Read: Horst, Peter and Robert S. Duboff (2015), "Don't Let Big Data Bury Your Brand," HBR, November 1.

3.The authors draw a distinction between price based promotion and brand building promotion.Is this a fair dichotomy?Can price based promotions also be brand building promotions?Why or why not?The authors seem to equate analytics with price based promotion?Why would analytics seem more amenable to designing pricing strategies than brand building strategies?

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SPOTLIGHT ON DIGITAL CUSTOMER ENGAGEMENT

Don't Let Big Data

Bury Your Brand

What Capital One learned about overrelying on analytics

by Peter Horst and Robert Duboff

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SPOTLIGHT ON DIGITAL CUSTOMER ENGAGEMENT

SPOTLIGHT ^{ARTWORK Hong Hao, My Things No. 7, 2004}

Scanned objects, digital c-print, 120 x 210 cm

2Harvard Business ReviewNovember 2015

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Don't Let

Big Data Bury

Your Brand

What Capital One learned

about overrelying on analytics

by Peter Horst and Robert Duboff

November 2015Harvard Business Review3

This document is authorized for use only by Eliseo Ilarraza in Marketing Analytics Summer 2021 taught by JOHN (RANDY) SPARKS, University of Dayton from Jul 2021 to Sep 2021.

D^{DEEP INTO THE SECOND QUARTER, the chief market} ing officer of a restaurant chain arrives at work to

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SPOTLIGHT ON DIGITAL CUSTOMER ENGAGEMENT

that were just then emerging. Recognizing how the

credit card industry could be transformed by means

find that the CEO has dropped by. In this business,as in many others, "CMO" means chief revenue of ficer to the CEO, who's here to talk sales. "There'sonly a month left," he says, "and I need a boost tocompensate for what we lost because of the weather.The data analysts over in IT tell me we get the high est response to burger and apps offers. So, time forsome coupons?"

The CMO's plan was to use the coming monthsto strengthen brand equity, through ads promotingthe quality of the food and the heritage of the brand,while moving away from the emphasis on discountsforced by a tough first quarter. But when the bossasks for something, what can you do?

This all too realistic scenario illustrates the classictension for CMOs and, we might say, the main rea son their high-level job should even exist: to achievejust the right balance between short-term revenuepursuit and long-term brand building. Advancedmarketing analytics and big data make that jobmuch harder today. If it was difficult before to de fend branding investments with indefinite and dis tant payoffs, it is doubly so now that near-term salescan be so precisely engineered. Analytics allowsa seeming omniscience about what promotional of fers customers will find appealing. Big data allowsimpressive amounts of information to be obtainedabout the buying patterns and transaction historiesof identifiable customers. Given marketing dollarsand the discretion to invest them in either direc tion, the temptation to keep cash registers ringingis nearly irresistible.

We can speak to the power of analytics directly,because one of us led marketing efforts for manyyears at Capital One, and the other is a longtime ad viser to that company and others. Capital One was

"born analytical" in 1988 as a credit card company wholly invested in the data-crunching capabilities

of computer analysis and continual scientific testing,its founders outlined an information-based strat egy that would not only give it a competitive edgeas it went to market, but ultimately define its entireculture. The ability to gain granular insights intothe behavioral economics of very narrowly definedsegments allowed Capital One to make credit cardoffers to far more consumers at far more attractiverates with far less financial risk. Back then the offersweren't electronicbut direct mail provided morethan enough closed-loop feedback for analysis, andCapital One was able to out-innovate its competitionby learning from it.

That history makes the direction that CapitalOne's marketing has recently taken rather surpris ing. After a decade of promotions that drew on ever expanding digital data sources, which resulted ingrowth that catapulted the company into the Fortune

200, Capital One's CEO, Rich Fairbank, decided thatthe company should invest more in brand building.Most companies have gone in the opposite di rection in recent years. Inspired by success storieslike Capital One's, organizations around the worldconcluded that they were overinvested in brand building campaigns with unclear returns and startedpushing toward a greater reliance on promotionalanalytics. But Fairbank saw a troubling future fora company whose name held no relevance for cus tomers and relied instead on the appeal of the Visaand MasterCard brands. Indeed, he commissioneda brand-equity study to understand how consumerssaw Capital One, and it identified only one attributethe brand overwhelmingly owned: "They send melots of mail."

