Commentary

Marketing Tech Succeeds Because It's Not About Impressions

Dave Morgan wrote an insightful column last week about how ad tech is going to get eaten up by marketing tech in 2016.  Dave is one of the smartest, classiest people in the digital business, so I think he was being too nice in his assessment. Marketing tech already triumphed last year — and 2016 might be even harder for pure ad-tech companies.

In the last month or so we’ve seen the effects of overvaluations and over-extended promises in ad tech.  Public companies in the sector are getting crushed, and private company valuations are unstable across the board.  

While the floor is higher and significantly more stable than in years past, it’s eerily similar to a cycle we saw back in 2001, when one evolution of the business was literally phased out.  Around that time there were a ton of rep firms and ad networks whose businesses started to falter simply because they were based on media and impression volume.  The death of the ad network led to the rise of the ad exchange, which ultimately led to DSPs and programmatic platforms.  While these businesses offered better scale, they were still fundamentally tied to impression volume and advertising.  

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While I still love advertising (and probably always will), it’s a subsegment of overall marketing. You need to be able to deliver value across the entire marketing ecosystem, which is why the category of simple ad tech is doomed — and the broader, more inclusive marketing tech category is proving its value across the entire enterprise.  It’s why so many companies (as Dave references, including the one where I work) have paid to acquire other technology companies and are developing their own marketing stacks.  

Marketing is inclusive of advertising, along with website customization, CRM, general email communications, customer service and more.  Marketing addresses the entire customer journey and the various stops along the non-linear path consumers take in today’s environment.  

Advertising, while still extremely important, is really only about impressions.  Marketing is about experiences beyond a simple exposure, and many of those experiences can be fueled by data.  Data is the driving force behind marketing tech, while impressions were the driving force behind ad tech. The two are related, but if you examine the value of companies that trade solely in impressions they tend to have lower valuations than companies that trade in data.  

The companies that historically were tied to advertising impressions are valued at 1-1.5x revenue, while SaaS marketing platforms and platforms that focus on data or insights are anywhere from 5-10x revenue valuations. VCs are still putting money into the impression market when they find the companies that can deliver at scale, but they are looking for growth in areas that diversify beyond the impressions for the long term.

The stock market in general is down because of uncertainty in foreign markets as well as uncertainty in our own market due to the looming election cycle.  Concerns about oil have bled over to concerns about technology, and the overinflated valuations of some companies are taking a hit.  This is the year of unicorns losing their horns and of ad tech being valued for what it is: short-term revenue applied to impressions, which can come and go at the drop of an insertion order.  

All the points in Dave’s column hold true, such as the focus of the business being on business outcomes, speed of optimization, data protection, consumer privacy and supply chain challenges.  These are indicative of where things have to go in 2016, but the industry needs to understand that it’s not simply about the impression -- it’s about the total consumer experience moving forward.  That is the core of marketing, which will be the core of the industry for 2016, and even on into 2017.

5 comments about "Marketing Tech Succeeds Because It's Not About Impressions".
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  1. Steve Climons from Crossover Creative, January 20, 2016 at 11:40 a.m.

    Based on this, how is advertising still extemely important if it is primarily about impressions?

  2. jeff white from Media Analytics, January 20, 2016 at 12:08 p.m.

    Great article Cory. Being a data and insights provider, I see both sides of this paradigm and have long believed it was just a matter of time before the brand owners (aka marketers) would want to have a more comprehensive and telling picture of what the cause and effects of their efforts are for each initiative. And more importantly they want to control the levers that govern dollars spent and be able to redirect funding base don measuring results in real time and feedback from their clients. The rate of change is finally starting to accelerate as two critical factors emerge. The toolsets needed for brands to actually have a comprehensive view of all their marketing initiatives is becoming a reality and the because pace at which consumer behavior and pivot is demanding marketers to be able to react in near real time. Advertising is the tail on this dog, regardless of whether it’s online, OOH, or TV based, all Ad Tech will become part of the larger Marketing Tech stack. This is the same phenomenon that occurred in finance and manufacturing worlds 25 years ago 

  3. Ned Newhouse from Conde Nast , January 20, 2016 at 1:21 p.m.

    Wise man you are. Being a member of that New Media Network time, we are at the proper maturity point where the businesses with product scale that can efficiently and effectively manage the entire marketing and performance concern are better suited to address buyers' interests and the impressions that publishers sell in totality. Our industry is ready and better off with some consolidation.  Survival of the fittest.

  4. Neil Mahoney from Mahoney/Marketing replied, January 20, 2016 at 3:29 p.m.

    Well said.  In my book, "Social Media Rules" I cite research that shows Prompt Response to Needs & Requests ranks second only to low price among most B2B customers & prospects.  Neil Mahoney

  5. Fred Tietze from Time Inc, Content Solutions, January 27, 2016 at 3:27 p.m.

    Brillant and well said Cory!  With the leading MarTech coming from the software/Enterprise tech  infastrucrure players such as Oracle and IBM, this will allow for seamless integration of MarTech into the entire business operations - logistics, finance, etc. And streamline entire enterprises around the customers.  1:1 marketing, at scale, real-time, and drivng business outcomes across the enterprise.  Marry that to a narrative that drives the content to support all those conversations throughout the purchase & loyalty cycle!  

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