Marketing technology Arms Trader's Almanac - diving deeply into marketing automation

Marketing technology is running red hot and benefiting from the most important trend underpinning the global transformation of business via digital technologies - the rise of consumer power. Which-50 has partnered with B&T and ADMA to dive deeply into emergence of the sector.  We start our investigation with marketing automation.

When Adobe bought Omniture in 2009, the analysts were a little stunned. Why would a free-spirited Californian design company, which built its fortune helping creative talents realise their vision, want to buy a web analytics business based in Utah, home of the distinctly un-Californian Mormon church?

Mergers are all about culture, and this one seemed to make no sense. Now of course, six years later with marketing technology the hottest of the hot spots, the move looks like genius, although the pay cheque for Ominture’s owners at US$1.8 billion is still striking.

It remains the second biggest marketing tech deal ever behind the Salesforce/Exact Target deal in June 2013.

Whether the genius was by luck or design (Adobe insiders argue for both), Adobe found itself at the leading edge of the most important transformation in business in the current era – the emergence of the customer as the true force in business. And the industry’s response – the emergence of enterprise grade marketing automation.

See also:

ARMS TRADERS ALMANAC: Introduction "The rise of the global digital marketing ecosystem"

ARMS TRADERS ALMANAC: Timeline "The deals that defined the marketing automation industry"

ARMS TRADERS ALMANAC: From original sin to global ecosystem - the rise of the advertising technology industry 

ARMS TRADERS ALMANAC: The modern marketer's ad tech arsenal explained

Interviewed for The Almanac, Deloitte Digital’s Chris Collacott defines marketing tech as an approach to programmatically coordinating and optimising marketing activities across one or more channels, such as email, websites and social media.

In short, it allows marketers to codify marketing programs, track and target users, automate content delivery and trigger automatic responses to user behaviours.

Increasingly it is taking on elements of advertising technology as well, and in truth the distinction remains arbitrarily and probably unsustainable.

Denise Shivell, creator of the Mediascapes (see below), who has mapped the local industry for five years now, provided the best distinction we could find. Marketing automation tends to refer to the creation, distribution and measurement of owned media and Adtech tends to relate to paid media.

 

But even this distinction is breaking down (as Shrivell happily acknowledges.)

Over the next 12 months we will be diving deeply into all aspects of marketing technology, covering everything inside of that ever-expanding universe.

And in reality, marketing automation, our first chapter involves, integrates or informs almost all of these areas. But for our opening chapter we are focusing on the marketing automation companies – basically the main platform vendors that provide the bedrock marketing infrastructure.

Marketing automation delivers two important outcomes for companies. The first, which attracts much of the attention (and most of the investment in recent years), involves platforms and tools that help marketers build campaigns across multiple channels such as email, social, search and web.

Marketing automation also relates to the process of day-to-day operations of marketers. These days vendors are increasingly looking at applying the same usability disciplines to the systems and screens the marketers themselves use to build, manage and report on their campaign activity as they do the screens and interfaces used by customers.

Signals of intent

Adobe’s acquisition did not herald the birth of marketing automation, which is decades old, but it did signal the intent of the software industry’s biggest names to exploit a long running shift in IT spending – from the IT department to line of business – what analysts once dismissed as Shadow IT and which is now acknowledged by Gartner and others as the tectonic shift in the relative power of the corporate IT buyers.

CMOs have emerged as the winner in this movement, with Gartner famously predicting they will dominate IT spending by 2016.

Key challenges

With their marketing clouds now extensively equipped, the marketing technology vendors have to justify those investments. So what are the main problems they are trying to solve for their clients?

Paul Cross, vice president customer success APAC, Oracle Marketing Cloud told The Almanac, “We continue to see marketing organisations challenged by disparate data, teams and technology. All three challenges are interrelated and creating an environment where it is difficult for marketers to truly create contextualised experiences across channels.”

For example, Cross said most marketers are unable to connect all of the customer behaviours they are collecting to create a more complete view of their customers and prospects.

“Email data, web analytics, purchase data and service data are just a few examples of the data that provides a true representation of their customers but the ability to connect that data is a struggle.

