TOLMAN GEFFS: This deal points in a direction where a lot more is going to be happening. You’ve got these overfunded point solutions that are competing for specs of revenue when there’s no way they’re going to earn their venture capital back. What’s emerging now is the integrated enterprise marketing stack that integrates software and marketing in a much deeper way.
What the world is moving towards is a marketing model that we’re calling always-on CRM. That’s when a company has a very good idea of who their best audience and customers are. They’re constantly messaging those groups and doing it in a way that allows them to measure the feedback and results in reality instead of testing panels.
MyWebGrocer, despite its goofy name, is a really good example of that future direction of how software marketing services are coming together in a way that’s much more profitable and sustainable. MyWebGrocer’s model is 50% software for the retailer and 50% targeted advertising in a platform for the CPG company. The company gets all the sales data from the grocery stores, including online and in-store data.
MyWebGrocer processes all that sales data and is able to report back to the CPGs exactly how many boxes of cookies were sold to people who saw the ads to improve their ad spend. In the world of grocery chains, the lion’s share of the ad dollars come from manufacturers and CPG companies. MyWebGrocer works for big grocery chains like Kroger and ShopRite [and can help] them compete with Amazon and Walmart.
What trends are you seeing in ecommerce platforms, and how does that apply to ad tech?
TG: Two things. Trend number one is continued growth in ecommerce enablement. People don’t even call it ecommerce anymore. It’s called omni-commerce, and it’s the idea that digital permeates every step of the purchase chain from product discovery to trial to pricing to actual purchase.
But with only a few exceptions like Target are retailers able to fund those developments by themselves. So big software companies are becoming ecommerce enablers like IBM with WebSphere and now SAP with Hybris and eBay with GSI Commerce.
Trend number two is integrating that customer experience through the ecommerce platform back into the CRM system and then into the marketing machine. That integration is the key next step. For the next three to seven years, you’re going to see a tremendous amount of investment, growth and M&A in that area. Salesforce buying ExactTarget is a great example of that. That’s an example of integrating CRM into marketing messaging.
For the players in ad tech, this is an emerging stack that a number of them will get acquired into. You’re already seeing this with folks like Oracle, IBM and SAP building both stacks of ecommerce capabilities and enterprise marketing capabilities. They’re going to continue making those acquisitions and those will be increasingly integrated.
How close are we to tying the online to the offline world through a CRM system?
TG: We’re a lot further along than most people realize, but it’s an enormous challenge. The amounts of data and bridges that have to be built are huge, so it’s going to take at least seven years to fully build this always-on CRM stack.
When you say CRM, people think that’s that high-priced system people use to sell really expensive stuff, but CRM is also used to sell Coke or toothpaste, and the integration of those databases with marketing data is going to be one of the major investment themes over the next few years. A lot of those small ad tech companies are going to find their place by getting acquired into those stacks.
Where does programmatic ad buying fit into this?
TG: Once a company has identified their best customers and prospects, they need to on-board that and make sure they have cookies on those folks, and once that’s set, programmatic buying is essential so you can buy impressions against those prospects wherever and whenever they become available.
Programmatic is the railroad that makes this all work, but programmatic ad-buying is just a capability. The question is what do you do with it. Companies are using it to unlock all the intelligence in their CRM databases and put it into their marketing campaigns and bring back the results.