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Big Data vs. Neuromarketing

By Carla Nagel
blog

Competing or complementing for better

When I first heard about Twitter, I was electrified. How cool would it be if you could read into many minds around the world??! Real time! And what about the possibilities of mining this huge dataset to get a better understanding of the ”common sense” and ”the feeling of a nation”. To be frank, after a while I was a bit disappointed about the insights Twitter gave me. Yes, it might have been naïve to think that people would really share their inner thoughts in public… But the addition of approachable consumer media, like Twitter, did change the marketing landscape forever.

Welcome to the twenty-tens. The decade where we can analyze mass amounts of data real-time. It is not only Twitter that delivered a direct and huge feedback loop. Huge data sets on website visitors, loyalty programs, search habits, mobile phone usages and real-time point of sales (POS) insights into transaction data (did you know that Walmart gets over a million transactions per hour?), bring more info into the marketing department than can ever be processed and analyzed. It is the new era of big data as a new field. Although no general definition is agreed to by everyone, the consensus on calling data ”big” is when it covers the three V’: Volume (a large amount of data), Velocity (direct or fast availability of the data) and Variety (unstructured or hard to store in traditional databases).

Neuromarketing & Big Data

At first glance, you might say that neuromarketing and big data do not have that much in common. However, when it comes to market research it is not hard to find similarities. Both fields can be used to analyze consumer behavior. Both are young. As in neuromarketing, big data is on the move from the status “What is it?” to “What can we do with it?”. Big data and neuromarketing are both technology-driven. And, I hate to admit, both are often used as buzz words. Big data and neuromarketing hold the promise of being the ”next big thing”: big data and neuromarketing are mentioned among the new and innovative approaches in market research. It is exactly this similarity, the fact that both fields are considered ”the next big thing”, enabling access to the crucial consumer insight, the significant competitive advantage, that forces us, professionals in neuromarketing, to better understand the potential of big data and how it relates, replaces or complements neuromarketing. Because it will become more and more common that neuromarketing projects compete with big data initiatives, both aiming for the same innovation budget.

Neuromarketing adds a persuasion layer to your big data-defined segments

The purpose of big data is to close the gap between data that’s available, and business insights that can be derived from that data. Therefore, it is about data you already have and should use for the sake of better consumer insights. Well-known examples are of course the ”Amazon approach”: (customers who bought this item also bought…), Google and Facebook (early adopters of big data analyses) chasing you with ads based on previous surf and click behavior and your supermarket sending you direct mailings offering discounts based on your previous grocery list.

If this data is available, then it is a no brainer to use it in your marketing strategies, although it still requires a thorough understanding of how people interact with the fragmented array of marketing touchpoints. Will your consumer see the ad? Will the ad convince them? Will they believe it? Will it persuade them to click-through or - even better - buy your product? Neuromarketing shows that small things can have huge impacts on the success of your campaigns. Applying the principles of visual saliency to the color and placement of the ‘buy’ button on your website can double or triple conversion rates. To really stand out, a better understanding of how the brain processes your brand, product and communications is a very useful addition to these data-derived messages.

Big data: understanding the market and how it relates to significant variables

I believe big data is your method of choice if you want to better understand the market. Big data is largely observational data collected as a side product of the activities people get involved in. It is obtained automatically when viewing all the attributes pertaining to the kind of behavior of interest. Big data obviously can be mined for patterns that lead to hypotheses that are inferred generalizations regarding decisions and preferences.

Demographic portraits
Big data is possibly perfect for shaping a demographic portrait of your audience. What are your (potential) customers buying? What do they read, watch and click on? What are their demographics in terms of age, gender, lifecycle stage, social class, geography, etc. Based on these portraits, big data allows you to personalize your content to the max. Big data allows you to correlate so much more information to other relevant information and context, that marketers may be able to finally retire the habit of creating and marketing to personas.

Measuring audience activity
Another great application of big data analysis is getting a better understanding of consumer activity. Which websites do they visit? Which loyalty programs do they use? What is their churn rate? Are they social media users, and if so, what word choice do they have? A large amount of data helps in a
better understanding of price efficiency. Trends and relevant context predictions Big data is famous for predicting upcoming trends. Google Flu Trends1] uses aggregated Google search data to estimate flu activity. But an example closer to the marketing field is how retailers like Walmart and Kohl’s are making use of sales, pricing, and economic data, combined with demographic and weather data, to fine-tune merchandising store by store and anticipate appropriate timing of store sales.

Neuromarketing: Understanding the why of human decision-making

Neuromarketing is experiment-based, which means that the observations come as a result of a pre-planned research strategy and can be specifically fine-tuned to the question of relevance. In market research, neuromarketing stands out when it comes to human understanding -especially related to building brands, innovation or introducing new products. It helps to provide a better understanding of the human emotions and motivations related to a brand, product or service. To put it simply, when a million people say on Twitter that they hate your product, you can analyze it to death, but you must agree that it is a little late to change things! Like Frederick Douglass once said “It is easier to build strong children than to repair broken men.”

Predicting by learning why
An area in which neuromarketing, therefore, rules over big data is prediction and explanation. Neuromarketing can be used to predict the success of new products, campaigns, commercials, TV formats or movies, because it helps us understand how consumers notice, interpret, and evaluate such things. What will people see, how will they perceive it and will it stick? Relevant questions that can be analyzed by using neuromarketing methodologies.

Building brands
In the last few decades branding has moved towards relationship building between humans and brands. Successful brands care about being associated with remarkable experiences (think Red Bull), relevant engagement with their audience (think Nike+) and aspirations to achieve and create (think Apple’s Think Different campaign).

Neuromarketing provides support in a better understanding of human aspirations and needs in such consumer-brand relationships. Are the different touchpoints of your consumer journey affecting emotional engagement and support the brand a relationship based on familiarity? Only neuromarketing can answer these questions.

Understanding the ”why” of conversion
Big data provides information on who converts, and when. It is, for example, easy to run an A/B test in Mailchimp to test two alternative email designs. Such a test provides you with information on which of two email texts will convert better, but it will not give you information about the rationale of this difference, about the why. Maybe there was a third email option that converted even better, but you were unaware of it and did not test it. With a better understanding of human needs, neuromarketing helps marketers to develop products, services and communications that are more appreciated and will be used more effectively.

Exciting times for marketing

We’re approaching an exciting future for marketing and market research. To sum up, I think the key to success is to get the best out of both approaches. Armed with ”big data” for better market and segmentation understanding and inter-market correlations, alongside ”emotional data” on human decision-making, we are in the best possible shape for better business. When I was introduced to neuromarketing, I was electrified too. I’m glad I have never been disappointed and remain thrilled to be part of this marketing revolution.

Carla Nagel is Executive Director of the Neuromarketing Science & Business Association (NMSBA), the association for everyone with a professional interest in neuromarketing.

This was originally published in Insights, all NMSBA members have access to the full archive of this quarterly magazine on neuromarketing. Interested in joining? Check the options