The rise of the global digital marketing ecosystem

For most of its history the IT sector has largely ignored marketing.  The colouring-in department was content enough with basic productivity tools, whether it was planning budgets or designing print adverts.  As much as by an accident of history, as by design, marketing was the last department to automate in many companies. Now, everything has changed.

Marketing represents one of the fastest growing areas of technology investment as the worlds of marketing technology and advertising technology begin coalescing around the real power player of the modern business era – the consumer.

Over the next seven years, more than 1 billion digital natives will enter the workforce worldwide and they will come armed with the minimum expectations that every future experience they have in their digital lives will be as perfect their last, best experience.

Companies, which in the past could mouth platitudes about customer focus, suddenly found themselves engaged in an existential challenge. Fulfill the promise of their brand or see the business melt away as customers shift to new insurgents utilising the very best and latest digital technology.

Cometh the hour, reluctantly

Someone needed to step into the breach and act as the customer advocate, and despite some initial reticence and self-doubt, marketers are now fulfilling that role.

But they need tools, and people with the skills to leverage those tools to stay at the top of their game.

And there are multiple challenges to be met.

Not only do customer-facing systems need to beat the threshold of ever-rising consumer expectations, but internal systems need to be able to provide a single view of the truth – and then deliver the right message to the right person at the right time – all at the speed of web.

The days when fiefdoms fought each other for resource and prestige within a business are over.

CRM systems need to talk to ERP systems. Ecommerce and marketing can no longer be considered as different species and customer needs must be met across many channels. Managers need to be able to respond in real time and will rely increasingly upon data driven decision making to assist them to do that.

And finance will want to keep a laser focus on ROI, meaning marketers will need to be better able to attribute success where it genuinely belongs rather than relying on unsophisticated ideas like last click attribution.

Follow the money

In the past five years the pace of innovation and acquisition has accelerated dramatically in the marketing world. Incumbent IT providers like Adobe, Oracle and Salesforce have seen the opportunity and between them engaged in an aggressive expansion into the marketing world.

Two deals in particular stand out: Salesforce’s $2.5 billion purchase of ExactTarget, and Oracle’s $1 billion deal for Responsys are both clear signals of intent.

While these may be the largest deals to date, they won’t be the last. Cloud-based business app provider Netsuite, for instance, recently put a $200 million toe in the water, buying marketing automation vendor Bronto.

But M&A activity in the marketing cloud sector is simply one area of growing investment.

The reality is that the money flowing into marketing and ad tech is broad, deep and growing.

As Which-50 reported earlier this year, marketing technology firms tapped the investment, venture and other start up funding markets for more than a billion dollars in the first quarter of 2015 alone. The figure is a big increase on the $US718 million the VCs stumped up in the previous quarter.

Data data everywhere, but not a drop to drink

Analytics is the biggest draw-card, according to the data compiled by Martech Advisor (MTA).

More than  $US350 million worth of cash flowed into the data science game, with web and mobile analytics in particular finding favour with the money men.

But data is both a blessing and a curse. Too much data remains locked up in company silos, its availability subject to difficult technical integrations (which explains the popularity of APIs) or simply the vagaries of competing tribes within a business.

And the data itself is both structured and unstructured, sometimes owned by a brand and increasingly now owned by a third-party vendor or an agency.

But it all needs to be brought under control in order to meet the basic customer experience requirement.

The primacy of data has ushered in a golden age for data scientists whose salaries have risen accordingly.

IAPA for instance estimates that typical data scientists can command salaries north of $120,000 in Australian, while those with specialist social analytics skills occupy the stratospheric world of $200,000 plus packages.

(Image source: IAPA)

It is little wonder, then, analytics outsourcing has emerged as one of the faster growing outsourcing disciplines in the world.

Of course, analytics isn’t the only hot spot. That same Martech analysis revealed content companies attracted almost $US280 million in funding, followed by social media marketing firms ($US167 million), open-stack platforms ($US114 million) and campaign-management firms.

Over the next 12 months, Which-50 in partnership with ADMA, and B&T and will dive deeply into the worlds of marketing tech and ad tech, although that is a distinction that is likely to become more arbitrary and less relevant in the years ahead.

We will look indepth at a range of subjects including:

1. Marketing automation?2. Cross channel automation?3. Web analytics?4. CRM?5. Advertising technology?6. Visualisation?7. Customer data management?8. Content management ?9. Social analytics

We will investigate the trends, profile the leading practitioners and reveal the emerging startups in each category.

