Forrester Welcome to the Era of Dig

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EXECUTIVE SUMMARY

Interactive channels continue to prove their worth or revenue generation and customer engagement,

but the growing complexity and volume o digital interactions cause analytics challenges. raditional

techniques such as web analytics were not designed or the breadth o channels, devices, and speed

that uel today’s digital interactions. Te underlying design o web analytics is undamentally

inadequate to accommodate emerging channels, sophisticated consumers, technical challenges, and

the democratization o analytics within data-driven enterprises. Because subpar analytics put customerrelationships at risk, Forrester is redefining the modern practice o web analytics as “digital intelligence.”

Tis new approach to analytics brings a set o expanded requirements and calls on firms to consider

their technology rameworks, organizational structures, metrics, and optimization practices.

THE DIGITAL MARKETING MIX DEFIES TRADITIONAL ANALYSIS APPROACHES

Growth in interactive marketing spend continues unabated, urther cementing the importance o digital

channels to commerce and customer engagement.1 Why? Interactive marketing is effective across all

phases o the customer lie cycle — driving traffic or discovery, delivering content or exploration,

supporting eCommerce or buying, and reinorcing engagement through customer relationship

management (CRM), loyalty, and support — and ollows the ongoing shif o wallet share to digital andemerging channels.2 Given the investment and revenue at stake, analytics is a critical unction to support

the development, validation, and optimization o digital channels. And web analytics is the logical

hub o interactive channel analysis, based on the historical centrality o the website.3 Unortunately,

most firms’ traditional approaches to web analytics are vestiges o a simpler time, when understanding

traffic sources and on-site user behavior were o paramount importance. In today’s multiaceted digital

landscape, standard web analytics methods are ill-equipped to keep pace with:

· Intricate multichannel customer relationships. Consumers expect a high degree o coordinationand relevance across touchpoints, raising the bar or marketing execution and analytics. Te

website — although still important — is now one o many destinations. Social networks and

applications comprise independent, yet related, channels that demonstrate the distributed natureo digital customer experiences. But traditional web analytics tools primarily track on-site

behavior rather than the multichannel customer interaction unnel.

February 10, 2012

Welcome To The Era Of Digital IntelligenceWeb Analytics Is No Longer Adequate To Support Data-Driven Marketing

by Joe Stanhopewith Dave Frankland and Michelle Dickson


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© 2012, Forrester Research, Inc. Reproduction ProhibitedFebruary 10, 2012

2Welcome To The Era Of Digital Intelligence


· Device proliferation. As the number and variety o devices providing Internet access explode,the paradigm o content consumption and commerce is shifing rom fixed location computing

to multiple screens across multiple locations.4 Firms require analytics that deliver visibility to

the devices, locations, technologies, and usage patterns that characterize multidevice Internet

access. But, again, web analytics offers a deault perspective based on the fixed website.

· Dynamic interaction management. Marketers must react to changes in customer behaviorinstantly, making the link between analytics and marketing crucial or coordinating interactions

based on accurate and timely insights. Firms require near-real-time analytics that deliver

actionable insights and direct connectivity to targeting and marketing execution systems. Yet

today’s web analytics solutions mostly offer isolated reports and dashboards.

MODERNIZE MEASUREMENT WITH DIGITAL INTELLIGENCE

As marketing’s remit evolves to accommodate a growing catalog o intertwined touchpoints, so too

must marketing analytics. o close the gap between web analytics and comprehensive analytics or

digital marketing, customer intelligence (CI) proessionals must adopt an updated approach (see

Figure 1). Forrester calls this “digital intelligence,” defined as:

Te capture, management, and analysis of data to provide a holistic view of the digital customer

experience that drives the measurement, optimization, and execution of marketing tactics and

business strategies.

