P.K. Kannan of the University of Maryland has been named Professor by Special Appointment of Digital Business & Analytics at the FEB and he will participate in the Groningen Digital Business Center. His research is on the frontier of how data and digital technologies have transformed the world of marketing. What was once an art, he explains, is becoming more of a science.

Decades ago the kings of marketing inhabited a world like that depicted in the hit television show ‘Mad Men’. Convincing consumers to buy a product was a question of inspiration and design.

“People looked at marketing as an art,” Kannan explained in an interview with Feb Research on a recent trip to Groningen from his usual base in the United States. “They tried to come up with very persuasive television ads, and come up with a very interesting logo design that represents the brand. Most of this was done from an artist’s viewpoint. It was something to do with art and intuition and experience learned over time.”

But the advent of the internet and computer technology changed everything.

“Whatever you do online you can measure,” Kannan said. “You can come up with measurement tools that tell you very clearly how each marketing initiative is contributing to overall sales. There is so much more information available and the information is also increasing very fast. Increasingly sophisticated marketing decisions are being made. It’s becoming less of an art, and more of a science.”

Learning from Netflix

Kannan is the Dean’s Chair in Marketing Science at the Robert H. Smith School of Business at the University of Maryland. His research grew out of the new possibilities afforded by the new data available.

One of the key areas he has developed is attribution modelling. Marketing is a mix of different interventions, ranging from embedded advertisements in social media or on mobile phones to direct email campaigns. Attribution means figuring out which initiative -- or which combination -- caused the consumer to make a purchase. One of Kannan’s specialties is figuring out how exactly a company should allocate their resources to come up with the most effective mix.

His research is broad. Marketing and digital business models are expanding and changing constantly, and continually raising new questions. How can artificial intelligence be used effectively in marketing? What is the best design of a ‘freemium’ range of products that will convert users of a free software into paying customers? What can online content publishers learn from Netflix? And what do customer comments and photos on social media say about brand image, and how best to harvest them?

Ethical challenges

The sheer scale of data being produced and the new possibilities it opens up also raises ethical questions.

“Ethical issues exist and the question is where do you cross the boundary,” Kannan said. “If it’s a win-win situation, then use of data with the consumer’s permission can really lead to positive impact for both the firm and the customer. The unethical part comes in where the customer doesn’t know what data is being collected and the company starts using it in an unscrupulous way. There it crosses the boundary: you can violate the trust of the customer.”

“Data is a double-edge sword,” he added. “It can lead to very positive results if you take the customer into confidence and show them exactly what they are getting in return, that you are personalising something for them.”

In some cases, outcomes of the data can be unclear to the company itself. Kannan uses the example of artificial intelligence. The online shopping behemoth Amazon experimented with using artificial intelligence to screen job applicants, by analysing their CVs. Unfortunately, the algorithm learned to discriminate against female applicants, based on past hiring patterns.

“It is not the algorithm’s fault, but the data on which the algorithm was trained,” Kannan said. “Companies have to look at the quality of the data they are using.”

Kannan’s expertise is a strong fit for the Groningen Digital Business Centre. He will be working on areas of his expertise in conjunction with a PhD student hired to work on artificial intelligence, digital business and marketing. It’s all part of an initiative to develop Groningen into a hub of innovation.

“The idea is to further the aspirations of companies in the Northern Netherlands, where there are a lot of digital IT startups, to really make Groningen the go-to place for digital business and digital marketing,” Kannan said. “It’s a mix of working on their business models, disseminating research, understanding their problems and coming up with solutions, and having students work with them.”