Data-Driven Marketing is a $156 Billion Economy

Last year, companies spent some $156 billion on marketing services that couldn’t have been performed without individual-level consumer data. The data-driven marketing economy now has a value and a name thanks to a study unveiled yesterday by Direct Marketing Association President and CEO Linda Woolley at the DMA2013 conference in Chicago.

Commissioned by the association’s Data-Driven Marketing Institute, professors John Deighton of Harvard and Peter Johnson of Columbia conducted the study to find the answers to two questions: How much incremental value does data-driven marketing add to the U.S. economy, and how much of that value can be pegged to the flow of data between companies?

Some key numbers unearthed by the professors:

$32 billion: Value added to the economy by services that depend directly on data exchanged or rented among firms

$78 billion: Value added by services that indirectly depend on data transfer

676,000: Jobs created by the data-driven marketing economy (DDME)

$34 billion and $32 billion: Amounts added, respectively, to the DDME by its two largest contributing segments: e-commerce and postal production

Together, e-com and postal concerns make up 43% of the DDME. Other significant contributors included search and digital audience assembly, teleservices, fulfillment, loyalty, and direct/CRM customer targeting.

Deighton and Johnson employed a conservative methodology in arriving at these figures, taking into account only what companies spend on data and data services and not the benefits they received in exchange. Considering that most companies collected more in revenues than what they spent on data, the true amount of data-driven contribution to the economy figures to be considerably greater than $156 billion.

“The study fills a significant gap in understanding about massive changes currently transforming the U.S. marketing and advertising industries,” Woolley said. “The results of this first-ever effort to systematically and objectively map, measure, and analyze the DDME will benefit anyone with an interest in a vital…marketplace for goods and services in the U.S.”

Woolley also noted that the study aimed to serve notice to government policymakers by affixing a number to what the nation’s economy stands to lose if further regulation were to impede the responsible exchange and usage of customer data.

Professors Deighton and Johnson will give policymakers and industry thought leaders a briefing on their study on October 29 at the National Press Club in Washington, DC. Others interested in digging deeper into the research may participate in a webinar conducted by the study’s authors this Thursday at 2 p.m. ET.

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