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Attribution Management 101


      September 7, 2012
 Go Sugihara, CEO, ATARA, LLC
Introduction
Go Sugihara
• Born March 1969 in Hiroshima
• Grew up in Oregon (yay!)
• KDDI, Intel(Intel Inside Marketing Program),
   Yahoo!(Overture), Google, ATARA
• Specialize in marketing automation systems development and
  attribution management, paid search consulting
• Published two books:
   – Paid Search: Professional’s Logic
   – Attribution: A Complete New Way to Consider Ad Effectiveness




                                                                    2
Agenda
• Attribution Management 101
• Case Study
• Current Business/Challenges




                                3
ATTRIBUTION 101




                  4
Conventional Online Ad Campaign and Analytics
                         Online Ad Campaign

     Media and Tactics                            Your target CPA(Cost Per Acquisition) = $120

                                              10 CVs with $1000 = $100 CPA Great. More budget!

        Paid Search


                                              20 CVs with $0 = $0 CPA       Really great. Keep using.

       Organic Search                  Campaign Goal
                                      = CV(Conversion)
                                      = Online Purchase

                                                                            Not good. Reduce budget
                                              5 CVs with $2000 = $400 CPA
                                                                            or cease campaign.
         Banner Ads


                                                                            Not good. Reduce budget
                                              8 CVs with $1200 = $150 CPA
                                                                            or cease campaign.
         Affiliate Ads



                                                                                                 5
What Does Actual User Purchase Behavior Look Like?




Banner Ads

                              Paid Search
                                                     Organic Search
             Organic Search



                                                                          Only last tactic that was
                                    Banner Ads                            clicked gets attributed credit



                                            Affiliate Ads             Paid Search
                                                                                                  Goal
    Assists do not get attributed credit                                                   = CV(Conversion )
                                                                                           = Online Purchase

                                       Shouldn’t these “assists” get credited?
                                                                                                               6
There are Similar Things in the World of Sports

                       Soccer                                           Hockey


                      Goal!                                           Goal!




                                                           Player A           Player B   Player C
           Player A                 Player B
Record    <Goal>                   <Assist>         Record <Goal>             <Double Assist>




In Soccer, Assist is actually an unofficial stats   In Hockey, the Art Ross Trophy is awarded
not counted by FIFA, but is counted mainly          to NHL player who leads the league in
by numerous soccer-related media.                   scoring points at the end of the regular season.
                                                    Scoring Points = # of Goals + # of Assists
                                                       Assists are considered to be valuable
                                                                                                       7
So What is Attribution Management?
A simple definition of “Attribution” (in the marketing world)

   = Giving credit where credit is due




                                                                8
Background: Why Attribution Management Started
•   Media fragmentation is making it difficult for marketers to see what is happening
     – Need to visualize in integrated, holistic fashion

•   Economic situation
     – Management needs to see hard evidence to approve budget

•   Return is maxed out with paid search

•   Re-boost of display advertising through DSP/Ad Exchange eco-system
     – But still need proof that display advertising really works

•   Social media is gaining momentum, but is it really working?

•   TV and print? PC and Mobile? Marketing is getting more and more difficult to
    make the right decision




                                                                                   9
3 Commonly Used Phrases
• Attribution Analysis
An analysis on how much contribution to conversion each of the
marketing tactics had using recorded data (conversion path data)

• Attribution Modeling
Selecting or designing the analytical model most likely to output the
correct contribution results. Depends greatly on business model,
industry, product/service lifecycle, etc.

• Attribution Management
Based on attribution analysis, a practice to optimize and gain
maximum return by re-allocating budget or changing media portfolio



                                                                        10
Essential Significance of Attribution Management
• In order to stimulate consumer attitude change, which is the
  purpose of advertising, attribution management is a practice
  used by companies to restructure marketing activities by
  obtaining holistic view of the entire consumer purchase
  behavioral trend which is becoming ever-so-complicated and
  fragmented

  In this difficult time for marketers, it is very important to be able to
  visualize what is going on holistically,
  so that you have a better chance of making the right marketing decisions




                                                                             11
How is it Actually Done?

  Attribution Management Processes

                                Accumulate
      Select/implement                             Select/Design
                              conversion path
             tools                                    Models
                                   data



                             Run simulation on
                                                     Evaluate
        Run analysis           re-allocated
                                                 simulation results
                                  budget


