Commentary
Running the Numbers: Centralized Vs. Decentralized Analytics
- by Jim Sterne , July 2, 2009
Central control is necessary up front
Decentralization is good and happens over time
Centralization is eventually required again
And now, on with our show....
Should you open the doors to the Web analytics tool, let everybody do their own analysis and draw their own conclusions? Or should you retain tight control over the data and spoon-feed those who initially showed no or little interest in the process, but are only looking for numbers to support their conclusion-du-jour?
The answer is yes; each in their own time.
When a pendulum is first set in motion, it must be brought all the way to one side. In this case, the centralization side. The analytics team must control the tool selection, implementation and interpretation. There is so much to know and so many mistakes that can trip one up when marketing analytics is launched that the task should only be handed to trained drivers on a closed course wearing seatbelts and helmets.
Step by step, these experts can venture into the business units with golden nuggets of statistical truth and entrance the uninitiated with their insights. Once the pupils are sufficiently hooked on the idea, senior management can be persuaded to invest more resources. At that point, centralization can begin in earnest.
The analysis team can recruit new members, upgrade the tools and expand their purview. This is the time to establish processes and procedures, set standard definitions and create a corporate understanding of how to draw the most valuable insights from the available data. The central team will reign supreme -- for a while.
Eventually, the central team will not be needed as each business unit acquires a taste for the value and the ability to go it alone. The page tagging process will be streamlined, familiarity with the tools will improve and critical thinking will become part and parcel of the marketing milieu. Each group will bake analytics into each project as a matter of course and all will be well -- for a while.
Remember that pendulum? Now that the pendulum has swung all the way over to the decentralized side of the arc, there is trouble afoot. Nothing is immutable; how people capture data, cleanse data, take measurements and interpret the results change over time. Why's that so bad? What's wrong with each business unit doing their own thing to optimize their own marketing in their own way? It drives the CMO crazy.
The CMO (or other sufficiently high-up individual) needs to be able to compare apples to apples. As soon as she sees that Group A's numbers do not line up with Group B's numbers, there will be hell to pay come budget allocation time.
Should your organization's analytics be centralized or decentralized?
Yes; each in their own time.
Jim -- interesting article. I would add a comment on another dimension of the centralization/decentralization issue -- and this is out of organizational consutling 101 (applied to IT departments, finance, other organizational dynamics). You centralize a function when either risk management or cost management is paramount and you decentralize when local control is necessary due to differences in market dynamics.
This applies to centralization of metrics (and we see this a lot w large companies that we work with). Most of our customers have centralized their digital marketing (SEO, SEM, Display) and the metrics aroudn them due to the risk and cost issues. Example, large CPG customer centralized SEO because letting each of 1000 brands go about hiring their own agency would not leverage the organizations's purchasing power. Another example, large company in high tech centralized for risk control reasons -- essentially to provide governance over significant spending in display and PPC search (when budgets were uncentralized, they ran into massive redundant purchasing and loss of control of corporate messaging).
The question is whether there is EVER a case for decentralization -- i.e., when will these control and risk control issues ever be eliminated or relaxed? I cannot see when that will happen. I think creative management for digital will be decentralized -- as that has to be tweaked to meet local market needs -- but the metrics? I dont see that. In fact, our customers are pretty much trying to figure out how to centralize more (email, integrate display and search, integrate TV and search) so that a single source of visibility can be obtained and more control over profligate spending exerted.
Only when the reins come off of cost control (i.e., a return to the roaring 90s) would this dynamic change.
Spot on, Craig. Cost controls are another pendulum axis - the higher the profits, the more local the control. The only problem with that is the whole pendulum analogy goes out the window. Sigh.
Not sure if I agree. marketers can have both with the right technology.