 

 

 

(Image: Oracle Marketing Cloud's Paul Cross)

“The fact that the internal marketing teams and the technologies they use are often siloed from each other only further exacerbates this problem.”

Personalisation for now at least seems like it is more honoured in the breach than in the observance. “They all want to provide a consistent and contextualised experience across email, search and display, regardless of the device but for most they are unable to bring even a couple of channels into uniformity.”

And finally, actually making sense of data remains a big challenge for many marketers, according to the Oracle APAC chief.

“Most marketers want to be able to calculate the impact their marketing investment is having on actual revenue. Additionally they want to attribute individual campaign efforts to closed revenue. Most marketers are unable to do this in an automated fashion because the systems they are using are not well integrated.”

Speaking to Which-50 last year, Sitecore chief strategy officer Darren Guarnaccia said Sitecore’s next priority is to focus on what he describes as the orchestration of marketing. 

(Sitecore chief strategy officer Darren Guarnaccia)

“Marketing as either an art or a science doesn’t have a single unified system to help marketers do their job. The accountants get ERPs, sales people get Salesforce type systems, but there is no marketing solution that helps them run the business.”

According to Derek Laney, head of product marketing Salesforce, budgetary considerations remain top of mind for marketers.

“Australian marketers are looking to rationalise technology investments and optimise media spend with 38 per cent looking to shift budget from traditional to digital platforms and 70 per cent looking to increase social advertising spend,” he said.

“Recently, 77 per cent of CMOs at top performing companies told [tech consultants] Gleanster that their most compelling reason for implementing marketing automation is to increase revenue. Smart marketers know that by getting marketing automation to do the heavy lifting, they can grow revenue without blowing their media budget.”

He also nominated new business development as a key marketing priority. “Australian marketers are looking to social and mobile as areas for increased investment with 70 per cent looking to increase spending in both mobile applications and social media advertising.”

Laney also suggested there are still potentially big gains in effectiveness, especially for B2B marketers.

“[Research institute] MarketingSherpa found that 79 per cent of marketing leads never convert to sales, he said. “Marketing automation can help marketers dramatically increase lead quality and conversion rates by driving lead generation through forms, landing pages, progressive profiling, paid search connectors, lead scoring and grading and automatic lead assignment.” 

(Derek Laney, head of product marketing Salesforce)

And of course given the growing role of marketers as customer advocates, Laney said marketers understand the importance of building a cohesive customer journey, and he nominated mobile apps, CRM and marketing analytics as the three top technologies to deliver this.

Daniel Aunvig, head of customer intelligence, SAS Australia and NZ offered a different perspective. “Using analytics to fuel better customer experiences through their multi-channel engine.”

He says organisations need to understand that analytics deeply embedded into their multi-channel processes is the ingredient that ensures a genuine move away from generic product centric marketing to a very targeted approach. 

(Daniel Aunvig, head of customer intelligence, SAS Australia and NZ)

In this scenario, audience sizes reduce and communication becomes individual and relevant based on a scoring of that individual customer and the context they are in.

Adobe’s Mark Henley, director of transformation and digital strategy says the challenges can be boiled down to three areas: technology, people and process. “Clearly, there is a lot of depth and breadth in each of these, but the transformation that is implicit in digital marketing ends up spanning them all.”

Within technology Henley nominates the problem of managing large, complex data sets, and coordinating vast amounts of online and offline data generated at the point of sale and from call centres as a major challenge.

“Extracting genuine insights and action is the major challenge for most digital marketers. Combining data and content into unique, relevant and valuable customer experiences is the intention and desire, but for many the lack of an integrated platform makes this impossible to achieve.”

On the people issue, he says a skills shortage presents challenges for businesses moving through a digital transformation, with high demand for experienced practitioners meaning they are hard to find and expensive to hire when you do.

“With better skills, marketers could leverage more complex metrics, and would be better able to apply data-driven analysis to generate actionable insights that would drive business results and demonstrate ROI. Organisations need to accelerate their investment in skills development to close the skills gaps faster and leverage the benefits of digital. A bolder approach is also needed to applying metrics and driving a more compelling case for increased investment.” 