In the past few years we've learned a lot abouthow to strike the necessary balanceboth throughCapital One's course correction and throughinsights gained from other marketers we respect.

If it was difficult before to defend brandinginvestments with indefinite and distantpayoffs, it is doubly so now that near-termsales can be so precisely engineered.

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Idea in Brief

A CLASSIC TENSION

Marketers have always hadto strike a careful balancebetween brand building andshort-term sales promotion.Depend on too much of thelatter, andas Capital Onelearnedyou'll wind up witha brand name that doesn'tstand for much.

MADE WORSE BY BIG DATA Today that balance is harderto strike than ever because ofbig data and analytics and thehighly targeted promotionsthey enable. The temptationto neglect brand investmentsin the pursuit of sure sales isnearly irresistible.

THE ADVICE

To protect your brand, makeevery message do double duty.Use insights from data to makethe long-term case for brandinvestments. Don't pursuesales offers you can't defendin brand terms. And go to newlengths to ensure productivecollaboration between yourbrand mavens and yourdata analysts.

Here we offer some practices that amount to a play book written by the smartest CMOs we know, whosecompanies target specific customers with short-termpromotions but also depend on strong brands.

Marketing News

Many students of marketing are familiar with theclassic case of the weekly newsmagazine that pro moted its way to irrelevance. Time enjoyed a cir culation of 4.6 million at its peak, in 1988. Despitea 31% increase in the U.S. population since then, thatnumber today is below 3.3 milliona 30% drop. In2014 Time was finally spun off by Time Warner, thecompany that grew from its once strong foundation.The magazine was no longer earning its keep.

The first challenge came in the form of all-newscable channels, which by accelerating news cyclesmade it difficult for a print weekly to carry suffi ciently current information. Time's marketers re sponded with a TV ad that made things much worse:

"Hi, I'm Judy, one of the operators here at Time maga zine. Remember, if you call now, you'll get Time atalmost half off the cover price. And this exclusiveTime AM/FM walkabout, free. This offer ends soon,

so call right now. Our operators are standing by."Desperate to replace the subscribers it was los ing, Time ran blatantly promotional ads that weredisconnected from the traditional image campaignit had under wayone that emphasized the heritageand quality of Time journalism and highlighted thebrand's personality. Thus the magazine unwittinglyset up an experiment, and the results quickly floodedin. The promotional ads were so effective that Time soon killed off its brand campaign. A truly sad aspectof the case is that the editors had been working hardto create a better Time for a sped-up era. They knewthey had one of the strongest brands for news ina world that had suddenly become news-obsessed.

Their circulation-focused colleagues, by doubling

down on the "call now" offers, not only failed to

communicate thatthey implicitly conveyed a lack

of faith in the brand.

Time's is hardly the only case that teaches

a simple truth about maintaining balance. Michelob

beer, for example, was for many years the premium

brew that "weekends were made for"until price

promotions sent it spiraling down to the bottom of

the barrel. Brand building is necessary to sustain the

healthy margins that allow a business to keep fulfill

ing its brand promise in the long run. But because of

the natural tension between brand equity and sales

promotion, any pressure to spur revenue in the short

term will threaten brand-building investments.

With that tension in mind, consider how great

the pressure has become. Big data and analytics

can put promotions on steroids. As a startling New

York Times story revealed, they can enable a retailer

to use a customer's history of buying pregnancy

related goods to seize the opportune moment for

promoting new-baby goods. As recent moves in the

personal insurance market show, they allow the

tailoring of price offers to individuals' revealed hab

its to replace large-group risk pooling. In ways we

encounter as consumers every day, they enable sell

ers to dangle offers with uncanny insight into what

will make us bite.

Make Every Piece of Messaging

Do Double Duty

At Subway, whose franchisees operate more than

40,000 restaurants in some 100 countries, CMO

Tony Pace managed to get the balance right dur

ing his tenure: The Subway name stands for a set

of brand promises and simultaneously drives sales

to the 40 million customers the company serves

every week. Pace told us his secret: Rather than

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SPOTLIGHT ON DIGITAL CUSTOMER ENGAGEMENT

try to balance promotions and image-building

campaigns at the portfolio level, his organization

strikes that balance in every element. For example,

"Our five-dollar footlong promotion also features

some of our 'famous fans' [such as the star athletes

Robert Griffin III and Michael Phelps]," he says.

