Everyone who owns a business and markets their business has heard the word algorithm thrown around. But what does it really mean? Marketing, in itself can be overwhelming and now business owners are expected to understand and utilize the infamous “algorithm” on top of everything else. Is it really that important? Yes!
An algorithm is, in a nutshell, “a sequence of steps or rules designed to produce a specific outcome from a set of inputs.” Still confused? Algorithms help us to solve a problem in a systematic way by defining the problem, breaking it down into small parts, defining a solution for each part, implementing the solution and making it efficient.
A relatable example of an algorithm is our credit scores. Our credit scores are created using an algorithm that converts all of our financial history into a 3 digit number.
Marketing algorithms collect data through things like demographic characteristics. Demographic characteristics describe your target market on an individual level by using age, income and level of education to determine customer behavior. This is how you know who is most likely to be interested in your product or service.
Another process of determining algorithm is through behavioral data to determine the target individual’s unique personality and decide on the optimal creative to display, or product to suggest, from a set of possible options.
Purchase behavior is one example of behavioral data which monitors people’s pay-per-click ads, or visits to a company website, to determine what products and services are good for who and the best way to get that product in front of the right customers.
Although humans are necessary in implementing, monitoring and adjusting our marketing plans; to ignore the work our computers are doing in collecting this helpful data would be missing an opportunity. Take advantage of your algorithms whether on social media, website or Google.