Commentary
Why Ad Tech Should Worry About The Rise Of Marketing Tech
- by Dave Morgan , Featured Contributor, January 14, 2016
Media and marketing channels like newspapers, magazines, radio, telemarketing and direct mail suffered mightily over the past 15-plus years, as “ad-tech” -- the multibillion-dollar tech industry providing ad serving, targeting, retargeting, analytics, machine-bidding and buying, etc. -- was applied to Internet-born behaviors like Web browsing, search, social and email. Ad tech created, at least theoretically, a better way for marketers to deliver the right message to the right person at the right time -- a massive improvement over those legacy alternatives. Thus, we have an ad-tech industry today that is worth tens of billions of dollars.
However, over the next five years we will see ad tech supplanted, albeit short-circuited, by technology and companies that directly serve marketers and their enterprises -- rather than ad industry ecosystem intermediaries, where most ad tech today is centered.
Think closed-loop marketing platforms, omnichannel data mining, prospect profile management systems and dynamic messaging and pricing systems. Think companies like Oracle, Palentir, IBM, Neustar and Adobe. Here’s why the marketing-tech space will become much more important:
Future of ads about business outcomes, not media outputs. The future of advertising is about delivering ads to specific people and driving predictable business outcomes -- sales, particularly -- and ROI. Every day, it will be less and less about impressions, CPMs and unduplicated cookies.
In a world that is outcome-centric, technology will need to be marketer- and enterprise-centric, since marketers’ colleagues in sales, merchandising and analytics will need to be involved as well.
Speed. Technology focused on connecting all of a marketer’s ads to outcomes and ROI will have to deliver results and insights to the marketer fast. Just look at search, which will mean lots of integrations into customers, sales and service systems through the marketer.
Protecting consumer relationships and proprietary data. As advertising becomes increasingly personal, and more and more of their first-party data is used in the process, marketers will need to more closely and directly control all advertising communications and resulting relationships. At the very least, the protection of privacy and proprietary data will demand it. Once again, just look at search.
Supply-chain problems. The digital ad supply chain today is a mess, despite years of discussions at the highest levels about the need to clean it up. It is leaking many, many billions of dollars to fraud, bots and un-viewable ads, and has resulted in a consumer experience with widespread interest in, and adoption of, ad blockers. Marketers have too much at stake to continue to allow ad tech to pollute the water where they fish and take sustenance.
You don’t think that this will happen? Just look at how search is managed today. Most of the management happens through the marketers, most of what is done is kept highly proprietary, and the work is handled largely through software systems.
What do you think?
Dave,
I completely agree with your assessment. I've been banging around the b2b segment as you know and the enterprise here is more about CRM, channels and first party data. As all the silos of marketing see more and more innovation from VC fueled SaaS offerings, the imperative to merge all those silos' audience data will heighten. In the case of CPG's that can be loyalty, ecommerce, POS data all combined to create the elusive OmniChannel view of a customer. Advertising and third party data is becoming a subset of the grander vision.
Finally The Martech space is much larger too as this graphic ala Terry Kuwaja's LumaScape shows: http://chiefmartec.com/2015/01/marketing-technology-landscape-supergraphic-2015/ Man, to be a CMO today has to be the hardest job in the business!
In fact, I think both Scott Brinker of Chief Marketing Technologist and Terry Kuwaja were seen shaking hands and sharing Infographics at a Conference late last year!:)
This Spot-On. Thank you.
A great post Dave. I've been talking to marketers and media companies for months that it is time to revisit Seth Godin's premise of "permission marketing' because martech is emerging to do this at scale. With all the ad-blocking, fraud, declining email performance, and even some skepticism about the performance of predictive analytics, why shouldn't marketers consider 'simply asking' consumers at touchpoints for permission to market to them later via criteria they set? In retail, I am seeing some top ten retailers getting a 40% opt-in on this option with non-buying shoppers leaving their email address for triggered dynamic 1:1 emails when the shoppers' requests are met. This first party data and the specific consent and intent attached to each consumer, and the new martech, holds great promise to me around the changes you see happening.
Bill, I think that what you describe from the B2B world will closely align with what we're likely to see in the future of B2C marketing. My good friend and former colleague Robert Tas (now at PEGASystems) describes the need for CCRM - Consumer Cutomer Relationship Management - at conumser focused marketers. That future is coming fast.
I think this sums up the situation perfectly... "The future of advertising is about delivering ads to specific people and driving predictable business outcomes -- sales, particularly -- and ROI. Every day, it will be less and less about impressions, CPMs and unduplicated cookies." I am constantly amazed by the number of people who fail to accept this.
Cheers/George "AdScam" Parker
This is why I've argued that the future belongs to direct marketers. I think it's still possible for the adtech to win out but martech could take it all.
Derek, I agree that direct marketers will have a big leg up in this emergin world. The best ones will figure out how to marry the best direct marketing techniques to media-based advertising and its unique capabilities - learning to not only dlieer messages that drive sales, but also meassages that retain engagement and viewership even when not relevant.