"Their presence in the ads is for branding, not just

sales." In fact, what began in 2008 as a four-week

sales-seeking promotion turned into a strategic

$4 billion brand asset, complete with its own catchy

jingle, logo, and hand gestures signifying "five

dollars" and "footlong."

Subway is a perfect example of a company whose

marketing could easily be taken over by analytics

driven promotions. With a strong loyalty program

and many cardholders subscribing to receive elec

tronic promotional messages, it has an enviable abil

ity to track and influence its customers' behavior.

Pace points out, however, that if analytics-driven

promotions are programmed to maximize sales in

the short run, they will always push to a given cus

tomer whatever that customer has ordered most of

ten. (Other offers have a lesser chance of prompting

immediate action.) That is destructive in the long

term, because, as the company knows, the bigger a

customer's "repertoire" (sandwich types ordered

more than once), the more loyal that customer

remains to Subway.

Even worse long-term effects, Pace notes, would

come from overly automated media buying and

ad placement. "Programmatic marketing can lead

to activities that are off brand strategy and brand

destructive," he told us. "I'm not going to abdicate

the messaging decisions."

Yet if a marketing team stays focused on the

right long-term goals, big data can often help pur

sue them. Subway's new ability to uncover sales

relationships among the 20 different sandwiches it

offers, for example, means that it can see opportuni

ties for growing a customer's repertoire. The unprec

edented quantity of data available to his market

ers, Pace says, "does lead to enhanced precision of

hypothesis making."

Pull Branding-Level Insights

from the Data

As we looked for other companies that had effec

tively balanced branding and sales promotion, it

was hard to ignore what Mark Addicks managed to

achieve, both for General Mills and personally. By

6Harvard Business ReviewNovember 2015

the time he retired, in 2015, he had been with thecompany 26 years, making him, as Advertising Age reported, "one of the longest-tenured CMOs in thefood industry."

Today Addicks describes General Mills' use ofbig data as evenly balanced between the pursuitof short-term sales and the building of long-termbrands. But it wasn't always that way, he says.

"Initially, data was used simply to drive sales: adver tising on the right day of the week, adding precisionon when to engage, knowing what offer to put infront of whom, which pie to focus on for which partof the country." Indeed, Addicks was more comfort able than many other CMOs with "letting the datatell us the consumer logic" for a promotion. He of fered one example of a pattern revealed by web data:Many shoppers who looked at a certain kind of yo gurt went on to consult certain chicken recipes. "Itmay seem odd, but we are now starting to follow thelogic without questioning it," Addicks says.

Over time, such assumption-challenging pat terns have yielded insights that have helped GeneralMills deepen its brand relationships and generatecontent that is more relevant and more meaning ful. In addition to enabling targeted offers, granular,

data-driven understanding of consumer behaviorand segments can reveal the shared concerns andunderserved needs of subsets of customers, suchas those who have young children or those who areresponding to cholesterol guidance from a physi cian. "This is hard for people to get their headsaround," Addicks says. "People worry about takingtheir eye off the brand when you get that granular."

But when a marketer's message can strengthenthe connection between how consumers perceivea brand and the particular problem they need tosolve, he says, it "drives sales, but also links to thebroader brand positioning."

For Addicks, perhaps, this was a natural directionfor analytics to take. Somewhat atypically, whenbig data began to generate all the hype, he pushedhard to build the company's capabilities with it. Butwhen his team made its first pitch to the rest of theC-suite, its emphasis on the predictable sales pay off "really hurt our efforts to get the investment," hesays. The company "so wants to focus on buildinga brand and serving customers that a focus on dataseemed inconsistent with that." Now that it's clearthat data can be just as useful in brand building, theinvestment is less controversial.

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Use Data to Make the Case

for Brand Building

Mark Addicks was in a company that understoodand loved brand building, and he had to advocatefor data's role in that. More often, as we've said, thebrand builders are on the defensive, because othersin their company want to see more sales emphasis.

That's why we were very interested by a companythat makes a strong case for brand building with data. Caesars Entertainment gained a reputation earlyon for data-driven decision making. Under the lead ership of Gary Loveman, its culture became bothsales-oriented and deeply analytical, with a generalbias toward elements that are measurable and trans actional. So when Tariq Shaukat became the CMO,he was prepared to drive even more accountabilityand granular analyticsbut he was also determinedto put them at the service of brand building. "With

the precision available now in zip+4 TV ad targeting,we're taking a direct-marketing approach to adver tising," he explains. That means the company can rigorously test and compare the effects of brand focused versus promotion-focused advertising.And once customers attracted by either type walkin the door, transactions inside the casino reveal"how they behave."

