"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 Nishat Mehta, head of brands at 84.51°.
As a Los Angeles Lakers fan, you might think the playoffs are the furthest thing from my mind given that it’s only September. But with the sports world fairly tame at the moment, there is no better time to talk about another type of playoff taking place in the sport of marketing technology.
On one side, there are the behemoths – the Facebooks and Googles of the industry – facing off against the smaller specialists that comprise the ecosystem’s backbone.
And although the odds may seem stacked in one direction, in this match, no one knows who will win.
A Tumultuous First ‘Season’
Starting with the advent of real-time bidding in 2009, marketing technology is nearing the end of its first “season.” It began with excitement and optimism, with every team believing it can compete for a championship. We have seen consolidations, a common occurrence when forming a new league, as well as lively trading as individuals and companies that built knowledge in one part of the ecosystem spread their expertise to other areas, pushing the industry forward.
We endured the season’s dog days as teams folded, unable to provide enough value to marketers. Now we see a rush at season’s end with several companies having gone public or agreeing to be acquired as they position themselves for the upcoming playoffs.
These playoffs pit two conferences against each other. The (mostly) Western Conference, otherwise known as the Integrated Solution Conference, is dominated by super teams, including Google, Facebook, Oracle, Adobe and Verizon/AOL. These teams’ strengths lie in their ability to simplify the digital media process for marketers by providing a single point of accountability, global campaign monitoring and unified service.
The Eastern Conference, also known as the Best-of-Breed Conference, has more teams and plays a small-ball strategy specializing in a specific part of the process. They aim to execute better than anyone else in a specific area and integrate with others through open standards. Innovation and creative solutions to today’s problems are most often found in this conference.
While the Integrated Solutions appear stronger due to their size and dominance over the current state of the industry, change is so frequent and quick, such as with the advent of new inventory sources including addressable TV, that Best-of-Breed teams cannot be counted out because of their ability to pounce on new opportunities more quickly.
The good news is that unlike in sports, marketing technology is big enough to have many winners. But all winners must live by two basic rules.
Rules Of The Game
First, winners must be consumer-focused. They recognize that doing right by the consumer is right for their business in the long term. Advertising depends upon consumers positively reacting to impressions. We need to continue pushing for relevance, value to the consumer and respect for their attention. If not, we will erode customers’ attention and, ultimately, our entire industry.
Second, winners must also become more client-focused. Digital marketers have become jaded by teams that overpromise and underdeliver. Fraud is high and viewability standards go unenforced. One knock on the smaller Eastern Conference teams is that the varied middlemen take 50% to 75% of marketing budgets, leaving publishers and marketers unexcited about playing. Great technology never wins unless it can provide value to marketers. There is little room for new teams unless they have a product or service that adheres to this goal.
Although the playoffs aren’t over, some are beginning to look ahead at the offseason, which promises many changes. The salary cap, for example, is increasing significantly, with marketers increasingly committing budgets previously reserved for print and TV to more addressable media. Marketing tech will be the primary beneficiary, so long as marketers receive value.
We will see expansion as new teams attempt to capture some of this additional salary cap. Some new data players, including old-world companies like credit card networks and retailers, are beginning to build information products from their first-party data. We are seeing a massive increase in user-generated data from our mobile and IoT devices. Finally, the arrival of over-the-top TV services and consolidations, such as Verizon’s acquisition of AOL’s, will spawn numerous upstarts attempting to capture the addressable TV media market.
We should expect to see significant rule changes implemented. The rise of ad-blocking software, especially with Apple’s announcement to implement the technology in iOS 9, and more consumer ownership of data, will shift power to consumers, enabling them to rewrite the rules to force all players to become more consumer-friendly.
Finally, we should be prepared for some labor strife as marketers push their agencies to provide more value or get out of the way. As agency reviews become more frequent – estimated at every three years now, down from every 10 years a few decades ago – agencies and marketers will insist on marketing tech partners doing the same. The revenue pie will be split very differently as advertisers seek more working dollars to justify increased spending in these channels.
Like the start of any playoffs, there is excitement as we move to the part of the season that matters, where history is written. In marketing tech, the rules, teams, players and relationships change constantly, which makes these playoffs all the more interesting. As a Lakers fan, these will be more exciting than anything I will likely experience in the foreseeable future.