(Mark Henley, director of transformation and digital strategy, Adobe)

And on process, Henley notes that customers are adopting digital in their everyday lives faster than ever, and many businesses have not yet become accustomed to the pace of adapting to their demands.

“Mobile has been a force in the market for at least the past five years, yet even now, mobile-first strategic thinking is rare, and mobile-first execution even rarer. The opportunity is to embrace big data, connected multi-channel experiences and personalisation. These may be harder problems for companies to solve than mobile, but will deliver significant returns.”

Privacy is another consideration and one that is often under rated from a regulatory risk perspective. “One of the main challenges we find customers have is using marketing technology to ensure they remain compliant with consumer privacy regulations,” says Simon Bowker, area director, Asia Pacific, Teradata Marketing Applications.

Bowker pointed to a report from the privacy commission, which showed that at least 21 companies had been investigated by it already this year for failing to explicitly tell people that they have their data and how they intend to use it. 

(Simon Bowker, area director, Asia Pacific, Teradata Marketing Applications)

“Organisations must understand how to use marketing automation systems to lower the risk of non-compliance, through clear, up-to-date policies. Marketing automation systems do this by controlling the approval processes for every campaign.”

Tim Doidge, IBM Australia customer engagement solutions leader, meanwhile offers real time contextual marketing, understanding the customer journey across on and offline channels and the issue of the accelerating rate of rate of change marketers to cope with as important challenges.

“Delivering real-time contextual marketing is the biggest challenge facing marketers. Customers expect the brands and organisations they engage with to deliver contextual relevant content, at the right time, through the right channel whether it be online or offline and in the right language. This is what will drive differentiation and customer loyalty.”

Marketers need to understand the true customer journey across traditional offline and the newer online channels, he said.  “Answering questions like: what is the fastest path to purchase, where did the customer struggle, what did they do on that journey, what was and was not important? Understanding the journey and corresponding experience will enable marketers to design campaigns and allocate the appropriate budget across paid, owned and earned channels to deliver tangible business outcomes.” 

(Tim Doidge, IBM Australia customer engagement solutions leader)

Those two ideas also need to be brought together, says Doidge. “Once we are able to anticipate the customer’s needs and predict their likely journey, we can allocate funds and resource to deliver the greatest impact. We can tailor the message to be hyper relevant based on their anticipated needs and their point in the buying journey. This investment can then be measured to quantify success and further investment.”

The third challenge for marketers is dealing with the accelerating rate of change, according to Doidge. “This is especially evident with the proliferation of channels and devices and with the availability of data to drive decisions.

“Often the challenge is not the technology, it is finding the skills to execute effectively using the technology. Often marketers are unaware of what is possible, or they cannot hire the right skills to squeeze the best out of their marketing platform. This is acutely evident in the ANZ region, where skills are short across the board.”

Aden Forrest, Marketo managing director Australia and New Zealand argues the biggest obstacle right now is the skillset of marketers.

“The platform itself is intuitive so the learning curve is not huge, but to be truly effective you need to be analytic and possess process-oriented thinking. A lot of marketers haven’t been trained to think that way. Our research with The Economist Intelligence Unit reinforced this skills shortage and the need for marketers to develop more of a business focus.” 

(Aden Forrest, Marketo managing director Australia and New Zealand)

He says marketing automation will become more integrated into other functions. In the marketing realm this will include PR, social, field marketing, brand building and the like, as well as stronger bonds with advertising platforms.

“A nurturing program could be furthered through some tactical social advertising, for example, placed through a RTB advertising platform. We’ll also see it integrated more effectively into mobile marketing, with context becoming a valuable trigger for communication.

“As Marketing Automation becomes a valuable tool for forecasting future sales it is likely to become integrated into other core business systems, contributing to the topline metrics senior executives use to drive their business,” Forrest says.

Then there’s the Internet of Things – more devices and a richer set of data adding to marketing triggers, he adds.