Good, provocative piece Dave. Not sure the line between martech and ad tech is so cut and dry though. Your last riff about search is case and point. Yes, it runs thru software but arguably those tools are more ad tech than martech. Think Kenshoo, Marin, and Doubleclick. The only martech stack that does SEM is Adobe and its offering hasn't progressed much since the Efficient Frontier acquisition. Perhaps the lens we need to look at this thru is SaaS vs. media arbitrage, not martech vs. ad tech. The days of media arbitrage networks with their proprietary algorithms and managed service disguised as platforms are over. 2016 will weed the rest of these pretenders out. Won't name names here but key metric to look at is gross margin. Thoughts?
Aaron, Excellent points. I agree that the SaaS v. Arb is a key point, maybe one of the most fundamental in business model differences, and should have included it in my column. Thanks so much for raising the issue. On the search side, we haven't seen many strong tech platform players here, but the fact that the functions occur at the client, tend to be very proprietary and leverage software is why I focused on it. Probably the fact that there is really only one supplier - Google - creates a lot of headwind (who wants single piont of dependency?) for creating a robust tech market for suppliers.
Indeed. In search, single point of dependency is a big issue (still blows my mind that people are comfortable using AdWords or Doubleclick to manage their PPC) and in-house management with a mix of proprietary tools and 3rd party software are distinguishing factors. I'd also add the fact that 50% of digital budgets go to search as another main reason marketers are taking control of their own destiny and not settling for outsourced, managed service, black box, arb solutions. It's just too big and important for the business. We're seeing the same trend starting to happen in social. Not necessarily movement in-house but definitely towards true SaaS. Won't be long for the rest of the industry to follow suit and ditch the arb. Certainly hope Programmatic TV shakes out this way. ;)
Well said Dave. This is why we don't sell ideas any more... We sell strategies and business outcomes. Addressable creative is just the means to an end we can quantify more easily. The question is will we move anyone emotionally. That's what brands are built on.
Thanks Alan. I think that buidling brands through emotion will be an even more important part of the marketing future. The more we are able to quantify the creation of customers over time, the more we (and all marketers) will realize the power of creating emotional connections. Those who are able to best blend that science with great art will be the kingmakers in this business.
It's amazing how these black hat malvertisers are able to outsmart some of the most complex ad networks, DSPs and ad exchanges like Google. There are teams dedicated to stop these horrible ads but they work mostly on a reactive basis. Even the ad quality offerings can only detect malvertising and do not have the ability to suppress these ads. The damage has already been done by the time the publisher is notified. I hope the ad industry can ban together to dramatically supress malvertising because it's true, this is polluting "the water where they fish and take sustenance."
Great points and conversation! It's worth noting that the enterprise marketing cloud vendors (e.g. Adobe, Oracle, SAP) have *signficantly* greater resources versus ad tech pure-plays which are in many cases still chasing profitability. Also, Verizon or Facebook carry unique capabilities and data sets which will allow them to compete for slices of the martech business opportunity. It will be fascinating to see how these stakeholders continue to adjust go-to-market strategies and attempt to disrupt what is already a highly dynamic landscape.
Great points Seth. I totally agree about the advantages that enterprise tech folks like Oracle, IBM et al and strong first party data platforms like Google and Facebook have significant advantages over ad tech pure plays. Watching how marketers dance with one or both of the enterprise or 1st party players will be fun to watch.
It's happening now. Tech platforms and development firms are grappling with how to service the marketeers (the clients of agencies) directly, rather than working trhough the agencies. As they try this, they will confront major tech firms that Dave Morgan mentioned, along with the global consulting firms, whose advantage is that they already have C Suite relationships with the global brands.
The Oracle's and IBM's are perfectly positoned as they leverage thier enterprise expertise and customer installed base in data, analytics, finance, logistics, etc., to now integrate the marketing part of the enterpise into a holistic business solution. eMarketers research shows that 67% of senior client marketers see truly integragted marketing as a top priority this year -- a comprehinsive marketing tech solution married to the core enterpirse tech systems are critical for that ot happen. Will be exciting to finaly see truly integrated marketing!
Bravo - I may purloin some quotes from you or this article for my ARF Re!Think presentation in March.
It will be called "SNAKE OIL: Still available to 2016 Marketers!"
Thanks Demos and help yourself to quotes. I love your title.
Late to the game here but I want to point out you're missing what I think is a huge player in the evolution of Ad/MarTech space. The start-up scene.
Here in SF you can't throw a rock (or kale salad) without hitting a start-up trying to get on that lumascape slide. We're focused on disrupting the Oracles and IBMs by building SaaS based, consumer products. After all, Marketers buy like consumers moreso then like enterpise buyers. And no offense, but Oracle and IBM don't have great track records in the consumer space.
Simply put, I think the speed at which well designed, afforable, niche SaaS tools and platforms are proliferating will destory the so-called "Stack Play" that the Adobe and Doubleclick's of the world are pursuing.
Last point, agencies are here to stay. It's a labor outsource model that helps companies stay focused. If marketing was a stagnant space then I'd see an argument for it becoming commoditized and automated but it's the opposite. Each day it grows more complex and unwieldy.