      Execute campaign
        w/new media
            plan


                                                                      12
Tools and Conversion Path Data
• Conversion path data:
    – is a string of data that can recorded using browser cookies
    – browser cookies enables clicks(views) that had direct/indirect relation to
      conversion to be connected, creating a path-to-conversion data
    – can be recorded up to 10-100+ historical tactics that lead to conversion
                                Paid Search        Ad Network A        Organic Search         Ad Network B
               CV
                               Keyword: aaa         Creative: zzz       Keyword: ccc          Creative: yyy
          2012/9/5 13:00
                              2012/9/5 12:00       2012/9/4 9:00       2012/9/3 23:00        2012/9/1 14:00
             ID: 123
                                  ID: 123             ID: 123              ID: 123               ID: 123


            Tools/Solutions                            Providers                   CV Path        View-       Modeling/
                                                                                    Data          Thru         Analysis
   Web analytics                          Adobe, Google                           OK           OK             OK

   Ad Effectiveness Measurement           LockOn, Bebit, Cyber Agent              OK           OK             No

   3PAS                                   DFA, MediaMind, Fringe81, DAC           OK           Yes            OK

   Attribution Analytics                  Market Share, VisualIQ, C3 Metrics,     Yes          Yes            Yes
                                          Adometry
   Campaign Management Tools              Ignition One, Marin Software,           Yes          Yes            OK
                                          Kenshoo, Adobe


                                                                                                                          13
Models
• Equal weight distribution model
Equally divide conversion credit to each tactics

• Hypothesis weight distribution model
Divide conversion credit based on hypothesis or strategy. For instance,
if introduction or growth stage in product life cycle, weigh more on
first clicks, if in maturity stage, weigh more on last clicks

• Statistical weight distribution model
Statistically calculate contribution and correlation of each tactics in
temporal sequence. Econometrics approach




                                                                          14
Equal Weight Distribution Model

                             Equal Weight
                           Distribution Model
          100%




           50%


                   1/              1/           1/
           30%      3               3            3




                   First          Middle        Last




                                                       15
Hypothesis Weight Distribution Model – First Heavy


                              First Heavy
          100%             Attribution Model




                   1/
          50%       2



                               1/              1/
                                4               4




                   First       Middle          Last




                                                      16
Hypothesis Weight Distribution Model – Last Heavy



                              Last Heavy
          100%
                           Attribution Model




                                               1/
          50%                                   2



                   1/           1/
                    4            4




                   First        Middle         Last




                                                      17
Last Click Attribution Model

                    Last Click Attribution Model


           100%                               10
                                              0%




           50%




                     0            0

                    First        Middle       Last




                                                     18
Statistical Weight Distribution Model
                                                  Tactics (a) increase in ad spend relates to increase in # of
                                                          conversions
CV

                                   (a)            Tactics (b) increase in ad spend inversely relates to # of
                                                          conversions

                                   (b)
                                                  Tactics (c) increase in ad spend will relate to # of conversions
                                                          but when surpassed certain point it will decrease

                                    (c)
                                                  Methodology is to consider the above characteristics of each tactics
                                                        and come up with the optimal combination of maximum
                                Ad Spend                conversion to total ad spend




                     # of CV = invariable + a×AD1 + b×AD2 + c×AD3 +
                  d×AD4
 Factor of each of the variables in regression equation = advertising elasticity = Attribution score

       “Where’s the optimal point in the line for the combination to get the most bang for your buck”
                                                                                                                  19
Attribution Analysis Steps



     Use a model and      Apply cost to the   Sort Attribution
     score each tactic        score and        CPA by better
       = Attribution          calculate         efficiency =
          Scoring          Attribution CPA    Attribution Rank

          Score it       Calculate “new”           Rank it
                         CPA taking into
                         account “assists”




                                                                 20
Very Simple Example of Attribution Analysis
                                   Premium         Ad Network
                                   Banner Ad       Banner Ad               Paid Search


                                                                                                         CV

         Considered to not
       have any effectiveness
                                     First              Middle                Last


                     Cost            $100              $200                  $300
Past             Attribution           0                0                      1
                     CPA              n/a               n/a                  $300


               Attribution Score     1/3                1/3                    1/3        (Equal Distribution)

