How much does bad data cost LG Commercial Displays?


Martin Oberli

Sr. Marketing Intelligence Manager
LG Electronics USA, Inc. Commercial Displays Division


I joined the company a few months ago with the purpose of organizing the information around LG’s commercial displays marketing unit. The principal idea is to gather and consolidate information about customers and leads in order to learn about their behavior and use this information to do more direct, effective and economically efficient marketing.

This objective sounds pretty straightforward, however the devil is in the details. I found that there is a lot of information available at LG’s digital signage business, nonetheless the information lives in different databases and systems. This makes it very impractical and inefficient to act on it for marketing purposes. What’s more, the myriad data received from numerous sources may not be clean, not complete, occasionally not updated and to a certain degree may contain mistakes.

In order to address this situation I got in touch with most of the major Master Data Management (MDM) companies. To my surprise all of them indicated that the data issues that LG’s commercial displays is facing are very common. What surprised me most is the hefty price-tag that these providers are quoting for implementing their solutions.

The latter made me wonder if there was a study that would give some indications of the cost of not having such an MDM solution, where companies keep dealing with disconnected data sources, bad data and outdated information. Having such information would allow me to get a rough estimate on how much “real” added value an MDM solution could potentially provide.

Researching the web I found a Harvard Business Review from September 22, 2016, titled “Bad Data Costs the U.S. $3 Trillion Per Year”. To put this estimate into perspective the United States Gross National Product for 2016 is $16.9 Trillion. This means that bad data costs the US around 18% of its GNP (or GDP).

In other words the estimated cost of bad data for an average company in the US is around 18% of its revenue. Extrapolating this information further to estimate the cost for LG’s commercial displays business, it is reasonable to assume that LG’s “data situation” falls most probably within the national average. Also from a data perspective LG’s digital signage business is mostly related to sales and marketing and therefore not the entire 18% can be related to the cost of bad data.

In order to roughly estimate how much of this number can be reasonably associated to bad data cost, from LG Electronics Financial Information, we get that “Selling & Admin Expense” accounts for 20.7%, which is probably a reasonable approximation to take. This means that 3.8% (20.7% out of 18%) of LG’s commercial displays revenue is the approximate cost of bad data and disconnected information.

An additional fine-tune for assessing the cost for only the marketing team, can be roughly estimated in relation to the number of people. If the marketing team has around 10% of the company’s employees then the cost of bad data would be 0.38% (10% of 3.8%).

At a first glance this percentage number (0.38%) looks insignificant; however when multiplying it by the yearly revenue of the company, the order of magnitude is similar to the cost of an MDM solution. Furthermore, looking it from an added value perspective, the conclusion is that the outcome is positive, especially considering that the clean and linked data will benefit not only the marketing team but also the sales team, managers, call center and others.