Marketing automation

Marketing in many ways was the last piece of the business automation puzzle. Even as sales departments were implementing sales force automation and later CRM tools, marketers were still cobbling together spreadsheets and text files trying to discern signals in the noise.

According to Chris Collacott, content and digital marketing strategist at Deloitte Digital, marketing automation, also often referred to as ‘revenue performance management’, is 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 marketeers to codify marketing programs, track and target users, automate content delivery and trigger automatic responses to user behaviours.

Among the benefits it provides, Collacott identifies:

• Empowering sales teams by providing them with the rich history of a prospect or customer
• Enabling the businesses to perform Closed Loop ROI analysis to determine which campaigns were the most successful at driving not only conversions but repeat engagements
• Automating the transfer of marketing data into the CRM database
• Targeting multiple customer segments
• Personalising the customer experience
• And reducing administration and program responses

Collacott’s list of benefits also reveal the two important aspects to marketing automation. 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.

(Image: Chris Collacott, content and digital marketing strategist at Deloitte Digital)

The second important element to marketing automation – which gets less attention – but is becoming more important is process automation of the day-to-day operations of marketers. Not surprisingly, much of the initial attention was on building beautiful customer experiences, however the platform 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.

The marketing automation market is one of the most fiercely contested. Marketing automation has attracted the tier-one IT companies, some of whom have written very large cheques in recent years to ensure their place at the head of the queue.

At the high end there are as many as a dozen major platform providers aiming to deliver comprehensive marketing cloud solutions that integrate tool sets and ultimately provide a single source of truth. And within these there are two camps: those who have grown via acquisition and integration such as Oracle, Salesforce and Adobe, and those like Marketo and SAS who have (mostly) rolled their own.

The companies in the build camp have been taking ever-bigger bets as they stake out their turf. Adobe was an early mover with its acquisition in 2007 of Omniture, however in recent years Salesforce’s  $US2.5 billion price tag for ExactTarget, Oracle’s $US1 billion purchase of Responsys have raised the bar and signalled clear intent.

And the deals continue, with cloud-based ERP vendor Netsuite recently playing $200 million for a largely bootstrapped dotcom called Bronto, which has a dominant position among US Internet retailers.

The builders such as Marketo and to an extent SAS, argue that the compromise of stitching together disparately acquired systems compromise the core idea, of having seamless and complete integrations between all aspects of the marketing cloud.

And this of course reflects the age-old IT argument of best of breed vs comprehensive service.

Behind the marketing cloud providers, however, there are also hundreds and perhaps thousand of point solution providers, mobile app solutions that plug into the cloud.

Because of this the ecosystem that surrounds a vendor’s offer is now considered as crucial as the cloud itself.

According to Collacott: “If marketing is to strive for a more strategic role, we must shift from a lead-generation mentality to a lead-through-revenue-management mentality.  I would like people to understand that the primary challenges facing marketing automation are not technological ones but rather people, strategy and processes that drive the technology.”

He says many of the platforms in the marketplace are very powerful and are not the primary limit on success. “Developing the right marketing skills and combining this with new agile marketing strategies are what will be required to realize the true potential of automation be it across one channel or many.”

Advertising tech

As much as 37 per cent of Australia’s total advertising spend already flows into digital channels and that figure is likely to grow to 50 per cent within the next few years.

Two companies, Google and Facebook, will likely capture half of that treasure between them. (They probably already do, but neither is willing to open the kimono) Competition for the remaining spoils will be intense.

(Image source: IAB)

Within that headline shift from offline to online is another less well understood but potentially as profound a change. The rise of programmatic buying has seen the model for selling advertising shift from the traditional account management approaches to one driven by machines – some forecasts put the level of programmatic ad building as high as 90 per cent by the end of the decade.

Ad tech is the discipline that has emerged in the shadow of these trends.

The distinction between marketing tech and ad tech is a little arbitrary and may evaporate entirely once the market starts to consolidate, however for the time being the sector remains vibrant and self-contained as companies compete with solutions that bid, serve and retarget search and display advertising.

As re/code noted in a recent report, “From a fundamentals perspective, the ad-tech sector overall has rarely seen better times. The ongoing shift of consumers’ time and marketing spend to digital channels has continued unabated at a 20 per cent+ annual pace. The more data-driven and programmatic ad spend is experiencing much faster growth — IDC estimates a 75 per cent compound annual growth rate (CAGR) from 2010 to 2017.”