Now             Attribution CPA     $300               $600                   $900
               Attribution Rank       #1                  #2                    #3


   You could say that the 2 banner ads tactics have better ad effectiveness than paid search

                                                                                                                 21
Example of Budget Re-Allocation (paid search example)
     •    Output attribution CPA by each individual keywords (even if there are 1 million
          keywords!)
     •    Given that the keywords have little margin for optimization (for instance, ranked #1 and
          have tried changing creative), using your target CPA, decide on what to continue using
          and what not
     •    For those that does not meet the target CPA, shift them to other efficient media


                                                               Attribution CPA is less
                                                                                                 Continue
                                                               than target CPA
                                                Last Click
                                              Effectiveness   Attribution CPA is more
                                                                                                 Re-allocate to Banner
                                                              than target CPA

                                Clicks                        Attribution CPA is less
                                                                                                 Continue
                                                              than target CPA


                  Impression                  No Last Click   Attribution CPA is more
                                                                                                 Re-allocate to Banner
                                              Effectiveness   than target CPA

                                                              Attribution Score is 0             Re-allocate to Banner
Paid Search                     No Clicks                     (no direct/indirect attribution)



                  No
                  Impression

                                                                                                               22
CASE STUDY




             23
Case Study: xxxx
• One of very top online xxxxx site
• Monthly online marketing budget is approx. 65 million Yen
   – Paid Search 60 mil Yen
   – Banner Ads 5 million Yen (includes premium ads, ad networks,
     retargeting, content targeting)
• Target CPA
   – Paid Search 6700 Yen
   – Banner Ads 12000 Yen
• Issues
   – Paid search is effective and efficient with good CPA but has no room
     for optimization
   – However, clients needs to increase conversions
   – Banner ads does not seem to be efficient but can it be better used?



                                                                            24
Attribution Analysis Result
                                                              Target CPA 6700 Yen
  Tactics           Cost        # of CV   Attribution Score   Last Click CPA   Attribution CPA

Paid Search      60 mil Yen      9000          16000            6666 Yen          3750 Yen

Banner Ads       5 mil Yen       420            830            11904 Yen          6024 Yen
     Premium      1.5 mil Yen     50             250             30000 Yen         6000 Yen

    Ad Network
                  1.5 mil Yen     170            155             8823 Yen          9677 Yen
   (Google-CT)
   Ad Network
                  1.5 mil Yen     180            400             8333 Yen          3750 Yen
  (Google-RM)
    Ad Network
                  0.5 mil Yen     20             25              25000 Yen        20000 Yen
   (Yahoo-IM)

   Total         65 mil Yen      9420          16830              6900            3862 Yen



• Banner Ads CPA turns out to be 12000 Yen >>> 6000 Yen
     – It means that it might be working and there’s opportunities




                                                                                              25
Re-allocation of Budget


Attribution CPA
                                                                      Re-allocate
                                             Not efficient             budget to
                                                                      Banner Ads


       6700 Yen




           High                                                 Low
        efficiency                                           efficiency
       KW1    KW2    KW3   KW4   KW5   KW6    KW7   KW8      KW9     KW10




                                                                                    26
Re-allocation of Budget


65 mil Yen
             Banner Ads:0.5
                 mil Yen       30 mil Yen
                                increase
                                                  Banner Ads:
                                                   35 mil Yen


              Paid Search:
               60 mil Yen


                                                   Paid Search:
                                                    30 mil Yen




 • No change to total budget
 • Shifted 30 mil Yen from paid search to banner ads

                                                                  27
Conversion Simulation
                     Current                         Simulated
# of CVs                                     +5500               If 30 mil Yen is shifted to Banner Ads,
                                                                    5500 CVs will likely be generated



              9450

                               -1500 from
                               decreasing paid
                               search budget




  • Simulation Result
           – +5500-1500 CVs = 4000 CVs increase possible


                                                                                                    28
Actual
  # of CVs


                                    Simulation line                 Actual line after
                                                               attribution management



                                                                  Past actual




                                                      1 month after実施後1ヶ月 management
                                                                   attribution

• Client decided to shift budget but less than 30 mil Yen (risk)
• In a month, # of CVs increase accelerated to be close to simulation
    – Reason for slow start (hypothesis): effect of banner ads takes some time
• Client was very happy and now we are supporting them in next phase
                                                                                   29
CURRENT BUSINESS/CHALLENGES




