What is Analytics?Why is it needed?
Analytics represents the use of specific scientific and mathematical methods to provide guidance when converting data into information. Many times it encompasses the creative use of statistics, regression analysis, and correlations to derive valuable information out of disparate data sets.
Analytics is used to determine marketing ROI and effectiveness and to derive the level of returns from a specific marketing activity. For example, we specialize in the use of marketing analytics to determine the effectiveness of marketing investments in driving incremental sales. We utilize an agent-based modeling approach. Other companies use a much simpler approach using simple statistical regression analysis.
Statistics and answering the question, what is analytics?
Most analysts, and marketing analysts in particular, think of analytics as employing some type of statistical analysis to solve a specific business question. In our case, the incremental return on marketing investments.
Analytics Tactics in Popular Use
Agent-based models (ABM) and simulation can also be used in many ways to determine the value of marketing activities and the brand to help marketers improve their overall marketing effectiveness. ABMs build an assumption of the relationships between specific marketing activities and actions and then uses a simulation based approach to provide exact levels of interconnectedness in a complex and dynamic environment.
Simple types of analytics include correlations where two-time series are correlated against each other to determine which is more correlated than another and what that level of correlation would be.
Multivariate regression analysis would be a more complex version of simple correlation where multiple independent variables, such as marketing expenditures, price, clicks and others, are regressed – simultaneously correlated – against a dependent variable, such as sales volume. The regression coefficients are then used to determine the relative contribution each independent variable has on the dependent variable.
Other forms of multivariate regression analysis include vector auto regression, multiplicative regression, logistic regression.
Market Research and Analytics
Market researchers would answer the question, what is analytics, by the building of tables and analyses to summarize and build recommendations out of complex survey responses. Often analytics are run to determine, how certain segments answer a series of questions differently than other questions. This can allow the determination of segmentation, discrete choice models and many other questions arising out of market research data.
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