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Given the nature of Caesars's business, says

Shaukat, the real brand building is done on each

property, as guests experience what the company

calls its "total service." The big data Shaukat's team

uses includes not only transactions with guests, but

also the answers to more than 500,000 feedback sur

veys every year. Together these offer deeply tactical

insights as to how components of the experience

drive brand perceptions and where investments

will have the most impact. Caesars can also discover

how customers' brand perceptions correlate with

their lifetime value to the companyand therefore

can predict how an investment that increases brand

ratings will translate into incremental revenue

gains. In other words, Shaukat says, "if we can move

from a B to an A rating of our brand, that will have

x impact on results."

It's gratifying to see that interrogating larger

data sets with better questions can lead to very dif

ferent marketing decisions. Today Caesars's TV ads

are almost wholly branding-oriented, designed to

heighten anticipation and emotional appeal. (A five

second promotional offer at the end allows them to

do the double duty that Tony Pace advises.) Although

the corporation has run into trouble from its debt

load, the brand and core business remain strong.

Fidelity Forges a Path to Balanced Marketing

One ad campaign that effectivelymelds branding's meaning with bigdata's targeting features a greennavigation line, the brainchildof Fidelity's EVP of corporatecommunications services, JimSperos. When the campaign waslaunched, in the depths of therecent recession, Fidelity wasresponding to an environment inwhich many savers and investorsquestioned their own acumen.The company wanted them toknow it could serve as an adviseras well as a provider of mutualfunds. Although each customer's

financial situation and goals wereunique, Fidelity could put peopleon the right track and help themstay there. As Speros tells it, the

metaphor came to him after hemoved to Boston and had toconstantly refer to his car's GPSsystem: "Why couldn't Fidelity bethat kind of guide?" he wondered. Marketing programs and

advertising campaigns aretypically designed either toburnish the brand (by creativelycommunicating its essence,associations, reputation, and soforth) or to generate sales

(by providing specific informationabout an offering, often witha call to action or an incentiveto buy right away). The greenline has endured as a powerfulbusiness builder because itbridges the gap. Jim Sperosreceived the Financial

Communications Society's

"Financial Marketer of the Year"award in 2009; the green linecampaign won a Cannes Gold

Media Lion in 2011; and thecampaign is still vibrantly

pushing its point and Fidelity'sproducts in 2015.

November 2015Harvard Business Review7

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SPOTLIGHT ON DIGITAL CUSTOMER ENGAGEMENT HBR.ORG

Don't Do It If You Can't Defend It

We've mentioned Mark Addicks's willingness

to "follow the logic" of data analysis that makes

surprising connections and suggests nonintuitive

marketing moves. In, say, a grocery setting, the risk

is small enough that it's worth trying out a novel

promotional idea. At Capital One, however, be

ing part of customers' financial lives means that

computerized decision making could backfire if

Even a coupon offer sayssomething about the brand,and even an ad with no

call to action changes theconsumer's proclivity to buy.

it produced outcomes that were inconsistent with

the company's values or brand.

Some CMOs apply the standard "Can I intuitively

explain this before simply following the dictates of

the data?" CMOs whose companies, like Capital One,

are in regulated industries need also to ask, "Could

I explain this to regulators, community leaders,

and other stakeholders?" Taking a follow-the-data

approach could lead to marketing initiatives that

generate strong ROI but unwittingly expose the

company to allegations of inappropriate targeting,

or unfair exclusion, or using data-driven correla

tions that in hindsight appear discriminatory. In

a human-driven, hypothesis-first model, this risk is

minimized by training and awareness and oversight.

In a data-driven, automated world, the risk of unin

tended missteps grows significantly in the absence

of an appropriate judgment screen.

That is why Shaukat, even though he is thor

oughly grounded in Caesars's analytics-loving cul

ture, insists that oversight by marketers who are

comfortable using their intuition and judgment will

always be needed. Surprising correlations are great

for challenging a marketer's preconceptions or the

conventional wisdom; but in the end, the marketer

8Harvard Business ReviewNovember 2015

must be able rationally to accept the logic. "If thedata tells us to do something that doesn't make in tuitive sense, we don't do it," says Shaukat. "Andif I can't explain to a customer why we're makinga particular offer, we won't do that one either." Thissounds like a good brand-protecting philosophy forany company.

