This article originally appeared on Forbes.com.
Executives in nearly every industry are looking for ways to reap value from analytics, but media companies may have better opportunities than most. Every song listened to, every minute of video viewed, every online page that is clicked contributes to the mountains of data that tell them what audiences want.
So media companies don’t necessarily need more data, but they do need to get better at sifting through it and blending together the multiple streams of data—some from new digital sources, others from reliable analog ones—to understand what their audiences like so they can deliver more of it.
Unfortunately, our conversations with media executives and our analysis of the industry’s analytic skills suggest that most traditional media companies aren’t very good at understanding data. Their pure digital competitors—technology-based media companies like Facebook, Google and Netflix—are best of breed. But to keep up with these new media leaders, the old guard must learn new skills and seize the opportunities presented by all this data.
In media, value comes from understanding and predicting the shows, movies and music that audiences want. Data and analytical firepower can improve the odds of getting it right. Netflix understood this when it was bidding against HBO and AMC for the political drama House of Cards. All three networks knew that political dramas, David Fincher productions and Kevin Spacey in a sinister role were highly bankable properties. But Netflix brought superior data to the bidding, based on its in-depth and fine-grained analysis of viewers’ habits over many millions of show viewings. Netflix executives not only knew these qualities were likely to make the show popular; they also knew how long viewers had stuck with similar programs, through seasons and individual shows, and which characters had drawn the strongest interest. That confidence allowed Netflix to make a bolder bid and win the show―as well as three Emmy awards.
Data insights can also help executives make bets on entirely new products. The Weather Company, known primarily for its Weather Channel network featuring weather news, is building up its capabilities to sell weather data and insights as new services. One potentially lucrative new business is WeatherFX, a marketplace service that allows advertisers to correlate their display ads with weather events, based on determining which products are most likely to sell under different weather conditions.
To build their data capabilities, companies like Google, Facebook and Netflix have invested heavily in analytics talent and have infused data-driven approaches into their marketing, programming and creative processes.
Media companies that lack competitive advanced analytical skills will increasingly find themselves outpaced by the better-informed, quicker business moves of those that excel in analytics. Table stakes for getting started include a focus on three areas:
Declare the ambition. Leaders clearly define their intention and describe how improving their analytics capabilities will boost their business performance. Appointing a chief data officer is a good sign that a company wants to do more than simply organize its analytics efforts; it wants to find new value using them.
Build the capabilities. Top analytics talent is in high demand these days, so in addition to hiring data scientists, media companies will need to improve the data skills of everyone in the organization. Leading companies trace the impact of analytics on their goals and they award incentives for analytics-driven behavior to ensure that decisions are based on data.
Create the right organizational home. Most companies place their analytics experts in the most relevant parts of the company. Rarely do we see analytics talent relegated to the IT department. Most executives understand this capability is critical to the business’ success and must sit close to decision makers.
Perhaps most important, as media companies build up their analytic capabilities, executives need to stay focused on business outcomes.
We often hear executives asking, “What can we do with all this data?” when they should be asking, “What data do we need to understand to build our business?”
As they answer that question, we expect companies to continue to rely on traditional techniques as well as big data. Advanced analytics are a powerful capability, but they are no silver bullet, and no one should expect them to make traditional metrics obsolete overnight.
It’s important for media companies to strike the right balance between well-established business practices and the use of new approaches based on analytics.
Written by Charles Kim, a Bain partner in New York, and Rasmus Wegener, a partner in Atlanta. They work with Bain’s Global Media practice.