- February 21, 2012

The Advent of the Computer

From its very first applications, it was clear that the computer would forever change our lives. Although opinions vary, most historians would contend that the computer’s origins predate the minicomputers and microprocessors of the 1960s and ’70s by a couple of decades—ages, in technological terms. According to the experts, Colossus was the world’s first electronic, digital, programmable computer, which, along with its successors, was used by British code breakers during World War II to read encrypted German messages and played a vital role in the Allies’ successful Normandy landings.

While most applications of computers do not have such grave consequences, they have been just as transformational to so many other aspects of our lives. Such transformation has certainly been evident in the marketing and marketing research disciplines over the past few decades.

Data collection
The computer has automated the collection of detailed data on consumer attitudes and behavior. Computer-assisted data collection began with the use of the telephone and random digit dialing to collect respondent attitudes, behaviors and intentions. Next, computer-assisted telephone interviews (CATI) and computer-assisted personal interviews (CAPI) added a level of automated interactivity to the interviewing process. However, it should be noted that not all of the computer’s impact on phone-based data collection methods has been positive: Answering machines and caller ID have contributed to declines in response rates and increased the cost of conducting telephone surveys.

Beginning in the 1980s, the POS UPC scanner automated the collection of detailed price and sales data for individual stores, and—if the consumer presented a loyalty card at checkout—at the household level, as well. Consumer research panels, which used handheld scanner devices in-home to record purchases, soon followed.

At about the same time, the computer allowed the creation of virtual shopping experiences from which consumer reaction to new products or varying shelf sets could be ascertained. More recently, we’ve seen the Internet emerge as a fast and inexpensive means of conducting surveys of consumers: More than half of all U.S.-based surveys conducted in 2011 were completed online.

The computer has dramatically improved market researchers’ ability to quickly analyze and interpret large volumes of market research data. From the advent of large mainframe machines, vacuum tubes have given way to transistors, which in turn gave way to integrated circuits, microchips and microprocessors. As a result, computing power has steadily become faster and cheaper while the computer has become smaller: Mainframes led to minicomputers, which led to personal computers. This has provided market researchers with the ability to easily process the massive amount of data that computerized devices have themselves been generating.

The ability of individual researchers to quickly conduct powerful analyses of data sets using personal computers has, I believe, been one of the most significant advances in the efficiency and effectiveness of market research over the past 50 years.

The computer has fundamentally altered the manner in which marketers communicate with consumers. There are five main ways in which marketers communicate with consumers today: television, radio, print, direct mail and, more recently, the Internet. One could argue that of the four “legacy” media, TV is the one that continues to benefit from the computer, since it’s central to the emergence of cable, satellite and digital TV set technologies. And while TV viewing is certainly getting fragmented by the explosion in the number of viewing channels, the total time spent watching television continues to increase. In contrast, print and direct mail audiences have declined precipitously as the use of the Internet and e-mail have grown.

With all these changes driven by the computer, I’d argue that its biggest impact on marketing is yet to come, as consumers’ adoption of the smallest computer—the smartphone—continues to grow. Consider the following statistics:

  • Helsinki-based researcher Horace Dediu at Asymco has pointed out that a smartphone today would have been the most powerful computer in the world in 1985 and that today’s phones have about the same raw processing power as a laptop from 10 years ago. And every year, the gap between smartphones’ and computers’ capabilities closes even further.
  • The number of people using smartphones is exploding: Comscore has counted that 30 million new smartphones were acquired in the U.S. in the past year alone. It’s been reported that Google is activating 700,000 new Android devices per day on a global basis!
  • According to Mary Meeker of venture capital firm Klein Perkins Caufield & Byers, there are 5.6 billion mobile phone subscribers globally, but only 15% of them use smartphones. Clearly, smartphones are only scratching the surface of their total market opportunity.

Smartphones are already being used to search the Web, buy products, update social networks, show you where you are on a map, check sports scores and recognize a song or a face. They are redefining the way in which consumers communicate with each other and creating opportunities for marketers that we could never have imagined a short time ago.

Consider how the personal computer has already altered the way people shop and buy, and how smartphones are bringing further change. E-commerce represents the first meaningful change in how people buy since the introduction of the direct mail catalog and, later, home shopping via a TV, but its impact promises to be far greater. Data from Comscore show that $1 in every $10 of U.S. discretionary spending now occurs on the Internet and that e-commerce is growing at a rate four times faster than retail spending. Smartphones are now being used to compare prices and product features while the consumer is still in the store. Often, the result means another online purchase. Does this mean that the store of tomorrow will simply be visited to “touch and feel” products, and the buying will occur online via a smartphone? Physical store retailers, beware.

Smartphones can also be geographically targeted by marketers to deliver relevant ads and promotions at the optimal time and location. Will this capability replace the use of magazines and newspapers to deliver coupons and ads? Stay tuned.

What about the use of a smartphone as an electronic wallet using near field communications? Will this replace credit cards for certain purchases? Only time will tell.

Looking to the future, it’s not difficult to see a time when a powerful computer will be in the palm of virtually everyone’s hand, and while we can’t today envisage all of the changes that this will bring, I think one thing is clear: Marketing as we know it will seem like a distant memory.

This post was originally published in Marketing News on February 10, 2012.

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