According to Alan Trefler, founder, chairman and CEO of Pegasystems, evolved CRM software uses model-based development to align IT and business in an agile development cycle that is much faster than coding.  “Instead of forcing businesses to preload data into a new repository, the software should fit into existing environments and run where a company needs it the most – whether in the cloud or in their data centres,” he says. 

(Image:Alan Trefler, founder, chairman and CEO of Pegasystems)

“This is only set to improve as we invest in ongoing research and development to further refine our platform to meet business needs. When afforded the opportunity to focus on customers instead of systems, businesses can shift quickly to meet evolving customer demands, empower employees to work smarter and faster, and respond to new business opportunities and challenges. This is the future, a ‘norm’ for businesses of any scale/size to focus on innovation, rather than archaic systems and processes.

“With customers increasingly taking a ‘self-serve’ approach to brand interactions across a variety of channels, many organisations have trouble keeping pace. But as customer service interactions become more complex, there is also an opportunity to develop meaningful connections with customers.

“It’s all about using technology to better understand the customer’s intent. Comprehensive and accurate data is critical to effectively managing customer experiences.”

Customer first

Marketing technology – designed as it is to identify and fulfill the content needs of customers – paralleled the rise of the consumer in the age of digital transformation.

Indeed McKinsey and Company has conducted various modelling exercises, which all arrive at the same conclusion. In an age of digital most of the benefits of change accrue to the consumer in the form of avoided cost.

That makes competition for the loyalty of those consumers all the more fierce as they become more precise in their purchasing choices.

While companies have always given lip service to the needs of customers, for too many the real goal was to corral consumers into boxed canyons and then to build impenetrable walls that would cost new market entrants too much to breach to be worth the conquest.

These days, however, digital technologies have stripped away barriers to entry too many markets and even torn down walls between industries.

Google, a search company now dominates the mobile telecommunications ecosystem and has its gaze fixed upon industries such as banking and finance. Amazon meanwhile transformed from a bookseller into a global IT services business as well as an ecommerce powerhouse.

Consumers, meanwhile, drunk on choice and armed with an arsenal of personal productivity tools now make their own choices often taking the best experience in one market and carrying it to the next as their minimum expectation.

Many companies are not finding their transition easy going.

In a recent report by Accenture called ‘The Switching Economy’ the consultants describe a marketplace where the “always on” nature of customers, the greater use of digital channels, and the growing acceptance of non-traditional providers is delivering an ever-growing pool of contestable revenue.

Internationally they put the value of what they call the switching economy at $6.2 trillion.

According to David Mann, Australia and New Zealand Accenture Strategy Lead, “Many Australian companies are reacting too slowly to the Switching Economy, resulting in customer losses and decreased revenue potential.”

“While many companies have been chasing the digital opportunities, they have not addressed the root causes of the problems that are exposed through poor execution. Companies have been focused only on ‘doing the same things better’ when these issues really require them to ‘do things differently’.”

Treachery is the new black

An Accenture study reveals that 69 per cent of consumers say they consider the offers from significantly more brands than they did 10 years ago. And the majority confirms they regard themselves as much less loyal than a decade ago.

And digital is key to this shift with almost 90 per cent of consumers using at least one online channel when looking for a new service provider, and a third saying they want more digital interactions from providers.

Worryingly for brands, the report notes that only 11 per cent of consumers strongly agree companies are effectively converging digital, mobile, social and traditional channels.

Into this dislocated marketplace some of the software industry’s biggest names have poured their talent and their treasure in recent years.

Perhaps the most interesting thing about this is the context they all bring. Each of the major players offers a unique perspective belying their heritage. For pioneer Adobe, it was all about the down streaming of creativity where as for the latest significant entrant Netsuite, digital marketing is merely an extension to its core business of cloud-based enterprise resource planning (ERP) and ecommerce.

Oracle and Salesforce meanwhile aggressively built out their marketing clouds from a heritage of CRM. Sitecore on the other hand parlayed its expertise in content management into a growing success in end-to-end marketing in the Microsoft ecosystem.

For its part, the independently minded Marketo maintains its commitment to building its marketing platform rather than buying technology. What it sacrifices in speed to market it makes up for in seamless integration.

