From The Trenches

Marketing: Rise of the Quants

Published by

Norwest Venture Partners

January 31, 2013

Published by Norwest Venture Partners

January 31, 2013

Product design and “UE” (User Experience) have taken center stage over the last decade, and for good reason: they are truly critical in order to obtain any level of user interest and cross the barrier to entry. The best product managers are extolled because of their respect for both the Scientific Method (i.e. numbers and testing such as A/B testing, LTV/CAC models, cohort analysis, etc.) and Feel (qualitative insights such as vision, design, risk-taking). These product managers live by the motto: “If the numbers tell us something, let’s go with that; otherwise, let’s go with what I think,” and have been the driving force behind the Facebooks, Twitters, Foursquares, and Quoras of the world.

But at an industry level, there is a general malaise spreading across Consumer Internet. From Series A/B funding crunch (Sarah Lacy: Series A Crunch, Paul Graham’s Letter to YC Companies, WSJ: VCs Chasing Web Companies, But With Less Cash), to challenges scaling even the best products (Fred Wilson: What Has Changed, Chris Dixon: 10M Users is the new 1M ), and even investors turning on Consumer in favor of Enterprise (Wilson’s same post, VentureBeat: Enterprise is Sexy!).

NVP remains bullish, but we have found that an awesome product is becoming merely table stakes, and the importance of marketing and scaling traffic is rising. Online performance-based advertising has opened a new opportunity for advertisers to actually measure consumers’ response to an ad, creating an explosion of data and making measurability available. But quantitative skill sets are needed to collect and process the data, uncover key levers, track them over time, and iterate quickly via rigorous A/B testing. These skill sets have already pervaded the Product function, but have yet to spread into Marketing.

When done well, we’ve seen traffic scale with incredible consistency and predictability, both in our portfolio (including Lumosity, ModCloth, Gilt, etc.) and in pitches we’ve seen from exciting entrepreneurs and startups (we’ll keep those to ourselves for now). When I talk to these marketing teams, I get a comfort level I would want from a sherpa climbing the Himalayas: “We’re going up. I know the way, and I will make the right adjustments.”

We believe this is the future of marketing, where the best CMOs will be numbers-first, brand-and-PR-driven second. Like their peers in the product department, marketers will be obsessed with numbers to make data-driven decisions and have a strong feel for vision and design. At NVP, we demand both from marketing teams at our portfolio companies as well as new startups – yet this new type of quantitative marketing still doesn’t seem to be getting enough attention. The most in-demand and hardest-to-fill job functions from our companies are now “Customer Acquisition Specialist/Analyst” rather than the “Marketing Programs Specialist” or “Marketing and Communications Associate” roles we have seen in the past.

This is a huge opportunity for aspiring young people who may have previously been at a disadvantage at a game currently dominated by experience and agency / PR relationships. We encourage students to study statistics, analytics and modeling in school, and young professionals (including those from consulting and finance backgrounds who lack industry experience but are analytically strong) to bring their skills to marketing rather than just product. Job opportunities for Growth Hackers and Quantitative Marketers are on the rise in NVP’s portfolio and elsewhere, and the quantitative marketing revolution is just getting started!