Predictive Analytics Isn't Bad, Bad Marketing Is Bad

Privacy one again reared its ugly head as a marketing stumbling block when The New York Times published “How Companies Learn Your Secrets” on February 16, 2012.

Target sent store coupons for baby clothes and cribs to a high school student, under the statistical impression that she was shopping like pregnant women do. According to the story, her father was first outraged and then abashed when he found out she was, indeed, expecting.

With the exception of this segment from Stephen Colbert, the hue and cry was predictable.

They’ve gone too far!
That’s a clear breach of privacy!
That technology should be banned!

Yes, and the automobile should be banned because bank robbers use them to make getaways.

There are bad ads on TV. There are bad billboards. There are bad ads in magazines. There are good ads that are sent to the wrong people.

The problem is not that companies are using data to try and sell you things, it’s that they are doing it badly. Much worse than bad targeting is wrong targeting.

This week, I got a letter addressed to the previous occupant of my home. That may be a common occurrence for you, but I’ve lived in the same house for 21 years. Whoever paid for that must be oblivious when buying direct mail lists. (The letter came from the Braille Institute.)

I once spent two weeks on the phone convincing AT&T that I did not speak Spanish. Its web server simply did not believe me.

The New York Times article, when read for information rather than angle, reveals that the people in Target’s marketing analytics group are doing just what they should. They are trying to send the right message to the right person at the right time. The problem is not the predictive analytics technology, the problem is the message.

Target recognized the error of its ways and modified its messaging.

“With the pregnancy products…we learned that some women react badly,” the (Target) executive said. “Then we started mixing in all these ads for things we knew pregnant women would never buy, so the baby ads looked random. We’d put an ad for a lawn mower next to diapers. We’d put a coupon for wineglasses next to infant clothes. That way, it looked like all the products were chosen by chance.”

This is good marketing. This is the art of selecting a market segment, devising an offer, and testing it. If the test doesn’t work, you modify your efforts and try again.

Using the power of analytics, the logic of a good analyst, and the magic of marketing creative, companies can get the right message to the right person at the right time.

But they’d better be darned careful because with great power comes great responsibility.