“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 Martin Kihn, research director at Gartner.
It should be obvious by now that the emerging class of providers known as digital marketing hubs or clouds rely on a smart combination of first- and third-party data. Even more obvious is the reluctance of many marketing technology players to accept that the worlds of ad tech and marketing automation, multichannel campaign management and CRM – often called “mar-tech” – are colliding.
Resistance is futile. Yet many providers cling to ancient battle lines. Ad tech players, who tend to come from media agencies rather than corporate marketing departments, often deride enterprise-marketing systems as outmoded and slow. The co-founder of an ad tech startup told me, “Marketing automation systems basically just optimize emails.”
Meanwhile, enterprise automation and CRM system managers often view ad tech as something akin to playing online poker. Recently, I asked the CEO of a leading marketing cloud company whether he intends to extend his integrated ad tech offering beyond a few social networks. “I’m not sure we really want to be selling ads,” he said.
Whatever the end state looks like, it is unlikely that ad tech and mar-tech will be as self-defined as they are today. Data and insights will be passed freely from internal systems to programmatic and media-buying platforms, properly anonymized and tracked by integrated measurement tools. Messages to existing customers, now pushed out via email, mobile and website personalization, will appear anywhere an ad does. New customers will be found based on ever-deeper knowledge of existing ones.
Two Worlds Colliding
If you want to know why the worlds of ad tech and mar-tech are colliding, don’t ask vendors. Ask marketers. Their goals are clear: Growing revenue and profits and connecting with customers better are at the top of the list. To do these things, marketers must sell more to existing customers and convert more prospects (via mar-tech). Very often, they will have to find new customers (via ad tech). It hardly takes a rocket scientist to realize that the best source of insights into what makes a ripe new customer is that rich lode of data already sitting in your mar-tech stack.
Dramatic evidence for the collision can be seen at the seams, the invisible middle layer that lurks like the Borg at the fringes of Delta Quadrant in the Star Trek universe. This middle layer performs the relatively unglamorous but essential role of integrating first-party and third-party data, maintaining customer records and making insights available for both mar-tech and ad tech systems.
Today, this role is most often played by data-management platforms (DMPs), data onboarding platforms and, increasingly, tag-management systems. In the words of a pioneering DMP, [x+1], which is now owned by and named Rocket Fuel, “A DMP … provides the requisite, yet somewhat unnoticed, function of data collection, translation, classification, indexing and storage. It’s the ‘plumbing’ part of data-driven marketing online.”
A DMP ‘Land Grab’
As recently as four years ago, one former [x+1] manager told me, “DMPs are a hard sell.” In 2014, there was a run on the market, as ambitious marketing hub vendors snapped up BlueKai, Aggregate Knowledge, Knotice and [x+1] itself.
Why the sudden DMP land grab? In a sense, these systems play a role in the digital marketing ecosystem similar to that of a data warehouse in the enterprise. In fact, most DMPs were originally built on top of traditional databases. They are important not only for what Joe Stanhope, the CMO of Signal, a tag-management system, calls “cold storage of cookies,” but also for providing an orderly space for pulling insights from cold cookies, warm cookies and other sources of relevant information.
These insights contain the kernels of modern marketing: smarter segments, the identification of important attributes and real, rather than approximated, measurement. Using a system like a DMP, a data-driven marketer can import information about customers, analyze what makes them different, retarget them across devices, serve ads to people who look like them, learn from mistakes and so on. Advanced tag-management systems can serve a similar intermediary role.
Heightened interest in DMPs and tag-management systems are just one sign of heat at the seam of the ad tech and mar-tech collision. There are many others.
Consider the rush on attribution platforms last May, when AOL and Google acquired Convertro and Adometry, respectively, on the same day. The promise of cross-channel attribution is the ability to measure the impact of advertising and other tactics on specific outcomes, such as sales or customer acquisition. Attribution platforms are a way to make advertising more accountable to marketing by combining what used to be separate – first- and third-party – metrics into a single version of the truth.
And then there was Oracle’s acquisition of Datalogix, announced Dec. 22. Oracle’s data-as-a-service platform, built on its acquisition of the DMP BlueKai, is the epitome of third-party ad tech data management. Meanwhile, Datalogix captures a sample of user-level transactions, the kind of information traditionally owned by mar-tech systems.
What does the collision of ad tech and mar-tech – which most of us believe is just beginning – mean for hard-working marketers? In the interim, there will be a lot of ad hoc solutions, cobbled together using APIs and workarounds. Smart analytics and data stewardship are crucial. Even the largest hubs have not fully integrated all their moving parts, so marketers should be skeptical of big claims.
I think mar-tech and ad tech providers need to see that yet another paradigm is on its knees. Just as “marketing” and “digital” reluctantly fell into each other’s arms, so too will those old frenemies: marketing and advertising.