As the Winterberry Group notes, the “bulk of new marketing spend in 2013 was in digital marketing.” It’s a $133 billion industry, with growth in subcategories: Display (35.4%), email (11.1%), eearch (12.9%), and eocial technology and services (50%). While the group predicts email and insert media will remain flat in 2014, the forecast is for healthy growth in display (17.1%), search (12.4%) and social tech/services (20.8%).
This growth has accelerated the investments in the marketing stack. Oracle, Salesforce.com and Adobe have raised the ante with their investments in advertising-enabled technology companies (email, DMPs, social). This has created super competitors that appear to provide all the tools and services you will need to connect your data, your customers and the applications that support your marketing organizations.
More importantly, we’ve seen a connection between the advertising ecosystem with the direct marketing ecosystem and the fringe technologies that enable both (social). I’d characterize the vendor supply chain as the optimist, yet not without its concerns over the bigger getting bigger and the middle markets “up for grabs.”
As the forecast suggests, overall spending was flat last year and projected to grow modestly in 2014. Marketers should get used to making do with what they have. This reminds me of DirecTV’s “When you pay too much for cable, you…” commercials: When you have less budget, you buy from more vendors. When you buy from more vendors, you end up buying coffee at discount coffee shops, and when you buy from discount coffee shops you may you end up with too much caffeine and sugar. When you end up with too much caffeine and sugar, you will wander around screaming at strange people.
When you try to do more with less, or more with the same budget, one of two things happen. You either spread out your budgets to work with many vendors to maximize things you test, or you limit the vendor landscape to maximize leverage with a few. One is sticking your head in the sand, trusting your advisors, and with the other, you live by the Lumascape maps, trying to figure out where to hedge your bets in a vast vendor landscape.
The key question that marketers will need to face: How far do you stretch with new technologies? Or are they generally a distraction from the real focus of reducing marketing costs? This is the thinking that prompted this article and spurred a heated debate among insiders.
Consumers, the last and most important element of the pyramid, are more diverse, more connected, more digital and are predictable products of their socio-economic roots. Yet the real question is how much control they will have in the future. Will privacy laws give them the appearance of “transparency” and control, or will they simply force a new value exchange that will fragment how we read, search, compare, buy, and share?
Ten years ago, a few colleagues and I were contemplating the future. We envisioned a world where your child (age 12), would put a video camera in his closet and stream live shots of his Nike shoes. He would sell advertising for the products in the closet (shoes, clothes) based on the eyeballs he had grown through his owned media: a world of consumer-controlled advertising.
We are at a fascinating, transformative time in this industry, where I believe scale advantage will be seen less and less as a differentiator. As one well-respected person put it, “David meets Goliath.”
I’ll finish with this sentiment. With increased expectations for targeting, advertising, measurement and big data, are we looking at the situation through the right lens? A salesman says, “This computer/software will cut your workload by 50%,” and the buyer says, “That’s great, I’ll buy two."