New Requirements Form The Foundation For Digital Intelligence

Developing an approach to analytics that adequately covers the breadth o data, analysis techniques,

and delivery o insights to support decision-making requires CI proessionals to re-imagine their

expectations and requirements (see Figure 2). Digital intelligence comprises an evolutionary step

beyond web analytics to make analysis:

· Customer-centric. As customers and prospects seamlessly move across channels and devicesat will, digital intelligence supports the analysis o customer interactions in concert rather than

discrete channel views. In addition to visibility across all channels, analysis is highly granular to

identiy, track, and interact with individual visitors.

· Data-agnostic. o conduct multichannel digital analysis, digital intelligence incorporates datawarehousing capabilities that accommodate data collection, storage, and management across abroad range o data types. Tis includes interaction data across all digital and offline channels,

customer data, and business data such as financial and product inormation.


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· Directly applicable to business actions. Digital intelligence emphasizes the direct applicationo analytics to marketing activities rather than static reporting and dashboards. Tis takes the

orm o native unctionality such as targeting, site optimization, and data mining to connect

analysis to the delivery o content and promotions. It also provides the ability to export analytics

data and insights directly into third-party optimization and marketing execution systems.

· Intelligent. Te volume and scope o the outputs rom digital analytics results in a theoreticallylimitless number o metrics, goals, key perormance indicators (KPIs), reports, dashboards, and

visualizations. Digital intelligence provides automation and data-mining capabilities to process

data and proactively detect anomalies, trends, and shifs in data to alert users and ree them

rom the time-consuming and ineffective task o manually poring over endless reports.

Figure 1 The Evolution Of Digital Intelligence

Source: Forrester Research, Inc.61276

1993 to 1999 2000 to 2006 2007 to 2010 2011 to present

Web server log analytics Web analytics Digital analytics Digital intelligence

• The World Wide Weband the web browseremerge.

• Firms understandthe volume of activityon the website.

• Website analysis isconducted, using datacollected from webserver logs.

• There is mainstreamacceptance of interactive channelssuch as search, email,and websites

• Firms understandaggregate visitoractivity on the

website, contentusage,and sources of traffic.

• JavaScript is acceptedas the web analyticsdata collectionmechanism of choice.

• There is mainstreamacceptance of socialmedia channels.

• Firms understandinteractions acrossinteractive channels

and track the successof interactivemarketing campaigns.

• Data collectionexpands to incorporatesocial and interactivechannels; vendorsextend nativedata warehousingcapabilities and partnerintegrations.

• There is mainstreamacceptance of mobileand applicationchannels.

• Firms understandinteractions acrossdigital channels in

a business contextand can take directaction on insights.

• Data collectionexpands toincorporate mobile,applications, andmedia; complimentarytag management anddata syndicationcapabilities emerge.

The golden age of web analytics

• The firstcommercialwebsite analyticssoftware is created.

• The second generationof web analyticsapplications cementthe market; Google

launches GoogleAnalytics, a free webanalytics application.

• Enterprise technologyvendors enter andconsolidate the webanalytics application

market; siteoptimizationapplication vendorsproliferate.

• Specialist vendorsenter the market toaddress emergingmedia, data

management, and big-data analytics.


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Figure 2 The Digital Intelligence Architecture

Source: Forrester Research, Inc.61276

Business

data inputs

Data

processing

Data

warehouse Analysis Action

Digital data

inputs

CRM/customer

POS

Transactions

Finance

Product

Tag management

Data ETL

Data collection

Digital intelligencedata warehouse

Direct responseand brand metrics

Data mining

Static reports anddashboards

Dynamic reportsand dashboards

Segmentation

KPIs

Interactionanalysis

Performancemonitoring

Forecasting

Personalization

Campaignmanagement

Privacymanagement

Targeting

Optimization

Customerrelationship

management

Support andcontact center

Design

Video

Ratings andcomments

Mobile website

Fixed Internetwebsite

Email

Organic search

Paid search

Displayadvertising

Games

Social networks

Affiliates

Mobile

applications

eCommerce

Social listening

Live chat

Voice of customer

· Distributed. o ully leverage digital data, analysts and tools must convey insights to businessstakeholders to drive decisions. Digital intelligence ensures that analysis capabilities are not

exclusive to technical staff and analysts, the traditional bastion o insight generation. In addition

to providing advanced analytics and annotation capabilities or power users, digital intelligence

provides nontechnical users and business stakeholders with access to role-relevant analytics

data via persona-appropriate, sel-service interaces and unctionality.


