What is data-driven marketing?

Published Sep 7 2022 Last updated May 15 2024 4 minute read
  • Sean Dougherty
    Written by Sean Dougherty

    A copywriter at Funnel, Sean has more than 15 years of experience working in branding and advertising (both agency and client side). He's also a professional voice actor.

At Funnel, data-driven marketing is a way of life. We use data to both measure and inform all of our marketing efforts. 

It is so ingrained in our DNA, that we thought it was about time that Alex unpack what data marketing is and how it can help you grow your business. You can either watch the video above, or read the extended script below.


What is data-driven marketing?

Data driven marketing is about analyzing performance data to see what’s working and what isn’t, then learning from the results to adjust your approach. It relies on performance data to improve how you market a good or service. You can be data-driven across nearly every channel or marketing style, including social media, content marketing, email, PPC and SEO. 

Just because you use digital marketing platforms with analytics features doesn’t mean you are already a data-driven marketer. Don’t worry, though. It’s straightforward to use these analytics features to analyze your marketing data and gain an edge over your competitors while helping you become more data-driven. 

Time for an example

Imagine that you start working at “Acme Enterprises” (they are very famous for their animated anvils). Your new CMO stops by your desk and informs you that the company focuses on LinkedIn advertising and steers away from Facebook. The underlying strategy is that Acme is a B2B brand, and LinkedIn is where the customers are. 

As a new marketer in the company, you may accept that fact. However, you may feel that there may be some opportunities to reach your customers on Facebook. That means it’s time to use Alex’s four steps to become data-driven.

Four steps to be more data-driven

Creating a data driven marketing strategy in 4 steps:

  1. Think it
  2. Test it
  3. Analyze it
  4. Learn from it


Think it

The first step is to formulate a hypothesis. In our case, we hypothesize that at least some of our customers use Facebook and would be open to receiving our advertising messages while using the platform. 

That means our customers have a Facebook account (a pretty safe assumption), they use the platform (another safe assumption), and we can reach them with targeted advertising. In other words, we assume that Facebook can play a role in their customer journey.

Test it

With our hypothesis in hand, it’s time to test. We could take a small portion of your budget to run some highly targeted display ads that promote Acme’s anvils to your business customers. Let’s say that you will run the ads for three months. 

Analyze it

At the end of your 3-month test run, you have a set of performance data ready for review. While analyzing the data, you see that your ads performed fairly well. The click-through rate was above expectation, and a few clicks led to sales. Great!

Learn from it

In this example, we learned that we can drive sales by advertising on Facebook. Before diving head in and allocating a large chunk of your budget to this channel, you may want to explore some further hypotheses and tests to determine how much advertising spend should be allocated. 

For instance, does doubling the amount spend on Facebook Ads also double the number of sales? And can you further improve performance by tweaking ad copy or creatives? Getting these answers further helps you create a solid marketing strategy.

How data-driven marketing helps you

By employing strategic marketing data analysis in your process, you can begin to make more informed decisions. This helps you gain a much deeper understanding of your target audiences and how to reach them. 

Also read: A guide to performance marketing strategies.


Of course, as your marketing becomes more targeted and sophisticated, you should see increased conversion rates and lower acquisition costs. 

Where to start your data-driven journey

According to Alex, there are a few things you should focus on if you want to become more data-driven today. 

Make an inventory

First, you should create an inventory or checklist of all the platforms you currently use that could contain useful data. When creating this inventory, note what data you have, where the data is stored (on the source platform or in another destination) and what is being done with it. 

Looking at our Acme Enterprises example, we may have customer data stored on our e-commerce platform. The finance team may be accessing that data, too. Plus, revenue operations may export that data to Google Data Studio to visualize it and improve the sales process.

While this may require some collaboration with other parts of the business, it’s essential to know what everyone has already  done. After all, you may be able to build on those efforts. 

Do I have enough data?

If you don't have a lot of data available, don't worry. You don't need 'big data' for data driven marketing. Even if you only have a small budget or no paid advertising at all, you can still analyze the data you have.

Look at all your LinkedIn Posts, or Google Ad texts. What marketing messages gain most clicks or likes? What does that tell you? 

Consolidate the data

Once you’ve completed your inventory, your next step is  gathering all your data in one place so you can review performance across all your marketing efforts simultaneously. This may require you to organize your data or even employ some data transformations. If so, head over to our article all about data transformation

More hypotheses

Now, it’s time for some more hypothesizing. Think about what you’d like your data to tell you. 

  • Do you want to see how your sales have grown? 
  • Would you like to determine your return on ad spend (or ROAS for short)? 
  • Are you trying to understand which marketing campaigns perform best?
  • Would you like to know which target audience is more open to your marketing messages?
  • Do you have a good idea of who your existing customers are, and can you use customer data to attract new customers? 


Simply identifying your needs up front makes your data much easier to analyze. 

Budget allocation

As you can see, data driven marketing is about experimentation. You are trying out new ways to reach your target audience and get them to convert. Therefor, it is smart to reserve budget to test new things. 

One way to do this is by allocating budget according to the 70-20-10 rule that many marketing teams use:

  • 70% of marketing budget should go to proven marketing strategies that you can count on
  • 20% is for new initiatives that you expect to work, but are still figuring out
  • Reserve 10% of you marketing budget to test totally new things

This way, you can plan ahead and will have the resources you need to test a new marketing campaign or tactic.

The core takeaways

The key is to keep things simple at first. There’s no need to create complicated graphics and charts that are difficult to build and analyze. Start with the graphs that you already know and understand. Then, grow from there. 

At the core of data-driven marketing is the ability to learn from your past performance to evolve your marketing efforts going forward. Data-driven marketers try new things all the time, evaluate them and learn from them. 

It’s important to reiterate that data-driven marketing isn’t all about paid advertising or large marketing campaigns. You can use performance data to inform your marketing funnel, creative concepts, public relations outreach, and even the sales process. With more data and analysis comes more informed decision-making and better performance. 

If you’re interested in becoming a more data-driven marketer, check out Alex’s walkthrough above, and subscribe to our YouTube channel to get our latest tips and tricks.

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