Get Branders and Analysts

to Collaborate

One last problem for CMOs who are attempting tostrike the right balance between branding and pro motion is that, increasingly, the two objectives arestaffed by very different kinds of people. At the pizzachain Domino's, for example, we heard from RussellWeiner, then the CMO (and now the president), thatthe complexities of the new data environment can'tbe mastered by the jack-of-all-trades marketer of thepast. "Big data requires such special skills," he said,that it "attracts a different kind of person, who can'trotate in and out of functions." Just as the most cre ative marketers aren't the best data people, analyticprofessionals usually lack the skills, the experience,

and perhaps even the "internal wiring" to excel atbrand, image, and creativity.

Like other CMOs we consulted, however, Weinerbelieves strongly that drawing on big data to createtargeted offers can be instrumental to brand build ing. "Not showing a pepperoni pizza to a vegetar ian is about both sales and branding," he said. "Adouble good when you get it right, and a double badwhen you get it wrong." His company's recent ef fort to encourage customers to order online ratherthan by telephone so that more and better data canbe captured is part of helping his team deliver thatdouble good.

But the bigger key, according to Weiner, is seam less working relationships between data-savvycreative marketers and consumer-centric big dataanalysts. "It's like linking a quarterback with an of fensive line, or Elton John with [Bernie Taupin]his lyricist," he told us. The teamwork isn't alwaysharmonious, though. There can be "governanceissues" about which side takes the lead and whichplays backup. Weiner's solution strikes us as onethat other CMOs might borrow: He brought a topmarket researcher with him when he moved toDomino'ssomeone whose skill set placed him rightat the intersection of data crunching and customerunderstanding. This professional's insights into the

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SPOTLIGHT ON DIGITAL CUSTOMER ENGAGEMENT HBR.ORG

whys of what the data showed allowed him to createcollaborative space for the rest of the team.Weiner said of one campaign that drew on bothsides' strengths, "It's not about big data. It's aboutbig marketing." In the world of sports, he pointedout, many organizations have become more data obsessed since Moneyball, the book (and movie) thatcelebrated the number-crunching sophistication ofthe Oakland A's. But they don't all play better ball asa result. Why is that? "Maybe the numbers get youonly so far," Weiner mused, "and after that it's aboutthe people getting it right."

Between the Extremes

Another difference between marketing people corre lates with age. Reliance on analytics and data-drivendecisions may be second nature to the new hires ina large marketing organization, but very foreign totheir veteran colleagues. In Mark Addicks's words,

big data "fundamentally challenges what they doand how they think." Speaking from experience, hetold us, "A junior person can look at the data andknow more about the category than a senior execu tive. It can be very humbling when a junior associ ate in a meeting says, 'I'm sorry, but that's not howthe category works.'"

It's not easy to resist the pressure to go all-inon data-driven promotions. Even Rich Fairbank

encountered (and encouraged) substantial pushbackto his thinking about the importance of branding atCapital One. Extensive internal debates precededthe company's strategic leap to make a significantmultiyear investment in building the brand.

Yet much in the traditional marketer's knowl edge and skill set is not prone to obsolescence. Everymarketing program has some degree of impact onboth sides. Sales-oriented marketing influencesshort-term actions; branding prompts feelings andunderstanding of what a brand represents. But evena coupon offer says something about the brand, andeven an ad with no call to action changes the con sumer's proclivity to buy. Good marketing mightbe defined as successfully navigating between theScylla and Charybdis of the extremes. In the pastmarketers have sometimes disastrously pushed to ward branding while neglecting sales (the infamousPets.com comes to mind). Today many are steeringjust as frighteningly toward sales promotions at therisk of causing their brands to founder. The best wayforward will always require a middle course.

HBR Reprint R1511D

Peter Horst was the senior vice president of brandmarketing at Capital One before becoming the chiefmarketing officer at Hershey. Robert Duboff is a founderand the CEO of HawkPartners, a marketing consulting andresearch firm.

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9Harvard Business ReviewNovember 2015

This document is authorized for use only by Eliseo Ilarraza in Marketing Analytics Summer 2021 taught by JOHN (RANDY) SPARKS, University of Dayton from Jul 2021 to Sep 2021.