                              30
Current State and Future

Level
High




                                                                   Cookie-less tracking
                                                                   Mobile integration
                                                                   Predictive analytics
                                                                  Marketing Automation
                                               3rd Generation
                                               Online+Offline
                           2nd Generation                            No doubt it’s going to be
                                                Econometric
                                Online                               more data-driven and
        1st Generation                               Innovators
                           Click+ViewThru                            sophisticated
             Online
                                         Early Adopters
         Click-based      Early Majority
            Late Majority
Low




                                                                          実施後1ヶ月
                                                                             Time




                                                                                            31
Challenges
• Internal Silo-ed programs and execution team
   – Many advertisers have silo-ed team function and they want to protect
     their own budget
   – C-level commitment and leadership and holistic decision making is
     necessary

• Agency governance
   – When there’s multiple agencies, project management can be difficult

• People
   – Data scientist shortage
       • McKinsey ”The US faces a shortage of 140K - 190K people with analytical and
         managerial expertise and 1.5 million managers/analysts with the skills to make
         decisions based on the study of big data”
   – Not just number cruncher, someone who really understands marketing
     and tactics in operational/planning level

                 Pretty much the same challenges as IMC

                                                                                     32
33

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Attribution Management 101

  • 1. Attribution Management 101 September 7, 2012 Go Sugihara, CEO, ATARA, LLC
  • 2. Introduction Go Sugihara • Born March 1969 in Hiroshima • Grew up in Oregon (yay!) • KDDI, Intel(Intel Inside Marketing Program), Yahoo!(Overture), Google, ATARA • Specialize in marketing automation systems development and attribution management, paid search consulting • Published two books: – Paid Search: Professional’s Logic – Attribution: A Complete New Way to Consider Ad Effectiveness 2
  • 3. Agenda • Attribution Management 101 • Case Study • Current Business/Challenges 3
  • 5. Conventional Online Ad Campaign and Analytics Online Ad Campaign Media and Tactics Your target CPA(Cost Per Acquisition) = $120 10 CVs with $1000 = $100 CPA Great. More budget! Paid Search 20 CVs with $0 = $0 CPA Really great. Keep using. Organic Search Campaign Goal = CV(Conversion) = Online Purchase Not good. Reduce budget 5 CVs with $2000 = $400 CPA or cease campaign. Banner Ads Not good. Reduce budget 8 CVs with $1200 = $150 CPA or cease campaign. Affiliate Ads 5
  • 6. What Does Actual User Purchase Behavior Look Like? Banner Ads Paid Search Organic Search Organic Search Only last tactic that was Banner Ads clicked gets attributed credit Affiliate Ads Paid Search Goal Assists do not get attributed credit = CV(Conversion ) = Online Purchase Shouldn’t these “assists” get credited? 6
  • 7. There are Similar Things in the World of Sports Soccer Hockey Goal! Goal! Player A Player B Player C Player A Player B Record <Goal> <Assist> Record <Goal> <Double Assist> In Soccer, Assist is actually an unofficial stats In Hockey, the Art Ross Trophy is awarded not counted by FIFA, but is counted mainly to NHL player who leads the league in by numerous soccer-related media. scoring points at the end of the regular season. Scoring Points = # of Goals + # of Assists Assists are considered to be valuable 7
  • 8. So What is Attribution Management? A simple definition of “Attribution” (in the marketing world) = Giving credit where credit is due 8
