What does it mean to be 'data-driven' and how is it different?

Digital360 on 15 May 2017

"Half the money I spend on advertising is wasted; the trouble is, I don't know which half." – John Wanamaker

In traditional organisations, making business decisions relies on hierarchical structures of authority. Older, more experienced experts are given the power to make final calls on operations, marketing and sales decisions.

But all too often, expertise loses to the power of influence, as the highest paid person in the room wins corporate political battles. Working within these systems can be slow, tedious and tiresome, with long meetings and deliberations straining company resources.

While this was once the typical structure of corporate decision-making, the modern organisation is now facing a new digital environment. Speed to market, innovation and adaptability are often the secrets that smaller organisations use to beat-out large incumbents.

And that's where the data-driven organisation comes in, with a culture of informed decision-making through data analysis, rather than guesswork. And a digital agency with a strong data-driven culture can help organisations gain a competitive advantage in the digital landscape.

What is a data-driven digital agency?

A data-driven digital agency is a partner that works with its clients to deliver digital solutions – whether that's marketing, development or strategy – through the analysis of data and the execution of insights. According to Carl Anderson in his book Creating a Data-driven Organisation, 'Data-drivenness is about building tools, abilities, and, most crucially, a culture that acts on data'.

For a digital agency, this could mean analysing data to develop creative for a marketing campaign. It could be increasing the conversion rate of an under-performing website. Or it could be creating a complete digital strategy. To be a data-driven organisation, a digital agency team needs to discover not just the ‘what’ – but the ‘why’ and the ‘how’. In other words, a data-driven agency delivering on marketing strategy needs to understand not just who their clients' customers are – but why, when and how they make purchase decisions.

This level of insight adds much more value to clients than standard reporting. Reports, which are an essential part of a client-agency relationship, are only limited tools for understanding past performance. Truly data-driven agencies use advanced tools to assist with forecasting, predictive modelling and optimisation. These tools look at not just what happened, but make accurate insights into what could happen.

To achieve this, the data-driven agency needs to have a culture around testing and tracking. Collecting the right data, trying out different approaches, and testing different ideas are all part of this culture mix. Ideally, the agency also needs to be in the development of custom data tools to assist their team in gathering the right insights. The whole agency, from the data analyst to the managers, needs to be willing to access data insights and understand its implications, and have the power and authority to make changes.

Comparing traditional agencies with data-driven digital agencies
Traditional agencies Data-driven agencies
  • Make decisions based on past experience
  • Teams operate in silos
  • Skills geared towards creative and account management
  • Integration with clients through relationship management
  • Makes decisions based on current data and models
  • Teams share collective data insights
  • Skills geared towards analysis and strategy
  • Integration with clients through technology and reports

Working with a data-driven digital agency

The benefits of a data-driven agency are around speed, clarity, performance and quality. Specifically, a data-driven agency will offer its clients:

  • Clarity and transparency – A good digital agency will always be open and transparent. If the digital agency is making decisions through data analysis, the client will often have access to similar insights, tools and reports.
  • Faster decision making – This improves both internal efficiency and the relationships between the client and the agency. The agency is able to make recommendations to the client with clear justifications and goals. This means the client is faster to market with agency deliverables and can react quickly to make the most of competitive opportunities.
  • Better agency performance – If data informs the strategy, then the result down the line with meet objectives. There are fewer mistakes made through execution and clearer communication between the client and the agency. This means higher quality results, with better returns on investment, delivered at a lower overall cost.
Without data you’re just another person with an opinion William Edwards Deming

Accessing and analysing data

The data used in analysis often depends on the type of agency and the kind of insight they hope to discover. For instance, a digital marketing agency will specially focus on marketing objectives, such as audience, engagement and sales. A web development agency will focus on conversion rates and user testing data. While a strategy agency will use business and market data. This data can be separated into two broad categories based on their complexity.

Basic data is readily available and easy to interpret and transform, such as financials, operational, and sales and marketing data. This is information which is often collected by organisations already – however, the challenge for a digital agency is access to the data. Access is important so a better, more valuable picture can be painted. For example, the added insight from sales data will greater improve the effectiveness of the marketing strategy.

Advanced data is often more difficult to collect, transform and interpret. Advanced data could include information about strategy and business development, customer service and experience, or the workforce. Large organisations dedicate management and IT resources to collecting and interpreting this information, which presents a number of challenges. According to a survey from Attivo, 59% said business users spend more time gathering data than performing analytics.

Basic data Advanced data
  • Finance and budgeting
  • Operations
  • Sales and marketing
  • Strategy and business development
  • Customer service and experience
  • HR and workforce

With the volume and depth of information available, as well as the ranging complexity of data, customised tools can add additional value to both the agency and the client. These tools, such as business intelligence, take a range of data sources, from marketing and sales to financials, to report on the performance of the client's business.

Using a shared set of tools, the friction to access and share data is diminished. Ideally, the goal is that the right data is being shared between the agency and the client, and is being transformed in a way that adds value to the client's organisation.

The future of the data-driven agency

The volume of data organisations continues to increase. And that means the data-driven agency is here to stay, as analysis and digital strategy skills become more central to all functions of business. Simply put, organisations need access to the digital services to improve their products and services, without being bogged down in the mountains of data.

For digital agencies, practices such as agile marketing will become more wide-spread. As data-driven agencies continue to deliver and build products around data, decisions are made quickly and with more confidence. That means faster iterations of marketing campaigns and strategy, as well as faster feedback and learning opportunities.

Meanwhile, as digital continues to permeate into customer lives, there will be access to a greater amount of personalised data. Already, businesses are discovering the new opportunities personalised marketing and customer service can offer. Digital marketers, in particular, are looking for a ‘single customer view’ – information about individual customers or prospects to help deliver the right message at the right time.

And finally, data-driven agencies will have access to better prediction modelling as tools become more advanced. The future of the data-driven agency is geared towards analytics and future facing decision-making, assisting clients to make marketing and business strategy decisions about what’s ahead, not on what was behind.

Interesting in finding out more about the data-driven process? Speak to a data-driven specialist.