Collision Course: Ad And Marketing Tech

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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.

Like many early-stage tech ecosystems, the integrated marketing hub comes in a bewildering range of shapes and sizes. It lacks meaningful standards and supports different – and, quite often, incompatible – configurations. While Adobe has a leading cloud platform with six core components, its average enterprise customer uses only 1.5 of them. Meanwhile, platforms such as Marketo and Tealium, which provide point solutions, tout their API-driven extensibility with other providers. The question of whether the victorious digital marketing hub will be wide open or walled up is still unresolved.

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.

Undeniable Signs

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.

Follow Martin Kihn (@martykihn), Gartner (@Gartner_inc) and AdExchanger (@adexchanger) on Twitter.

5 Comments

  1. Steve Casey

    Great analysis, Marty. Especially loved the analogy of EDW and DMP, because that’s where the fusion will need to happen to fulfill the marketing hub vision. Curious to know if you’ve heard from any corporate clients actually tackling the integration required to deliver action/channel as well as individual attribution, as previous single-view, customer 360 movements seem to have stalled. Perhaps the inherent data integration, data quality and master data management challenges can finally be overcome with marketing (and revenue growth) leading the charge, rather than the customer-service cost center.

    Reply
  2. Tony Giordano

    This article is on point of the integration of digital and traditional CRM data. From a traditional marketing tech perspective, 360 view of a customer must take on a broader view than just the traditional data warehouse. At the same time, Adtech data without the enrichment of 1st party data simply does not provide enough of the story. I agree as well that the DMP will be the "provisioning" point for the integrated data. However the integration will need to be in using real-time customer data integration processes to verify the data quality, and house holding rules for BOTH digital and traditional data sources. This is how you prevent "stalls" in these movement and build credibility with the marketing and Adtech organizations.

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  3. Thanks Steve - we get a lot of questions from IT around building up a master customer record, and most of the time it's marketing that is pushing for it. My observation is that marketing is forcing IT to engage internal systems in DMP-like practices or -- depending on the organization's internal politics -- just going rogue and apologizing later. There's no doubt the desire for the DMP-like solution is everywhere these days.

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  4. Great article Martin and couldn't agree more. The whole notion of Customer Profile Management platforms that have deep integrations into the Ad Stack as well as other actionable channels is blurring the line between the DMP and CRM worlds. Traditional DMP's will struggle to evolve past the hyper-focus on the Ad Stack and 3rd party data while next generation platforms more focused on 1st party data and omni-vendor access will thrive. Exciting times!

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  5. Could not agree more. The scale of this change is enormous, and equally big is the opportunity that bringing together disparate parts of the marketing effort and creating a more accurate understanding of the whole customer life cycle – from unknown audience to well-known, loyal individual – presents while continuously bridging 3rd party and 1st party attributes.

    It is not surprising that the category of “marketing middleware” has gained so much traction recently. Customer data platforms (CDPs) in particular and (due to their recent pivot) to a lesser extend tag management systems, will facilitate this convergence by enabling a more seamless integration and sharing of customer profile and interaction data which is what fuels the ROI across the broader marketing tech stack.

    They will bring greater visibility and accountability to marketing and advertising and help drive the organizational changes required to take advantage. It’s going to be an incremental transition while we are in the early going, but we see this this trend to picking up steam every day as our customers are asking for it.

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