The sites notes that growth disproportionately benefits the large platform players like Google, Facebook and Twitter at the moment.

Companies such as Kenshoo, Criteo, Adroll and TubeMogul are carving out huge early opportunities as all the while new categories emerge. Content marketing alone looks likely to spawn a whole new ecosystem as marketers demand the same kinds of transparency and analysis from content campaigns as they have become accustomed to from display and search. Companies like Outbrain and Tiboola have already built global scale on this nascent area.

Cross channel automation

Eight years ago there were no Android phones in the world. None. Today there are more than a billion. Nothing so well describes how rapidly the problem of cross channel automation has emerged as the sheer growth in global fleet of smart phones.

More recently, personal devices like Fitbits and smart watches have emerged, bookending a period that saw the stunning rise and relative decline of the tablet market along with several channel missteps – most famously Google Glass.

And behind it all, marketers are still having to deal with traditional channels such as television, print, radio and outdoor while merchants need to accommodate both clicks and mortar.

The race is on to tie these disparate channels together in order to build a complete picture of the consumer and to ensure the ever-increasing demand for better experiences can be matched.

The problem, however, doesn’t simply start and end with the device, or even the data those platforms generated. The way the data is stored and the rules and policies around it create silos of information that need to be released and allowed to easily transit a company’s boundaries.

This has seen the emergence of an ecosystem including marketing clouds, application programming interface (API) vendors, attribution specialists, data scientists and advertising technologists, all of whom are needed to deliver the idea of a single unified view of the truth.

Web analytics

Almost 90 per cent of the world’s commercial websites are running some form of web analytics, and almost 40 per cent of those sites are using only the simplest metrics (Thank you Google).

According to researcher Gartner, customer-based segmentation, data warehousing or targeted email don’t yet feature in the thinking of a large minority (40 per cent) of many web administrators.

While web analytics is one of the earliest form of business intelligence online, and the market exhibits many characteristics of maturity, beneath the surface innovation continues to bubble over, particularly around the mobile web, the app economy and increasingly advanced analytics, according to the analyst.

In its report, called ‘Market guide for web analytics’ Gartner defines web analytics as the market for specialised applications used to understand and improve the online channels’ user experience, visitor acquisition and actions. Products offer reporting and segmentation, analytics and performance management, historical storage and integration with other data sources and processes.

At its core, though, it is about understanding what customers are doing on the web and giving business leaders actionable insights to improve services.

Not surprisingly, web analytics is cloud friendly in the extreme and, indeed in Gartner’s view, the market has now almost entirely migrated away from on-premises solutions. Further and deeper analysis of the data offers a number of opportunities, according to Gartner:

• More insight. Solutions now provide attribution and recommendations, especially for ecommerce and anomaly detection. Adobe has integrated predictive analytics into its Web analytics platform. IBM has some industry-leading predictive capabilities in its SPSS platform, but has yet to fully integrate them. However, most Web analytic tools remain focused on historical, descriptive analytics on aggregated data
• Greater understanding. Replay vendors provide session replay (with its deeper understanding of how customers are interacting with your website) than traditional Web analytic vendors provide. Session replay also provides insight into the customer experience
• Faster responses. Some offerings, including Webtrends’ Streams, enable users to perform virtual real-time Web analytics. This can be useful, for example, in triggering an email offer to a known user on an e-commerce site who has just abandoned a shopping cart
• Friendlier integration. Some offerings enable you to integrate with more data sources, such as CRM data, customer profile data and data from other channels

The other big issue is capabilities. While often the tools are available, users are often poorly trained and usability and configurability is often hamstrung by the requirement for would-be web analysts to understand things like javascript, says Gartner.

Social analytics

Facebook CEO Mark Zuckerberg has a very simple three-point plan for global advertising domination that he has happily been promoting to his investors for several years. Firstly, connect everybody in the world to the internet. Then learn everything he can about them from their behaviour. And finally, based on these insights, flog space.With more than 2 billion people using social networking sites, Zuckerberg’s grand vision seems more realistic by the day.

A recent IBM study in social media analysts revealed some key data points describing the global reach of social media:

• 1.43 billion people worldwide visited a social networking site last year
• 3 million new blogs come online every month
• Last year, 1 million new accounts were added to Twitter everyday
• Facebook has 850 million active users every month (in 2015 it has grown past 1.4 billion if you include Instagram and WhatsApp)
• 80 per cent of internet users say they prefer to connect with brands via Facebook
• 65 per cent of social media users say they use it to learn more about brands, products and services

But like all the great plans, the simplicity belies some very serious complexity.

