Using Rocket Science to Gain an Advantage in Marketing

The startup DataXu utilizes software, initially designed to be used on NASA space missions, in order to show customers the most relevant ads online. DataXu which was founded the MIT alumnus Bill Simmons and Sandro Catanzaro leverages the big data about consumer demographics behavior in order which to help companies receive the largest ROI possible. The software analyzes past online behavior and preferences as well as utilizing data from third party sources regarding the users demographic, general interests, and purchase history. DataXu instantly analyzes all of this data to determine the specific ad from their large group of potential clients that will spur the user to take action, whatever that may be.

Advertising and marketing have by no means been an exact science throughout its history. The data regarding Return on Investment was largely an approximation, and took months to collect. This has changed dramatically as DataXu has the capability of precisely measuring ROI numbers. They are trying to break advertising down to a science and remove its uncertainty. Companies are apparently eager to employ such an approach as DataXu boasts such as Ford, Lexus, and 3M. The results speak for themselves. Ford experienced a twenty percent jump in online shopping outcomes with DataXu services.

The DataXu software was originally created by Simmons and Catanzaro while studying systems architecture with MIT Professor Ed Crawley. The team originally designed the software for NASA to determine the most practical manned missions to Mars. They narrowed down the count of feasible missions to just 1,162 from the original 35 billion potential options. The most impressive feature of this software was actually its speed. Normally, it would take quite some time to analyze all 35 billion options. But the software quickly eliminated options that were clearly unfeasible. This is what separates them from the pack, especially in the world of online advertisements in which things happen in a matter of milliseconds. NASA was mightily impressed by the team’s work as have been the customers of DataXu.

According to Laurie Sullivan from MediaPost.com, the Internet Advertising Revenue or IAB recently released a report showing that the American digital advertising revenue increased by more than fifteen percent in 2014. Last year, total revenue in this space was just below the $50 billion mark. $14.2 billion of this came in Q4 of 2014, which was a 17% increase from the previous quarter.

If you take a closer look at this data, you will see that ads in social media rose an incredible fifty-seven percent to over $7 billion in 2014. The growth of this number over the course of the year is even more impressive. Of this $7 billion, $4.1 billion came in the final six months of 2014. Over the last three years, the compounded annual growth rate sits at a remarkable fifty-five percent.

David Silverman for PWC notes how brands have finally determined how to make money from the investments they have made in social media over the last few years. The market for this platform has really matured.

Sullivan reports that the cost per click for advertisements that appear on social media sites such as Twitter, Facebook, etc. have increased in recent years. Sullivan also points out that these higher prices could influence how brands allocate their money in the future.

Brian Wieser, an analyst form Pivotal Research Group, believes that the numbers, if you dive into the data, indicate something else. The lion’s share of the growth can actually be attributed to that of Google and Facebook. If you remove these two tech giants from the data, digital advertising revenue only experienced a marginal increase.

In this article, Sullivan also reports that investments in the mobile space increased twenty-five percent last year, and now sit higher than $12 billion. Search remains the leader in advertisement revenue with it accounting for nearly $20 billion in 2014.