Data is the new, critical asset fuelling tech M&As

Singapore

MUCH has been said about Big Data and how it can help businesses. Microsoft's US$26.2 billion buyout of business social network LinkedIn is only the latest validation of how data can boost business growth, and is the motivation behind many tech M&As (mergers and acquisitions) today.

Putting the gains from data into perspective, Ben Legg, group chief executive of digital marketing firm Adknowledge, said that data analytics is no longer just an experimental tool for companies, but a means to faster, better decision making, new product creation and cost reduction.

The 46-year-old, formerly chief operating officer for Europe at Google, spoke to The Business Times in an interview at the sidelines of digital conference Wild Digital in June. A civil engineer by training, Mr Legg held executive positions at Coca-Cola, spent a decade as an officer in the British Army, and most recently, authored a marketing handbook for C-suite executives, Marketing for CEOs: Death or Glory in the Digital Age.

Mr Legg described the book as focused on helping CEOs navigate the changing landscape of marketing, and decide if it's time to dismiss their chief marketing officers (CMOs). He said: "I would say that frustration - not so much disagreement - is the greatest source of tension between CEOs and CMOs. CEOs are frustrated that marketing is a cost centre."

But here's where data can deliver value - data can make marketing, as well as other business decisions, "more justified", Mr Legg said. With the digitisation of all consumer purchases, companies can easily track who bought what, when and where - and measure the value or return on investment of marketing initiatives.

B2C (business to consumer) companies such as those in the fast moving consumer goods, insurance and telco sectors stand to benefit from data analytics, noted Mr Legg. Specifically, they can do "closed-loop marketing", tying every single sales lead, customer and dollar back to the marketing initiative that created them.

With data, B2C marketers can now prove their worth and recognise how to more efficiently sell to their target audience, said Mr Legg. Asked about B2B (business to business) companies, he said that the principles that guide data analytics and marketing in such firms are "exactly the same", only B2B firms have much fewer customers, but who are of higher value.

Mr Legg added that good CMOs need to be data driven, action oriented, diligent, own a "world-class" database of customers and yet never be satisfied. He quipped: "They are potential CEOs. They should think about value creation, not just polish the brand while other people work."

A Forrester report released a day after the Microsoft-LinkedIn news pointed to data as a critical, acquired asset. It said: "As today's marketing tech platforms go, Microsoft lags significantly in two areas: identity and a proprietary data asset. LinkedIn solves that problem handily."

The report added that by accessing 433 million LinkedIn profiles, Microsoft can examine how these individuals use products such as Office 365 and Skype, and use the insights to create personalised service offerings, appeal to business buyers and even understand its employees better.

"As more millennials, who are not as loyal to their employers as previous generations, join the workforce, employee retention will be a key challenge. Visibility into various signals, such as an uptick in connections to a competitor, could let a firm proactively manage unwanted churn."

READ MORE: M&As outstrip initial public offers as exit route for tech firms