What Can Data Do For Your Company?
Your credit card, your computer, your phone, even your TV produce data about you that is precious to companies that want to sell you something.
Target Data helps them mine it, and a lot more companies want picks and shovels these days.
The Chicago-based company, backed by Richard Branson, has tripled headcount in the past two years to more than 30. Revenue doubled last year to more than $10 million, and Target Data was profitable last year, says CEO Ross Shelleman. Customers include Versace, the RoomPlace, Valspar and the Chicago Fire soccer team.
Target Data is one of several data analytics companies in Chicago focused on advertising and marketing, including 4C Insights, Networked Insights and Civis Analytics. They’re growing fast, attracting capital and talent, and building on Chicago’s long history as a home for marketing innovation that ranges from catalog pioneers Montgomery Ward and Sears to data gatherers Nielsen and IRI.
“Having top-tier universities producing great data science talent, balanced with strong consumer marketing talent from both Fortune 500 companies and agencies, has made for a good recipe for startup success,” says Sach Chitnis, managing partner at Chicago venture firm Jump Capital, an investor in 4C Insights.
Marketers have always used data—from phone books to credit cards—to find ways to sell more to existing customers and find new ones. What’s changed is an explosion of data and the availability of more powerful but less expensive technology put into the hands of engineers and data scientists to gather and analyze it.
“Some of these techniques have been available for a long time, but they’ve only been available to those with the most resources,” says Michael Mathias, president of Target Data. “It used to take several million dollars and a year to get started. Now you can do it in 30 days for five to six figures.”
Target Data’s business model is to take sophisticated data mining and analysis used by Fortune 100 giants and serve them up to businesses with $100 million to $1 billion in revenue. It’s a crowded field, with giants like Merkle and countless smaller players. “Everybody has some sort of machine learning and algorithmic offering,” says Gerry Murray, an analyst at research firm International Data, based in Framingham, Mass. “In (marketing tech), the innovation curve is starting to taper off.”
Why all the fuss over data?
“Companies want to find the most valuable prospects but spend as little as they can to do it,” says Scott Bailey, head of strategy and analytics at Target Data. “We help them figure out who their best customers are and find more of them.”
Target Data helped Lombard-based furniture chain the RoomPlace lift sales 15 percent at three stores with the lowest mattress sales in the company, using a combination of online and offline advertising, says Cara Wallace, vice president of marketing.
It also helped the Chicago Fire identify 100,000 people most likely to become customers. Results for a particular season ticket promotion were 35 percent higher than the year before, says Mike Ernst, senior vice president of ticket sales and marketing.
DATA EXPLOSION
Target Data’s roots go back a decade, when Shelleman and Andrew Hamilton started mining real estate data on the web to help find customers for the Pods household storage franchise they bought in Australia. They identified people who were about to move and found out that other companies valued that data, too. Shelleman pitched the idea to Branson during a chance meeting while vacationing at one of the British billionaire’s properties in Morocco. Branson invested an undisclosed amount through his family office.
Things got more interesting when Target Data married its data to troves of consumer information gathered on every household in the U.S. by giants Acxiom, based in Little Rock, Ark., and InfoGroup, based in a suburb of Omaha, Neb.
Because consumers have addresses in the physical and the virtual worlds thanks to computers and smartphones, marketers can target them with personalized ads and offers. Target Data’s clients use everything from email to direct mail.
“The basic demographic data has always been there,” Bailey says. “What marketers have now is the behavioral activity.”
Much of that comes from mobile phones—which are almost always on, generating location data and a history of websites visited, videos viewed and purchases made. During the Copa America soccer games last summer at Soldier Field, Target Data teamed up with a vendor using geofencing technology to gather smartphone data to help the Fire identify potential new customers.
Conversant Media, which grew out of Chicago-based Dotomi, a pioneer in using data to personalize digital marketing, has a database of 160 million consumers, each of whom have three to four devices, generating 120 billion data points a day, says Ric Elert, president. In 2011, they produced 16 billion data points a day. (Unlike Target Data, Conversant tracks individuals anonymously, based on their devices, rather than using their names and addresses.) Conversant sends out 100 million customized messages—such as emails and texts—a day on behalf of advertisers.
All this data has given rise to the geek marketer, resulting in an arms race for technology talent. Infutor, based in Oakbrook Terrace, received a $40 million investment last fall from Norwest Venture Partners and has grown from about 50 to 75 people in the past year. It’s heavy on engineers and data scientists, says CEO Gary Walter.
At Conversant, which employs nearly 600 people in Chicago, Elert says, “I’ve got 35 Ph.D.s—everything from auction theory to medical models. We have unlimited open headcount for engineers and data scientists.”
It’s a good time to be working in the mines.
Source: Crain’s Chicago Business