According to a joint MIT Sloan Management Review and IBM Institute of Business Value study: “Organisations that excel in analytics often outperform those who are just beginning to adopt analytics by a factor of three to one. And top performers are 5.4 times more likely to use an analytic approach over intuition and gut instinct when making decisions.”

You only need to review the kinds of salaries being paid to data scientists with social media data skills to understand the heat in the market.

While typically data scientists in Australia can command salaries around $120,000, those with social analytics skills are being offered packages closer to $200,000, according to a survey last year by IAPA.

With social media likely to take an increasing bite of the advertising budget in the years ahead, according to a consistent view of most of the studies, that demand seems likely to continue.

As the name suggests, social media analytics involves hoovering up data from social networking services and blogs and then using the data to determine buyer sentiment and intent, and increasingly to predict buyer behaviour.

Social networks like Facebook and Twitter have encouraged companies to build services around this by making the data available and that in turn has seen the development of a healthy service ecosystem.

However, for the companies in that space (as in search) they are subject to the vagaries of the policies of the social networks themselves.

There is a critical difference between social analytics and earlier forms of data analysis and it is to do with the data itself, which is largely unstructured text from tweets and posts.

Customer relationship management

For years the sales department seemed notoriously difficult to automate, despite the obvious benefits of doing so.

Systems tended to be simple affairs, like PC-based contact databases, or high end and expensive enterprise sales force automation systems like Siebel (which was eventually bought by Oracle).

The past decade, however, has seen the emergence and widespread adoption of Customer Relationship Management (CRM) systems. These days they are typically Software as a Service (SAAS)-based and Salesforce.com is perhaps the most famous, although its share is still less than 20 per cent.

Furthermore, the companies that dominate this field work hard not just to deliver their own solutions, but to promote and encourage the development of partner ecosystems that can further extend the discipline.

According to Accenture interactive managing director, Marek Rucinski, customers have a very different set of expectations as to the offers and dialogue they want to have with brands and service providers these days.

More than that they are increasingly information rich, allowing them to make more informed choices quickly, he says.

(Image: Accenture interactive managing director, Marek Rucinski)

“Brand and service owners need to be able to cope with evolving and increasing consumer expectations.”

Rucinski says that the key challenge for CRM today is selection, scale and speed to offer.

Furthermore, he says, companies need their data well organised. This enables them to predict what items and services will be relevant to their customers. And they need systems that offer these insights in real time and deliver them through the channels that the customers demand.

Rucinski identifies three big challenges facing the CRM market:

1. Data enrichment is a key enabler but this needs to be tempered with data privacy
2. Process orchestration to deliver relevant offers is increasingly more complex
3. Analysis of data to support decision making, offer generation and dissemination is increasingly complex and moving into the machine learning strata.

And more challenges loom on the horizon.

“Marketing workflows and team structures need to be re-thought,” says Rucinski. Particularly as some marketing teams still operate in silos around traditional and digital CRM execution, with functional support provided in other teams breaking down their ability to execute in real time and drive valuable insights.”

CRM today is about the orchestration of data, insights, offers and channels in real time, he says.

“Marketers who don’t think holistically – across channels, tools and processes – will risk disenfranchising their customers to the detriment of their brands and services.”

Visualisation

Visualisation is a crucial part of the business intelligence (BI) and analytics market. In Gartner’s BI magic quadrant analysis for instance, visualisation tools rate highly as critical differentiators among competitors.

As data decision-making becomes more important, the ability to find signals in the noise is becoming a critical business advantage.

The field itself offers a dizzying array of techniques to practitioners and a language and lexicon all of its own. Heat mapping, graph drawing and multi-dimensional scaling are just the start. It is also a field where practitioners have strong views.

Edward Tufte, a pioneer in the field of visualisaton, famously instructed, “above all else, show the data”.

According to Gazal Kapoor, Senior Manager, Insights & Optimisation Commonwealth Bank, Tufte’s view espouses what is known in the industry as the minimalist approach. 

“He thinks that the data should be interesting in itself,” says Kapoor, “and we should not have to embellish our charts and graphs and visualisations using animation, graphics and 3D effects.”

Tuft also coined the term data-ink ratio. “He believes in maximising it. The term he uses for non-data ink (everything on a visual that is not related to your data) is Chart Junk.”