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· Right-time. Marketers place a premium on timely, high-speed analysis, due to the incrediblyast pace o digital interactions and campaigns. Waiting days or weeks or reports and analyses

incurs an unacceptable opportunity cost or ailing to continuously optimize customer

experiences. Digital intelligence delivers analysis in real time or on demand at a pace that

matches users’ decision-making schedules.

· Tightly managed. Te capacity to manage large volumes o diverse digital data sources is amandatory baseline requirement or digital intelligence. Digital intelligence offers access to a

suite o management tools — including tag management, data syndication, centralized user and

unctional administration, data warehousing, and data processing — to acilitate the availability

o high-quality data or analysis.

Digital Intelligence Demands A Broad Measurement Strategy Shift

Digital intelligence is not simply a semantic attempt to revise web analytics history. It is a newstrategy or comprehensive analytics, based on a cohesive approach that incorporates a combination

o technologies; a wide set o stakeholders and users; and multiple outputs spanning reports, data

integrations, and direct action. Delivering digital intelligence requires a measurement strategy

reboot to break away rom historical biases and develop a holistic plan. o understand the

requirements, gaps, and benefits o digital intelligence, CI proessionals must consider:

· A new technical approach. Digital intelligence isn’t available through an all-in-one product suite.CI proessionals must employ a combination o technologies to collect, process, store, analyze,

and distribute digital data. When considering technology in this environment — in which data

and unctionality integrations between tools are a given — solution packaging, data integration

capabilities, and partner programs matter as much as native unctionality and user experience.

· Ownership structure. Digital intelligence must be deeply embedded in the business ratherthan an isolated unction, raising important questions about unctional ownership. Although

business stakeholders such as interactive marketing and eCommerce proessionals comprise

the primary consumers and beneficiaries o digital intelligence, the practice remains highly

technical and dependent on advanced analytics skillsets. Because o this, Forrester believes that

a customer intelligence command center, with support rom business technology and input

rom the business, should own digital intelligence.5

· Metrics and KPIs. By providing substantially more raw data and links across data points,digital intelligence introduces the opportunity to reconsider the data sources, calculations, andinterdependencies o metrics and KPIs. For example, even the classic website “bounce rate” metric

warrants reconsideration in a digital intelligence context to determine how it could be redefined as

a universal metric to track low-engagement visits across social media, websites, and applications.

Ten marketers could use it to trigger individual-level messaging to drive marketing actions.


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· Optimization as a core competency. Conducting statistically sound experiments is the onlyway to cut through digital marketing’s diversity and volume o interactions to determine which

content, promotions, and experiences will resonate with customers and prospects. CI proessionals

must cultivate a culture o experimentation and ensure that digital intelligence utilizes testing and

targeting as a key method o making analytics actionable and embedded in all marketing activities.

W H A T I T M E A N S

DIGITAL INTELLIGENCE INTEGRATES ANALYTICS INTO THE BUSINESS

Digital intelligence distinguishes itself from traditional web analytics by going beyond expanded

data collection and generating more reports. Digital intelligence ultimately breaks down the

wall between analytics and the business, eliminating passive insight delivery to make digital

data directly actionable. Digital intelligence is a new analytics standard because it closes the gapbetween analysis and action to optimize digital customer experiences seamlessly, based on a

holistic view of customer relationships and delivered at the speed of interactions. The depth of

data, organizational, and process integration required by digital intelligence offers opportunities

to all participants in the digital marketing process:

· Digital intelligence levels the playing field for marketers. Historically, marketing successrelied on scale, volume, and resources, but success in the second digital decade depends

on an organization’s ability to deliver cohesive and relevant customer experiences. Firms —

regardless of size — that leverage digital analytics will be in position to create sustainable

competitive advantages within their markets.

