What Your Business Can Learn About Leveraging Big Data From Netflix, Eloqua and the 2008 Election
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For many organizations, big data is the engine of their success. Netflix , Eloqua and Obama’s 2008 winning campaign for the presidency provide key lessons for entrepreneurs looking to harness the power of big data. Each of these businesses used big data to get closer to its customers -- and to develop a successful strategy.
In show business, a sector traditionally ruled by executives making decisions based on gut instinct, Netflix brought big data to the table when making the initial decision to invest in what eventually became a huge hit, House of Cards. When pitched the show that other producers had passed on, Netflix consulted its viewership data, according to David Carr of The New York Times.
After seeing that it had enough viewers who watched the films of David Fincher (who was directing the series), movies with Kevin Spacey (who was the star of the series) and the original British version of the show, Netflix agreed to invest $100 million to produce the show. The company was so confident in the data that it took the unusual step of green-lighting two seasons.
Netflix originally started as a mail-order to alternative to Blockbuster. But at its heart, Netflix is a data play. The selection queue gave Netflix insight into its users’ viewing habits and enabled it to recommend movies and TV shows its customer might enjoy. That capability has been expanded and made more immediate now that Netflix streams entertainment to its viewers.
Eloqua is another startup that rode big data to success: This marketing-automation software company was sold to Oracle in 2013 for $957 million.
One of the secrets to Eloqua’s success was its software-as-a-service model. Because it hosted its solution online, Eloqua had access to rich data on how its customers were using the product, which gave the company tremendous insight into how to serve individual customers and how to make the software better.
“I think what’s interesting about the technology phase we are in today is that for the first time we have a pretty good sense of how people are using our software and when they’re using, how frequently they’re using, and how many people are using it,” Joe Payne, the former CEO of Eloqua, explained in an interview for my book The Big Data-Driven Business. “If you pay attention to all of those things, it can give you insight that will help you win your market.”
In 2008, Obama for America in 2008 used big data not to win a market but win a presidential election. Dan Siroker was the director of analytics for the initial Obama campaign for the White House. In this role, Siroker focused on website optimization -- often using A/B and multivariate testing.
Obama’s campaign embraced the use of data, particularly for the campaign’s website, and this was critical to getting supporters’ email addresses because each individual averaged $21 in contributions to the Obama campaign.
To drive sharing of email addresses, the Obama team tested a variety of combinations of visuals and calls to action, 24 in all. Using A/B testing, the campaign discovered the combination that outperformed the others: A photo of Barack Obama with his wife and children combined with a call to action of “learn more” drove 11.6 percent of visitors to share their email address, which was a 40.6 percent improvement over the 8.26 percent average of the 24 combinations, according to a blog post written by Siroker.
Ultimately, that combination led to the collection of 2.88 million additional email addresses and an extra $60 million for the campaign, Siroker said. In 2010, he used the lessons he learned on the campaign trail to launch his own big-data business, Optimizely, a platform that helps companies get the most from their websites, email marketing and other digital marketing.
Next on Optimizely’s plan is to help improve mobile marketing for its customers. “Our vision is to enable the world to turn data into action,” Siroker said. “We think website and mobile optimization are just the first steps on that journey.”