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Why data’s time will never run out in the hourglass economy

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In almost all areas of the economy the middle ground is on the decline.

In grocery, powerhouses Sainsbury’s, Morrisons and Asda have been assailed by discounters Aldi and Lidl.

In fashion, social media is rendering luxury labels more accessible, while consumers can’t resist the other end of the scale, with fast-fashion brands including Primark dominating the scene.

The disruption to middle-of-the-road favourites is being driven by technology

In banking, the likes of Lloyds and HSBC are losing custom to fintech start-ups including Starling and Monzo.

This disruption to middle-of-the-road favourites is being driven by technology. The result is a services economy that has started to resemble an hourglass - broad at the top and bottom, much narrower in-between.

In droves, consumers are deserting the squeezed middle ground as they seek to save money with discounters or splash out on specialist high-end products and services.

The desire for something cheap and fast is perhaps most evident in the food and beverage industry. Takeaway services continue to pile on the pounds - in terms of revenue - and have been eating away at middle ground restaurants for some time.

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The tech improvements in food delivery have caused a surge in demand, with Deliveroo sales reaching £476m globally last year. Meanwhile, middle ground restaurants are struggling, with Jamie’s Italian going under and the likes of Chilango and Prezzo turning to CVAs.

It’s not just tangible experiences that are being disrupted by the hourglass economy. Similar instances can be found across sectors. For example, technological advances in accountancy are polarising the industry. More and more businesses employ cost-effective software, like Xero, or splash out on highly skilled accountants, like EY.

Over in the fitness industry, firms like Pure Gym eliminate the need for receptionists with their fully automated double-door gateway for entering and leaving the gym. This inevitably reduces the cost of the gym for its users, with some branches charging less than £10 per month.

The need for the middle ground is starting to fade

In both instances, the need for the middle ground is starting to fade – people either want the best money can buy or something dirt cheap.

Of course, this could also be bad news for those of us working in the data industry. Yet there’s a good reason why the statistical branch of the creative sector can buck the trend: disruption was done and dusted a long time ago.

Data went through a great tech revolution as far back as the 1960s and ‘70s. With increased computing power and statistical software packages, manual calculations and slide rules became obsolete.

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Today, data science by its very nature needs people at the top of the hourglass structure, delivering hugely valuable and specialist services for businesses of all shapes and sizes.

With the advent of Artificial Intelligence and machine learning, we’re seeing more organisations consider ‘black-box’, algorithm-based technology for statistical analysis. The main problem with this approach is transparency.

A 360-degree view of marketing effectiveness is nigh-on impossible

At a time when brands are demanding to know the real returns of their expenditure - witness Procter & Gamble slashing online advertising by hundreds of millions of pounds - black box just doesn’t provide that line of sight. All in all, a 360-degree view of marketing effectiveness is nigh-on impossible. 

The antidote to this myopic model is white-box analytics. It’s a proven process built on interaction between consultants and their clients. In this way, data experts can pick out - for example - exactly where a business should invest to enjoy the greatest returns by building an attribution model.

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Needless to say, there are plenty of data businesses out there offering services from the floor of the hourglass. They’re not recommended, though, unless you aren’t bothered about accountability and data security.

The positive news for organisations seeking statistical support is the good actors outweigh the bad. In an era when computing power is pushing consumers out of the middle ground in multiple sectors, the data industry looks set to remain on a firm footing.

By Austin Winton, Data Analyst, Marketing Metrix 

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