"Data-Driven Thinking" is written by members of the media community and contains fresh ideas on the digital revolution in media.
Today’s column is written by Ray Kingman, CEO at Semcasting.
If technology is driving the union between marketing and advertising, who will end up steering the car?
The answer to that question will play out differently at each brand. But in a macro sense, data will be unified to the point where advertising will become a function of the marketing stack.
While that might make Madison Avenue extremely uncomfortable, it’s actually a classic tech story of innovation followed by consolidation, where technology disruption eliminates the middlemen that offer limited value and creates economic efficiencies that empower end users.
Centralized Data Will Empower Marketers
One of the biggest challenges CMOs face today is the problem of data normalization. While we’ve been talking about breaking down silos for years, marketers still operate as specialists. Email marketers, social experts and lead-gen teams are all collecting more data than ever and using what they learn to drive insights.
But the big picture remains illusive because marketers are unable to take data from one silo and turn it into action in another area. According to one recent survey, less than one quarter of all marketers said they had integrated data across channels. Meanwhile, all marketers continue to struggle with attribution, even though the elements required to answer that question, notably big data and advertising technology, have been operational for many years.
So how does a merger between mar tech and ad tech address the data normalization challenge? Consider the problem in historical terms. Marketers once used direct mail to reach a specific mailbox location. While crude by today’s standards, direct mail evolved and began to use demographic data, customer data and predictive modeling to better target qualified prospects. Compared to channels such as television or print, direct mail was something of a closed loop – an ongoing, measured communication with a known customer.
As digital media grew to prominence, marketers became far more sophisticated in the ways that they used data, but what was supposed to be a one-to-one closed loop turned into an endless universe of difficult-to-connect data points. Marketers lost sight of the customer because they fixated on the technology – the targeting cookies that exhibited certain behaviors, like a website visit – rather than focusing on the prospect. Marketers could close a loop between search and display, for example, but there was no way to tell if a cookie walked into a store.
Today, marketers are beginning to close the loop, thanks to advances in mar tech and customer management tools, including the death of the cookie and the consolidation of user IDs around giants, including Apple, Facebook and Google. Marketers have dropped any distinction between offline and online, and more importantly, they’re investing in the infrastructure needed to manage that new paradigm.
From the perspective of annual budget and planning, it’s tempting to see the growth around big data-related infrastructure, software and services as a push to create better tools and develop innovative solutions, but the real shift is much more profound. As mar tech and ad tech merge, data normalization becomes possible, and its arrival will empower marketers to make better decisions.
When those decisions deliver more efficient results, advertising will slot itself into the “new” marketing stack because marketers will now be able to view all channels as a closed loop.
Media-Buying Agencies Will Lose Relevance
The more ownership a brand takes over its audience data, the less relevant its media-buying agency becomes. That’s why so much is written about the uncertain future of the ad agency; if the brand knows more about the audience than its agency and can act on it directly, what is the value of that agency?
By definition, media-buying agencies are middlemen, and already there are signs that their time has come. But brands still need to buy media from somewhere, and demand-side platforms (DSP) and exchanges are the logical sources.
Naturally, exchanges and DSPs can’t just stay put and reap the benefits of a merger between ad tech and mar tech. They need to improve optimization across all touch points, platforms and channels, and they need to do so in a much more transparent way. Soon enough, it won’t be sufficient for an exchange or DSP to offer just online, or even online plus mobile. Their value will come from being able to offer marketers a holistic media distribution platform, as well as apples-to-apples measurement across the total media mix.
In time, exchanges and DSPs will begin to differentiate themselves by offering services that cater to empowered marketers. A DSP or exchange is the logical focal point for validation. DSPs or exchanges could enhance their rating and categorization of media, providing marketers with visibility and measurement metrics that speak to the quality of the inventory with a specific audience. When that happens, marketers would be able to designate tiers of media for brand engagement and a tier for retargeting, something that today is done arbitrarily through pricing.
The Opportunity For Creative
For creative agencies, the merger between mar tech and ad tech represents a tremendous opportunity. Each audience segment needs its own creative, and where ad tech once yielded perhaps a dozen audience personas, a closed-loop universe could easily multiply each segmentation scheme several times over. Combining the knowledge of marketing and advertising into one workflow deepens the insights into each of those segments. Consequently, creative will play a critical role in execution, but instead of a situation where a creative shop pitches an idea along with a half-dozen variations on that idea, each segment will require its own distinct creative.
Put simply, if you know a lot more about your customer, your ads must reflect that. It’s why personalization really is possible, but also why marketers are further behind than they think. Brands aspire to close the one-to-one conversation digital promised all those years ago, but it’s not a question of better tech; it’s about consolidating the audience innovation of the previous decade into a merged ad tech and mar tech stack.