"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 Matt Keiser, founder and CEO at LiveIntent.
While WPP's Martin Sorrell has sounded the alarm, the rest of the industry is just catching on: Amazon is racing ahead to own the people-based marketing crown.
Amazon operates as its own R&D lab. It is unleashing on the mar tech and ad tech space its proven strategy of optimizing the supply chain from start to finish. It’s a page it borrowed from the playbooks of consultancies.
Here’s the formula: Amazon enters markets where it can be its own largest customer. Amazon started Pantry Prime and became a large food seller. It sourced the goods, managed trucking, toyed with drones for delivery and then realized: If we want to become the world’s biggest seller of groceries, we need grocery stores. So, Amazon bought Whole Foods. Amazon’s mission is to deconstruct the supply chain and deliver local, healthier products at a lower price.
Owning the full supply chain affords these efficiencies.
Amazon’s Data Has A Day Job
Amazon is repeating this formula to become an ad tech leader with its A9 group. It started out of necessity.
Amazon began with marketing to known people and expanded to advertising to the unknown using state-of-the-art technology. It built its ad tech to bridge the gap between marketing and advertising to sell its own products more efficiently. Amazon’s approach is steeped in all the hot-button issues for marketers, including closed-loop attribution, lifetime value and customer experience. Its efforts benefited from unfettered access to the underlying data and mirrored the Amazon ethos: a better experience for consumers while passing the efficiency and performance through to advertisers.
Owing to its model, Amazon has access to the intent and metadata needed to build an identity graph that spans devices and environments and optimizes to performance. That metadata makes the difference between being another provider of people-based marketing and being the leader. The metadata that only exists at the intersection of advertising and marketing is the key to people-based marketing, separating the wheat from the chaff.
With this metadata advantage, Amazon understands the difference between accuracy, precision, recall and performance. This is the result of owning the execution layer and having first-hand access to that data, just like Facebook and Google. Amazon is writing the challenger blueprint and proves that a deep business understanding can act as a force multiplier when paired with data, tech, marketing chops and fearlessness.
Consultancies Should Own Media Activation And Identity To Close the Loop
Bezos built Amazon by deconstructing and optimizing the supply chain. But this isn’t Bezos’ formula. It’s the formula pioneered by consultancies like Accenture.
The consultancies focus on first optimizing one part of a business and moving on to the next. For instance, they’ll be hired by an automotive company to improve the supply chain for sourced rubber, then they may create factory guidelines, shape price points and even manage creative services. That relationship ends, confusingly, in digital advertising. Why not extend that expertise to the intersection of marketing and advertising?
Consultancies still rely on using brand exposure, lift and awareness metrics as proxies for actual car sales. It’s at this intersection of marketing and advertising where critical data, such as intent and identity, come together as a differentiator. To enable brands to compete, consultancies need the same access to data and underlying metadata that Amazon and the duopoly have.
Brands trust consultancies with their management services, secrets and first-party data. Consultancies are among the few afforded the time horizon to pursue true performance. They have the latitude to look at results and not rely on clicks, viewability or ad spend as proxies for success.
It’s in the best interest of consultancies and brands to leverage identity graphs and a media activation layer. Consultancies already handle creative and drive strategy. To challenge the duopoly, consultancies must blend creative strategy, marketing, identity management and media activation.
A tremendous amount of data sits idle at the intersection of marketing and advertising. If brands are getting data from data providers, it's been pasteurized. When their own first-party data has a day job, it has the metadata and intent that machine learning can use to create performance. This is the realization of merging the consultancies’ capabilities with Amazon’s proven A9 recipe: Identity without an execution layer won't cut it, and neither will an execution layer sans identity.
A Rush For Identity Solutions
To close the gap on Amazon and follow the A9 and duopoly formula, consultancies need to have their own execution layer and identity solution. SAP (Hybris) bought Gigya’s identity solution to identify customers across channels, platforms and devices, even when the same person is in different environments on the same device. But, just like the other clouds, SAP will be held back because of ad techitis, a fear of entering the media business and owning the execution layer. The race is on for the final remaining scaled identity solutions where data has a day job – and the clouds may miss their opportunity.
If the consultancies that are as fearless as Bezos realize they can own their own identity solutions and execution layers, they won’t have to use data that’s missing the metadata needed to compete. They’ll be able to own the entire supply chain because they will have access to data that hasn’t been pasteurized. The very nature of consultancies is not being wed to a single business model so it is likely consultancies will want to buy a solution where data has a day job.
Amazon: Home Of Big Acquisitions
What happens once consultancies are armed and continue to innovate with the power of closed-loop attribution in their sails? How does Bezos stay ahead? Will Bezos acquire consultancies? It sounds insane, but then again, my local Whole Foods now sells Amazon Echos.
Has the student become the master? Why wouldn't Amazon want to buy a consultancy to close the loop and bring the same efficiencies it is famous for to the enterprises that already count on Amazon for everything from cloud services to cream for their coffee? Will the consultancies learn from Bezos or will Bezos close the loop on the consultancies and bring the execution layer and identity graph to them?