  • 9. Background: Why Attribution Management Started • Media fragmentation is making it difficult for marketers to see what is happening – Need to visualize in integrated, holistic fashion • Economic situation – Management needs to see hard evidence to approve budget • Return is maxed out with paid search • Re-boost of display advertising through DSP/Ad Exchange eco-system – But still need proof that display advertising really works • Social media is gaining momentum, but is it really working? • TV and print? PC and Mobile? Marketing is getting more and more difficult to make the right decision 9
  • 10. 3 Commonly Used Phrases • Attribution Analysis An analysis on how much contribution to conversion each of the marketing tactics had using recorded data (conversion path data) • Attribution Modeling Selecting or designing the analytical model most likely to output the correct contribution results. Depends greatly on business model, industry, product/service lifecycle, etc. • Attribution Management Based on attribution analysis, a practice to optimize and gain maximum return by re-allocating budget or changing media portfolio 10
  • 11. Essential Significance of Attribution Management • In order to stimulate consumer attitude change, which is the purpose of advertising, attribution management is a practice used by companies to restructure marketing activities by obtaining holistic view of the entire consumer purchase behavioral trend which is becoming ever-so-complicated and fragmented In this difficult time for marketers, it is very important to be able to visualize what is going on holistically, so that you have a better chance of making the right marketing decisions 11
  • 12. How is it Actually Done? Attribution Management Processes Accumulate Select/implement Select/Design conversion path tools Models data Run simulation on Evaluate Run analysis re-allocated simulation results budget Execute campaign w/new media plan 12
  • 13. Tools and Conversion Path Data • Conversion path data: – is a string of data that can recorded using browser cookies – browser cookies enables clicks(views) that had direct/indirect relation to conversion to be connected, creating a path-to-conversion data – can be recorded up to 10-100+ historical tactics that lead to conversion Paid Search Ad Network A Organic Search Ad Network B CV Keyword: aaa Creative: zzz Keyword: ccc Creative: yyy 2012/9/5 13:00 2012/9/5 12:00 2012/9/4 9:00 2012/9/3 23:00 2012/9/1 14:00 ID: 123 ID: 123 ID: 123 ID: 123 ID: 123 Tools/Solutions Providers CV Path View- Modeling/ Data Thru Analysis Web analytics Adobe, Google OK OK OK Ad Effectiveness Measurement LockOn, Bebit, Cyber Agent OK OK No 3PAS DFA, MediaMind, Fringe81, DAC OK Yes OK Attribution Analytics Market Share, VisualIQ, C3 Metrics, Yes Yes Yes Adometry Campaign Management Tools Ignition One, Marin Software, Yes Yes OK Kenshoo, Adobe 13
  • 14. Models • Equal weight distribution model Equally divide conversion credit to each tactics • Hypothesis weight distribution model Divide conversion credit based on hypothesis or strategy. For instance, if introduction or growth stage in product life cycle, weigh more on first clicks, if in maturity stage, weigh more on last clicks • Statistical weight distribution model Statistically calculate contribution and correlation of each tactics in temporal sequence. Econometrics approach 14
  • 15. Equal Weight Distribution Model Equal Weight Distribution Model 100% 50% 1/ 1/ 1/ 30% 3 3 3 First Middle Last 15
  • 16. Hypothesis Weight Distribution Model – First Heavy First Heavy 100% Attribution Model 1/ 50% 2 1/ 1/ 4 4 First Middle Last 16
  • 17. Hypothesis Weight Distribution Model – Last Heavy Last Heavy 100% Attribution Model 1/ 50% 2 1/ 1/ 4 4 First Middle Last 17
  • 18. Last Click Attribution Model Last Click Attribution Model 100% 10 0% 50% 0 0 First Middle Last 18
  • 19. Statistical Weight Distribution Model Tactics (a) increase in ad spend relates to increase in # of conversions CV (a) Tactics (b) increase in ad spend inversely relates to # of conversions (b) Tactics (c) increase in ad spend will relate to # of conversions but when surpassed certain point it will decrease (c) Methodology is to consider the above characteristics of each tactics and come up with the optimal combination of maximum Ad Spend conversion to total ad spend # of CV = invariable + a×AD1 + b×AD2 + c×AD3 + d×AD4 Factor of each of the variables in regression equation = advertising elasticity = Attribution score “Where’s the optimal point in the line for the combination to get the most bang for your buck” 19
  • 20. Attribution Analysis Steps Use a model and Apply cost to the Sort Attribution score each tactic score and CPA by better = Attribution calculate efficiency = Scoring Attribution CPA Attribution Rank Score it Calculate “new” Rank it CPA taking into account “assists” 20
