Don Draper in a scene from "Mad Men."
© AP

With its depiction of three-martini business lunches and a plot centred on the “creative types” who ruled the 1960s advertising world, the Mad Men television series defined the archetype of the industry. Not any more.

A new generation of executives, armed with millions of terabytes of data, are taking over today’s advertising world. They are schooled in creating sophisticated automated systems for buying and selling ads, searching for patterns in the data to tell stories and tapping algorithms to evaluate the effectiveness of marketing.

Take Becky Wang, whose first job in 1998 was at a financial technology firm on the cutting edge of building proprietary stock trading models that mapped the relationship between qualitative data, such as news reports or regulatory filings, to quantitative statistics, such as share price.

Today Ms Wang, 35, leads a team of data scientists at Droga5, one of the hottest shops in the advertising industry, to mine information with the goal of uncovering insights about human behaviour and unlocking new creative ideas for ads, products and services.

“All of the data that we are collecting is pushing us into entirely new directions,” she says. “We have really interesting and compelling conversations with our clients about new product developments, whereas before we were those kooky creatives.”

Across the industry, advertisers are tapping big data in hopes of reaching marketing’s ultimate goal: targeting personalised ads to the right person at the right time.

“There is a spectacular change occurring,” says Quentin George, chief innovations officer at Interpublic’s Mediabrands advertising buying group. “What big data is trying to do in the ad business is harvest consumer signals to deliver something more relevant and more meaningful.”

Marketers have long mined consumer information – ranging from public records data about how much a person’s house is worth to surveys about whether they are married or have children – to send direct mailings and make telephone pitches to people most likely to buy their products. Even the “mad men” drew on panel-based research about the television shows people watched, the radio stations they listened to and the newspapers and magazines they read.

Big data’s renewed heft in the advertising industry, however, came partly as a result of a concurrent disruption of the advertising business as smartphones spread and consumers digitised their lives.

This not only unearthed a treasure trove of real-time data about individuals, but is also forcing the advertising and marketing industries into new ways of doing business.

Marketers, eager to prove the return on investment of their ad dollars, suddenly could track the ads consumers saw and clicked on. They are discovering, for example, that nationwide US television advertising campaigns are failing to reach a large portion of their target audiences.

The industry is, therefore, creating dossiers about individuals based on everything from the information revealed in online dating profiles to the pictures people posted to social networks, the items they put in their online shopping carts and the television programmes viewed on digital video recorders.

These profiles are now the nexus around which an increasing part of the $518bn advertising industry operates. The rise of online ad exchanges, which operate much like stock trading platforms, means that marketers can now buy ads based on the profile of the person who sees the ad, rather than the site where it appears.

Within the blink of an eye, marketers can evaluate the performance of an ad and alter the message, the way it looks or the audience targeted to see it. Most of the main advertising holding companies operate units to buy ads via these new programmatic ad-buying models and report that their clients are devoting an increasing share of their budgets to them.

Marketers first tapped the model for buying online ads only but increasingly are deploying it to buy all advertising, from television to mobile phone ads.

This emerging model of how ad buying works is built upon a foundation made up of a staggering amount of data. Interpublic’s Mediabrands ad buying group, for instance, sifts through trillions of messages each year, creating close to a petabyte, or 1m gigabytes, of information. For comparison, all the text of Wikipedia in all languages requires only about 100 gigabytes to store.

Yet while the advertising industry is dazzled by the profusion of data and the possibilities it wields, many marketers struggle to sift through the information to track the most relevant details about consumers, let alone mine the data for insights and deploy sophisticated targeting models. Having to deal with too much information, and not all of it accurate, is a common complaint among ad executives. A recent survey of 120 top marketing executives, conducted by Publicis’ Razorfish digital ad agency, revealed that many businesses continue to deploy age-old strategies of tapping historical sales data instead of real-time information.

“The business needs to catch up with the hype of the technology at this point,” says Ray Velez, global chief technology officer at Razorfish.

Meanwhile, disputes rage within advertising agencies about whether data should be used to dictate the artistic and storytelling aspects of ad campaigns – sensibilities that traditionally were the territory of “big idea” creative types. Some argue a distance between creative departments and algorithms should remain to preserve a sense of serendipity.

Even larger loom privacy issues, which threaten to limit the amount of consumer information marketers can track and use for ad targeting. This is becoming a bigger area of concern as companies marry information collected both online and away from a screen. MasterCard, for instance, recently started to make available an analysis of transaction data for ad targeting. Facebook, meanwhile, has worked with Datalogix, a data company, to track whether people buy products after seeing an ad on the social networking site.

Some patent applications signal how much further marketers could go in the pursuit of futuristic ad targeting and personalisation. A Verizon patent application published in November details plans to create a digital video recorder that watches television viewers and listens to their conversations for ad targeting. A Visa patent application published in 2011 describes tapping information from DNA data banks.

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