Also piling on, but from a background in analytics and business intelligence, are companies like Teradata and SAS.

Over the horizon

Looking beyond the immediate considerations, what are the new issues that are likely to emerge?

According to research group Gartner, some trends seem clear enough. The age of CRM is passing, while big data – and big content are both rising. And traditional ways of thinking need to change also as  digital marketing has effectively blown the purchase funnel apart according to the research companies marketing specialists.

 (Image Adam Sarner, Gartner)

As Which-50 reported at the time of Gartner’s digital marketing symposium earlier this year, analysts Adam Sarner and Mike McGuire identified a clutch of emerging trends.

These included:

• Real-time marketing. This moves in customer time as consumers create links to each other and to brands.
• Quantified self. This includes the Internet of Thkings (IoT), wearable computing and is estimated to be a $5 billion market in less than two years.
• Digital marketing hubs. These hubs assemble all the data together to be used across the organisation and in real-time.
• Multichannel attribution. This set of techniques link specific actions marketers take to consumer actions.
• Content marketing. Marketers need to build a content marketing supply chain and determine how to create, curate and cultivate content.
• Responsive design. This is especially important across mobile and after Google’s new mobile friendly search policy.

The pair also noted that B2B marketers are increasingly investing in B2C technologies and that email marketing’s long heralded demise remains as distant as ever.

“No, email isn’t dead. It’s still valuable since more email marketing is being consumed on the go, through multiple devices and is still extremely measurable.”

For their part, the platform providers each have their own views on major areas for improvement and development in the years ahead.

Salesforce’s Derek Laney says: “We are at the tipping point of a new age for marketers. Brands are competing for the hearts and minds of the consumer and this means offering a second-to-none customer experience. Key to delivering customer experiences that sets brands apart is harnessing the data and the insight needed to power 1:1 conversations. Marketing automation is the platform through which the industry finally abandons the mass marketing mentality in favour of high value, personalised conversations.”

However, he cautions that delivering an exceptional customer experience across all channels is not easy. “While marketers have ample access to customer data, activating that data and engaging customers with relevant content at the most opportune time, across the right channels will continue to be a significant challenge for marketers.”

To address this challenge, marketers are moving from manually executed batch and blast campaigns to event-triggered automation and real-time personalisation, he says.

“With marketing automation, personalised 1:1 conversations are possible for the first time. We expect this trend to accelerate over the next few years.”

SAS meanwhile is working hard to make machine learning techniques available and approachable for marketers, says SAS’s Daniel Aunvig. And the goal is to do it in a way that the marketing automation system can suggest analytically driven improvements in a way “that marketers don’t have to come up with them but accept them and the system adjusts automatically”.

That, he says will lead to an efficient channel mix or different segment sizes. “The other element I would highlight is further integration into the online eco-system – the market seems to be interested in how customer and contextual information can be exchanged with DMPs and ad serving platforms in a way that allows for true targeting on third-party web properties.”

Adobe’s Henley says its goal is to deliver the best possible integrated platform. “Giving the customer a solid foundation with all the data and necessary features they need built in. Concurrently, improving the underlying algorithms to drive success, uplift and conversion is important.”

And he flags further work in the areas of personalisation through multivariate testing.

For IBM’s Tim Doidge meanwhile, the further development of analytics and social networking, along with advances in mobility, particularly geo-location services are likely to feature prominently.

He says we will continue to see better use of data to improve the understanding of the customer journey. “Customers will generally interact with many touch points along the customer journey and these interactions need to be captured and shared across the marketing platform eco-system. Without the seamless view of the customer journey, marketers are faced with ‘filling in the gaps’.”

This open exchange of customer behavioural data between vendors will enable a more personalised understanding of the customer, says Doidge.

Social networks will continue to grow in influence as well he predicts. “The friends, relatives and peers we connect with on social are the people we most trust, take advice from, listen to, and therefore hold the greatest power of persuasion over us.”

And he says: “Mobile is increasing rapidly in all aspects of the customer journey, from initial interest through to purchase. Using this device effectively to engage customers based on their location in addition to the other contextual based information is still in its infancy.” 

