In marketing, embracing a world where data rules

March 17, 2014

FORTUNE --Big data this, big data that. The popular Silicon Valley buzzword has become so ubiquitous -- the term was even added to the Oxford English Dictionary last year -- that it seems to mean everything and nothing at the same time.

Big data will transform industries! Change the way we work and live! Alter the future of computing as we know it! (Imagine the confusion among executives who feel competitive pressure to actually incorporate the concept into their business.)

The benefits of big data are still nebulous for some, but the marketing industry faces a slightly clearer proposition. For marketers, harnessing complex data sets about a target audience could produce more effective campaigns and measurable competitive advantage. Which may be why more than two-thirds of organizations expect to ramp up spending on data management services in the next year, according to a recent report from Forrester Research, and 41% expect to increase spending between 5% and 10% in the next year.

"It's not really a question of big data as much as it's a question of the right data," Forrester principal Sheryl Pattek says. "It's about turning data into insights that you can act on to drive business."

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Marketers are not quantitative experts -- not quite in the way that a data scientist is, anyway. Yet they are expected to justify every dollar they invest and make data-driven decisions on brand strategy. Digital marketing involves more channels, platforms, and audience segments than ever before. Analytics tools to track web and social trends only scratch the surface of the intelligence that can be gleaned. Is there a better -- organized, structured -- way to integrate it all for a better view?

Ad-tech companies like Rocket Fuel, a Redwood City, Calif.-based startup using artificial intelligence to determine advertisement placements online, are working to help marketers automate data for optimal ad delivery and use predictive algorithms to inform future campaigns.

"The idea is that this parallel processing with machines gives you far greater power than you could ever have by trying to guess your way into making a decision," says Eric Porres, Rocket Fuel's chief marketing officer.

Toshiba is one of the companies that enlisted the five-year-old company to help drive sales for its Kira Ultrabook laptop computer. Using its platform, Rocket Fuel discovered that business travelers and wine connoisseurs were most likely to purchase the device. By orienting its ad spend to this group, Toshiba achieved an average 8:1 return on ad spend -- in other words, $8 in revenue for every $1 in ads spent.

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"Not only does online offer these tantalizing clues into human behavior," Porres says, "but it's also a way to shift how marketers see their issues of communication and strategy married to their goal and objectives."

AirPR is another tech company working with marketers to improve their results. The San Francisco-based startup recently rolled out Analyst, a platform that uses machine statistical analysis to measure return on investment of public relations and marketing spends. The firm, a type of Match.com marketplace for PR, is betting that it can help marketers understand the quantitative value of PR campaigns and more quickly eliminate programs that aren't working.

Core to the platform is what AirPR founder Sharam Fouladgar-Mercer calls "PR intelligence," a sort of competitive analysis that rates large companies like NYSE Euronext and small shops like the web development company Wix against their competitors for factors such as brand awareness.

"Data alone is not enough," Fouladgar-Mercer says. "Companies that cut through the fat to showcase what data is important for decision making will help elevate the entire ecosystem."

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Forrester's Pattek, who regularly works with CMOs on strategy, says that a benefit of data-driven marketing is in transitioning an entire organization -- not just the marketing team -- to understanding how to use data to win and retain customers.

"Data has allowed CMOs a seat at the executive table to really talk in business terms through these non-monetary models," Pattek says. "But they have to be comfortable with it first."

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