  • 21. Very Simple Example of Attribution Analysis Premium Ad Network Banner Ad Banner Ad Paid Search CV Considered to not have any effectiveness First Middle Last Cost $100 $200 $300 Past Attribution 0 0 1 CPA n/a n/a $300 Attribution Score 1/3 1/3 1/3 (Equal Distribution) Now Attribution CPA $300 $600 $900 Attribution Rank #1 #2 #3 You could say that the 2 banner ads tactics have better ad effectiveness than paid search 21
  • 22. Example of Budget Re-Allocation (paid search example) • Output attribution CPA by each individual keywords (even if there are 1 million keywords!) • Given that the keywords have little margin for optimization (for instance, ranked #1 and have tried changing creative), using your target CPA, decide on what to continue using and what not • For those that does not meet the target CPA, shift them to other efficient media Attribution CPA is less Continue than target CPA Last Click Effectiveness Attribution CPA is more Re-allocate to Banner than target CPA Clicks Attribution CPA is less Continue than target CPA Impression No Last Click Attribution CPA is more Re-allocate to Banner Effectiveness than target CPA Attribution Score is 0 Re-allocate to Banner Paid Search No Clicks (no direct/indirect attribution) No Impression 22
  • 24. Case Study: xxxx • One of very top online xxxxx site • Monthly online marketing budget is approx. 65 million Yen – Paid Search 60 mil Yen – Banner Ads 5 million Yen (includes premium ads, ad networks, retargeting, content targeting) • Target CPA – Paid Search 6700 Yen – Banner Ads 12000 Yen • Issues – Paid search is effective and efficient with good CPA but has no room for optimization – However, clients needs to increase conversions – Banner ads does not seem to be efficient but can it be better used? 24
  • 25. Attribution Analysis Result Target CPA 6700 Yen Tactics Cost # of CV Attribution Score Last Click CPA Attribution CPA Paid Search 60 mil Yen 9000 16000 6666 Yen 3750 Yen Banner Ads 5 mil Yen 420 830 11904 Yen 6024 Yen Premium 1.5 mil Yen 50 250 30000 Yen 6000 Yen Ad Network 1.5 mil Yen 170 155 8823 Yen 9677 Yen (Google-CT) Ad Network 1.5 mil Yen 180 400 8333 Yen 3750 Yen (Google-RM) Ad Network 0.5 mil Yen 20 25 25000 Yen 20000 Yen (Yahoo-IM) Total 65 mil Yen 9420 16830 6900 3862 Yen • Banner Ads CPA turns out to be 12000 Yen >>> 6000 Yen – It means that it might be working and there’s opportunities 25
  • 26. Re-allocation of Budget Attribution CPA Re-allocate Not efficient budget to Banner Ads 6700 Yen High Low efficiency efficiency KW1 KW2 KW3 KW4 KW5 KW6 KW7 KW8 KW9 KW10 26
  • 27. Re-allocation of Budget 65 mil Yen Banner Ads:0.5 mil Yen 30 mil Yen increase Banner Ads: 35 mil Yen Paid Search: 60 mil Yen Paid Search: 30 mil Yen • No change to total budget • Shifted 30 mil Yen from paid search to banner ads 27
  • 28. Conversion Simulation Current Simulated # of CVs +5500 If 30 mil Yen is shifted to Banner Ads, 5500 CVs will likely be generated 9450 -1500 from decreasing paid search budget • Simulation Result – +5500-1500 CVs = 4000 CVs increase possible 28
  • 29. Actual # of CVs Simulation line Actual line after attribution management Past actual 1 month after実施後1ヶ月 management attribution • Client decided to shift budget but less than 30 mil Yen (risk) • In a month, # of CVs increase accelerated to be close to simulation – Reason for slow start (hypothesis): effect of banner ads takes some time • Client was very happy and now we are supporting them in next phase 29
  • 31. Current State and Future Level High Cookie-less tracking Mobile integration Predictive analytics Marketing Automation 3rd Generation Online+Offline 2nd Generation No doubt it’s going to be Econometric Online more data-driven and 1st Generation Innovators Click+ViewThru sophisticated Online Early Adopters Click-based Early Majority Late Majority Low 実施後1ヶ月 Time 31
  • 32. Challenges • Internal Silo-ed programs and execution team – Many advertisers have silo-ed team function and they want to protect their own budget – C-level commitment and leadership and holistic decision making is necessary • Agency governance – When there’s multiple agencies, project management can be difficult • People – Data scientist shortage • McKinsey ”The US faces a shortage of 140K - 190K people with analytical and managerial expertise and 1.5 million managers/analysts with the skills to make decisions based on the study of big data” – Not just number cruncher, someone who really understands marketing and tactics in operational/planning level Pretty much the same challenges as IMC 32
  • 33. 33