From Admen to Algorithms: The Transformation of Marketing

In the 1960s, the world of advertising was a cocktail-fueled arena where charismatic executives pitched bold ideas to clients over three-martini lunches. Fast forward to today, and the landscape is nearly unrecognizable. Gone are the smoke-filled boardrooms, hand-drawn storyboards, and larger-than-life personalities. Instead, we find a world driven by technology and data.

“Marketing decisions are increasingly made by algorithms,” says Samuel Levy, the newly appointed assistant professor of business administration at the University of Virginia’s Darden School of Business.

Levy, who will be teaching the marketing core course for the MBA program, joins the faculty at a pivotal time. Many forces are transforming the way companies buy and sell ads, including new data privacy regulations and the demise of third-party cookies — the digital codes that allow websites to track users’ online activities.

The Darden Report caught up with Levy to learn more about his academic interests and insights on the changing dynamics of marketing and advertising. An edited version of the conversation follows.

Q. What are your areas of research?

I’m interested in many different ideas around customer analytics and marketing analytics. I take a quantitative point of view, combining methodologies from statistics, machine learning and economics. I’m interested in branding, customer relationship management, the impact of privacy concerns on marketing.

Also, the idea of data fusion — which looks at how to you fuse different data sets to get insights above and beyond what you would have gotten if you had analyzed the data sets separately.

Q. Explain data privacy a little more.

 Data privacy is different from data security. Data security is the idea that you want to protect your data sets with security measures like access control, or encryption.

Data privacy is more about the trust that you build between a brand or a company and consumers. Privacy is a fundamental human right essential to modern digital interactions.

The big issue right now in data privacy is third-party cookies. Regulations like the General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA) have enhanced consumers’ rights to decide whether to allow these little pieces of software on their devices that track them everywhere online.

Q. In a major reversal, Google announced in July that its Chrome browser would continue to allow third-party cookies. The company also said it would introduce a new prompt to allow users to choose how they want to be tracked across Google’s search products. What are the implications?

It is probably going to slow down the move towards privacy as companies adjust their policies. The adoption of alternative tracking technologies such as the Google Privacy Sandbox may also slow down. But in the long run, there’s going to be a push toward more privacy.

Q. Is there an alternative to third-party cookies?

Yes, data clean rooms are one example. One way to think about this it to imagine data as packages traveling along a conveyor belt. Companies put their first-party data into packages that move along the belt towards a secure environment, like a “metal box,” which is the data clean room.

As the packages move along the conveyor belt, the sensitive data is transferred into the data clean room. Once the data has been scrubbed so that all the personal information is removed —through techniques such as anonymization, aggregation or differential privacy — companies can access information about consumers without infringing on anyone’s privacy. Amazon Web Services (AWS) Clean Rooms is an example.

Q. One of your areas of research is digital marketing twins. Can you explain?

It’s a very loosely defined term. My personal definition is that a digital twin is a simulation that allows you to do counterfactual analysis — the “what if?” scenarios using very big data sets, when interventions are not materially possible, too costly, or unethical.

Digital twins have been used in the fields of engineering and medicine for a long time. For example, in medicine, you can make a digital twin of a heart before surgery to understand the risks.

Digital twins are really useful. I’m interested in using survey data to create digital twins of consumers, helping marketers navigate customer journeys by running marketing interventions on synthetic versions of customers, to better understand customer journeys.

Q. You are also researching privacy and data fusion and have a working paper on this topic. What are some of your findings?

There are three main findings. The first is that data fusion introduces significant and novel privacy risks, over-and-above those of the individual datasets to be fused.

Second, partnering with a major wireless telecom carrier that surveys customers at scale about their brand perception, we show that we can fuse large scale brand surveys and transaction data without disclosing anyone’s identity.

Third, differential privacy is very abstract for marketers. It’s a state-of-the-art technique to protect privacy and a technical term from computer science. Simply put, differential privacy adds a small amount of noise to data, allowing statistical trends to emerge of the overall data while protecting individual privacy.

My co-authors Longxiu Tian (University of North Carolina Kenan-Flagler), Dana Turjeman (Reichman University) and I created a new way to measure how easily customers can be identified when companies combine different sets of customer data. This helps marketers protect people’s privacy when they use large amounts of combined data for their advertising campaigns. Marketers can adjust how much privacy protection they want to use.

Q. Data privacy and data fusion are two of the trends that have shaped marketing over the past decade. What are the big trends for the coming decade?

It is very hard to predict the future, but I would say one mega trend is that we will see increasingly sophisticated computers running large language models (LLMs) and generative AI will be used extensively, revolutionizing personalized marketing and content creation, also offering deeper insights into consumer behavior.

Q. What worries you and what are you most excited about?

My concerns are mostly related to mental health and the pervasive influence of social media. Privacy is a human right, but we also have a right to not have our attention constantly grabbed by social media platforms.

What I’m most excited about is the idea of how digital twins will change the retail industry. I think there are a lot of promising solutions, whether it’s creating virtual replicas of stores or consumers and customer journeys. This is a revolution that will happen in the near future.