Another minimalist is Stephen Few, who considers data visualisation to be a language with simple rules.

“Anyone can learn it if they know the rules,” he says. “All creativity needs to be bound within those rules. Line graphs for trends (and in some cases, bars as well), bars for distributions and scatter plots for relationships.”

But the purists don’t have the debate all to themselves.

According to Kapoor, “on the extreme other side of the spectrum were numerous designers, graphic artists, software vendors who believe that bright colors, 3D animation, the ability to flip a two-dimensional graph into a 3D cube is what data visualisation is. To them, a dashboard must have dial-like gadgets even when all the gadget shows is a single number that does not even need a visual.”

Customer data management

One of the central organising principles behind the wholesale digital realignment of business is that all power is shifting to the consumer.

Certainly, analysis done by McKinsey and Company clearly suggests that the greatest benefit of digital technology accrues to consumers – usually in the form of avoided cost.

However, there is a flipside to that argument. As they travel around the web searching, researching, sharing, commenting and eventually buying, consumers leave small traces of their activity everywhere they go. Unlike the kind of data companies have historically kept on customers, much of this new data is unstructured or just semi-structured. However these old and new worlds of data need to be combined successfully in order to provide customers with the kind of holistic and seamless experiences they have come to expect.

Customer data management is the discipline that has developed to meet this goal.

According to Shailendra Kumar, Accenture managing director: “In the past, businesses relied on customers to provide information to guide their sales and service strategies. But in today’s digital era, customer data can be collected through various external sources including social that is readily available in the public domain along with the information provided by the customer themselves. This allows organisations to enrich the data and have a better understanding of their customers’ needs and ?preferences.”

Kumar notes that since customer data was traditionally very structured, the technology used to process and store the data was relational. “With the introduction of new technology to manage, process and store semi-structured and unstructured data, the single view of a customer has become much more complete in this digital age.”

The payoff is clear. “Once this holistic, multichannel view of customer data within the organisation has been accurately assembled, the only limit to its usage is the imagination and creativity of business and IT management.”

In a fluid and quickly developing market, challenges abound but Kumar identifies two in particular that practitioners are dealing with at the moment:

1. New data sources bring new challenges and one of the challenges is processing semi-structured and unstructured data, like pictures and videos, and then linking it back to the customers
2. ?Data privacy laws need to be frequently updated as more and more information is made available to organisations, data privacy aspects of the customer data will have to be kept in mind in order to use the customer master data

“The customer is king and for organisations to provide a great customer experience they need a holistic view of their customers,” he says, noting that the explosion of data through new emerging sources provides an opportunity to capture customer information, which has not previously been readily available. “It offers organisations an unparalleled opportunity to get to know their customers better, which can translate into increased customer engagement, long-term customer retention and multiplied revenue.”

Content Management

Content may be king, but the king needs a palace, and a set of rules for controlling the subjects.

“In essence,” says Cameron Walker, Deloitte Digital director, “content management systems are the systems that drive most of the websites that you see on the Internet. They separate the details of how websites are laid out by web developers, from the work of creating, reviewing and publishing content that is used within those layouts.”

Walker says that CMS platforms are becoming increasingly powerful in the options that they give to content authors to help control how content is communicated to users, such as by building in capability to gather information about users and personalise the content displayed.

The two leading vendors are Adobe and Sitecore, with the former dominating in the Java world and Sitecore on top in the Microsoft landscape. However beyond these two obvious candidates, there are a plethora of commercial and open source providers in the field.

According to Walker, the big issues facing the CMS community include the movement from simple ‘content publishing’ towards a holistic customer ‘experience platforms’, support for mobile optimised sites, and cloud hosting and software-as-a-service (SaaS) offerings.

“There are an increasing number of tools available for optimizing different parts of digital marketing,” he says, “but this can lead to siloed data or an inconsistent approach degrading customer experience."

“The leading industry CMS platforms are looking to provide an ecosystem of tools to cover the spectrum of digital marketing needs, but so far the integration of best of breed tools can be challenging, or tools that have been developed together tightly lack some of the advanced functionality and polish.”

According to Walker, a CMS platform is not just an engine for content management. “It also needs to provide the backbone in an ecosystem of capabilities that work together to provide a consistent and engaging experience to their customers through all of an organisation’s digital channels.”

 About the author

Andrew Birmingham is the editor of Which-50. You can Connect with him on Linkedin or follow him on Twitter @Which50. 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.