· Digital intelligence opens up the market for technology providers. Web analyticsvendors are in pole position to lead the digital intelligence solution market, given their

technical capabilities and market penetration, but this is no guarantee of success. A new

entrant or entirely new class of technology provider could redefine the category, driving

innovation and providing new options to firms. Several categories are in the running;

these include data-management platforms for audience intelligence, such as Krux Digital;

data-mining and predictive analytics platforms, such as SAS; analytics platforms, such as

Causata, Splunk, and Vertica; and demand-side platforms that are connecting media and site

targeting, such as X Plus One.

· Digital intelligence pulls service providers out of their silos. Advanced requirements

and a lack of available packaged solutions create new opportunities for third-party serviceproviders as firms seek out tactical and strategic support to implement and manage digital

intelligence. A broad range of service providers will expand from their traditional footprint

to operate in the digital intelligence market. Digital marketing agencies are an obvious

beneficiary, but nontraditional service providers will gain significant traction either through

specialization, such as analytics consultants, or through the integration of digital intelligence

into enterprise IT services, such as systems integrators.6


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Forrester Research, Inc. (Nasdaq: FORR) is an independent research company that provides pragmatic and forward-thinking advice to global leaders in businessand technology. Forrester works with professionals in 19 key roles at major companies providing proprietary research, customer insight, consulting, events, and peer-to-peer executive programs. For more than 28 years, Forrester has been making IT, marketing, and te chnology industry le aders successful every day. Formore information, visit www.forrester.com.

© 2012 Forrester Research, Inc. All rights reserved. Forrester, Forrester Wave, RoleView, Technographics, TechRankings, and Total Economic Impact are trademarksof Forrester Research, Inc. All other trademarks are the property of their respective owners. Reproduction or sharing of this content in any form without prior

written permission is strictly prohibited. To purchase reprints of this document, please email [email protected]. For additional reproduction and usageinformation, see Forrester’s Citation Policy located at www.forrester.com. Information is based on best available resources. Opinions reflect judgment at the timeand are subject to change 61276

ENDNOTES

1 Interactive marketing spend totaled nearly $35 billion in the US in 2011, with continued double-digit

growth orecast or the next five years. See the August 24, 2011, “US Interactive Marketing Forecast: 2011

o 2016” report.

2 Forrester estimates that eCommerce in the US, afer maintaining double-digit growth in spite o the

recession o the past ew years, will pass $200 billion in 2012 and achieve a double-digit share o overall

retail sales, See the February 28, 2011, “US Online Retail Forecast, 2010 o 2015” report. US mobile

commerce is projected to grow fiveold in dollars and more than triple its overall share o eCommerce in

the next five years. See the June 17, 2011, “Mobile Commerce Forecast: 2011 o 2016” report.

3 I the Web is the common thread throughout the marketing mix, marketers can ill afford to miss the

opportunity to use web analytics to close the gaps between cross-channel marketing tactics. See the March

29, 2010, “How Web Analytics Will Emerge As A Cornerstone O Customer Intelligence” report.

4 Evolving orm actors and pervasive wireless connectivity have transormed computing rom an activitydone in one location to an activity done anywhere. Contrast the experience o computing on a desktop

PC, in one place with a clear start and finish time, to that o the anytime/anywhere computing done on a

smartphone or tablet. See the May 17, 2011, “What Te Post-PC Era Really Means” report.

5 Highly accountable marketing organizations have unified corporate goals and objectives that pulse through

all parts o the organization. How do they get there? Tey ensure sound organizational alignment that

coordinates customer data and analytics, marketing technology, and measurement across the enterprise.

Tis kind o organizational alignment is built upon a basic center-o-excellence model. Forrester calls

this particular model a customer intelligence command center. See the March 23, 2010, “Te Marketing

Accountability Index” report.

6 Tird-party service providers offer CI proessionals expertise, processes, and flexibility across a wide

variety o web intelligence services. Te our primary categories o web intelligence service providers are

technology vendors, marketing agencies, specialist consultancies, and systems integrators. See the January

19, 2012, “Where o Get Help With Web Analytics”report.
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