For his part, Oracle’s Cross nominates five areas: data management, extensibility, account-based marketing (aggregate behaviours across an entire account team that you are selling into) cross channel orchestration and analytics as well as measurement as core areas of focus.

An old argument surfaces

With the platform vendors all building or (buying) additional marketing cloud capabilities, it’s little wonder that the suite versus best of breed argument continues to be waged.

Cross says: “Customers continue to move away from point solutions and are more interested in an entire marketing solution that includes marketing automation, content marketing, digital advertising, and social marketing.  We expect this trend to accelerate over the next 24 months as competition drives marketing teams to become more sophisticated.”

Doidge speaks for many providers when he notes: “We are still seeing large organisations selecting best in class point solutions based on siloed decision making in different channels. Often this is not an optimal decision when considering the customer journey spans many channels and marketing should be looking for a holistic approach to engagement. In larger organisations, marketing should ideally own the customer experience and engagement. With this in mind, we would see a more integrated approach to buying decisions.

“This position is improving over time, as organisations put the customer before the channel when making buying decisions. Inevitably, there are a growing number of vendors selling marketing solutions and no one platform can cover even half of the requirements. Considering the above, it’s important to buy from vendors who are committed to open standards and interoperability.”

Smaller organisations are buying cloud-based point solutions, often with a platform in mind. This is driven by cost and availability of skills, he says.

His views are echoes by UK-based research house 451. In its study ‘The Contemporary CMO’s Toolkit 2.0’, the research company suggests that while marketing budgets are demonstrably shifting to digital, much of the investment is quite specific, targeting functional areas like email marketing.

Hold on a sec

The authors accept that expectations are high but they doubt that there is kind of wide-scale adoption of platforms and systems to justify the hype (and presumably some of the valuations) in the market.

Almost 70 per cent of the marketers they surveyed reflected digital marketing’s importance, but only 18 per cent said they were actually utilising digital marketing systems, according to the study.

Part of the reason is that delivering genuine end-to-end marketing outcomes remains difficult and fraught.

“While contemporary CMOs are starting to believe that digital marketing will address the shifting expectations of customers, most marketing organisations lack the technical skills to deploy the highly complex data-driven customer profiling and personalisation that vendors in this marketplace are offering. Furthermore, very few organisations have the overarching information architecture required to support the customer data requirements to meet this vision. They lack both the expertise and process maturity,” say the study authors.

This integration program has seen the emergence of a class of technology provider which, which not strictly or solely marketing tech, are nonetheless critical to success in the sector.

API vendors like Mulesoft, Apigee and SOA Software are gaining increasing traction by offering to simplify the silos.

Locally, we see almost an even split between organisations selecting a platform to address a transformational program and where customers are selecting a point solution, 40/60 respectively. From the outset, the decision-making process is driven by customers looking for that quick win to an increasingly complex business problem. 

But the most value for business can be seen over the long term - the by-product of establishing an adaptable platform is that the business can continuously access key insights in real time for future problems. Over the last 24 months, there has been a realization that there is a different approach available to the multi-year, multi-hundred million dollar transformation programs. Businesses are looking for the next best action to solve challenges.

In particular, we are seeing more of a demand for agile wrap-and-renew approach where customers are selecting Pega to provide end-to-end management of policies and procedures without the heavy costs and risks involved in replacing their systems of record.

And the payoff to marketers if they can solve these problems is huge.

The deal flow may have gone quiet in recent months, but the shift of power from seller to buyer, and the primacy of the customer experiences shows no signs of abating.

With customers being less loyal and more mobile (both figuratively and literally) brands will continue to invest in technologies that both determine customer intent and ensure the right content arrives at the right time, ideally personalised to the right individual. In chapter two we will example the emergence of Adtech.

About the author

Andrew Birmingham is the editor of Which-50. This feature is the first chapter of a significant editorial program being developed over the next 12 months by bandt.com.au, ADMA and Which-50.

 

ADMA is a corporate member of the Which-50 Digital Intelligence Unit. Members contribute their expertise and insights to Which-50 for the benefit of our senior executive audience. Membership fees apply.