.

When you’re ready to present your data, use Semrush’s My Reports feature. You can find “My Reports” under the Management tools section in the left-hand navigation.

my reports navigation

Create a report from scratch or use one of our templates.

my reports templates

You can even schedule reports for a daily, monthly, or weekly basis.

my reports schedule

3. Bringing Everything Together

Using data effectively in marketing requires the ability to collect, analyze, and synchronize the data. The goal is to integrate all systems and platforms.

And understanding what the data means and then figuring out how to apply it to your marketing strategy can feel overwhelming.

How can you overcome this? 

To overcome this challenge, you need to develop a method that works for any data type.

We like the scientific method.

First, ask yourself what question you want to be answered or what problem you want to solve. Let’s use finding your target audience as an example.

Next, make predictions. Make some educated guesses about your target audience without collecting any data.

  • What are their passions?
  • What is their typical day like?
  • What problems might they have?

From here, you are going to gather some real data. This is where your analytics tools, advertising tools, social media software, and CRM come into play.

Once the data is collected, you want to analyze it. What does it mean? Is it what you expected? Are there any overlaps? What patterns do you see? Did anything stand out?

The last step is to draw a conclusion. Ask yourself if the data you collected aligned with your prediction. Now that you have all this data, what does it mean for your brand? What does it mean for your audience?

The final advantage? You’ll know exactly who your target audience is, allowing you to create content specifically for them and solve their problems.

You’ll have all the information you need to develop a connection with them and provide them with a unique brand experience.

how to use data effectively

Why Data-Driven Marketing Should Be Part of Your Marketing Strategy

Data-driven marketing should be part of your marketing strategy because:

  • It allows you to make informed decisions based on real-world data rather than theories
  • It helps create highly targeted engagement and better conversion rates
  • It allows marketers to target the right audience, grab their attention, and give them what they want at the right time

To sum it up, data-driven marketing helps businesses understand what consumers are purchasing, when they are purchasing, where they are purchasing, why they are purchasing, and all of the steps they’ve taken from their first interaction with the brand to the final purchase.

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