Digital innovators and strong megatrends will help ensure that digital marketing tightens its grip further this year. With more personalization, increased use of mobile Internet and data analysis, it looks likely that digital conversion rates will improve further, especially as new marketing technologists are expected to enjoy growing influence in the coming year.
It’s always challenging when new professions are pushed into establishing a common understanding. I have seen many attempts at forced marriage between marketers and technologists; and it’s not always been successful. Major advertisers are increasingly requiring agencies whose marketing technologies are well integrated with the value proposition. In other words, they want the best of both worlds. It’s Mad Men meets Math Men. At present, there are tremendous opportunities at the intersection of marketing and technology, and those who succeed will no doubt be in high demand with advertisers. Digital marketing is emerging from infancy; now it must deliver the desired business results.
Data-driven attribution should be compulsory reading for all marketers in 2016. Based on algorithms and recognized game theory, collecting this data – and the subsequent analysis of it – will show the relationship between campaigns and media channels in influencing the final conversion. Successful attribution is about understanding customers’ digital DNA in real time and then capitalising on this information by personalizing the online experience for customers. This is what digital marketing should be about in 2016; so to become personalized in real time, marketers must build data profiles, segmenting the customer base and relying on good marketing technologies.
Amazon has provided its customers with a superior shopping experience since the late ‘90s. Their one-click-buy technology and personalization – and recommendation-technology has been crucial to its success. However, their patent for one-click-buy technology expires in 2017, giving all online operators thereafter the chance to make use of its features. But will personalization contribute to increased traffic, increased conversions and greater satisfaction? In a digital world, insight will always trump intuition, so access to unbiased data and good analysis is one of the biggest forces in a data-driven marketing organization.
Technology brings scientific experimentation and testing of hypotheses into Marketing
Marketing technologists bring A / B testing, experimentation, optimization and ROI focus into marketing, and such performance marketing will produce results and deliver on the targets set for digital marketing activities.
Conversion ratio increases significantly among sites that are able to be customer responsive at the crucial moment of purchase, and such personalization technology will be in the public domain for years to come. It’s amazing that Amazon has prevailed as long as they have done. Twenty years of commercial Internet has changed our lives fast and slowly at the same time, yet we see a powerful technology shift within many industries now; not least in the marketing and media industry. The rules have changed; we’ve got to use self-service marketing platforms – social media – and the web has become mobile; Facebook Instant Article, Google Accelerated Mobile Pages and Apple News are new platforms that increase the download speed of mobile sites and tailor content for mobile screens.
Your customers’ digital DNA
The biggest marketing cliché is more topical than ever; «Half the money I spend on advertising is wasted. The problem is that I do not know which half.» Previously, there was a skills-asymmetry between agencies and advertisers, but now advertisers have greater faith in media agencies than advertising agencies, according to an ANFO survey in 2015, and many agencies are reluctant to make the digital promise as needed. Should data analysis, experimental testing of hypotheses, optimization and data-driven attribution be future services in all agencies? The advertising industry will certainly have different opinions about that; the only certainty is that simple attribution models have limited or no value to the advertiser, and the smartest marketers will base their media buying on analysis of real-time data, machine learning and pattern recognition.
By using data-driven attribution, the marketer can dive into any issues; the data exists and it is your ability to analyse the relationships that is essential for digital growth in the future. Data-driven attribution is a continuous process and many factors affect the user’s conversion path, just as market events affect the value of listed companies.
It’s likely that with increasing degrees of automation, digital media buying will be automated on the basis of real-time data; financial directors will require ROI reports and customized dashboards will report directly against defined KPIs. The beauty of digital is precisely that data can be collected, tracked and analysed, thus changing the decision-making processes within marketing.
Seamless technologies and rich data profiles
2016 will be an exciting year for anyone who dares to step into the new digital marketing world. Different data sources now integrate seamlessly with each other and enrich digital customer profiles. This means that online and offline meet. Multi-channels and silos are history. In a seamless digital world omni-channel marketing will give value, but while marketers can handle multi-channels, is omni-channel marketing technology’s domain?
Digital marketing is often used to drive traffic to physical stores. What leads to conversion? Which conversion paths have new customers? Which KPIs should we set for our digital marketing activities? How do we drive greater traffic to our websites or physical stores? Which conversion and turnover-KPIs should be defined for my business? What insights do you need to achieve these goals?
Marketing technologists will play a crucial role in understanding how the consumer is changing, which channels influence and contribute to growth and, not least, why. Data-driven attribution is an important pillar in building a data-driven organisation. Most people talk about becoming data-driven, but very many fumble in their quest for good technologies that can raise a business up to this level. The market is flooded with seductive technologies. Advertisers also have a fear of investing in mistakes. Technology is just a tool and works best in tandem with operational advisors. Internet has no intrinsic value – it is the content that makes the web meaningful.
Marketers must educate their own organisation; they must know how the technologies are to be exploited and they must know what data contributes to increased returns. Data-driven business developers, mathematicians and computer scientists must develop a close partnership with creative people and good storytellers. Which content engages? Which media helps ensure the best results? Digital growth will occur in the interaction between marketing and technology. New companies will be created in this new landscape. Google, Facebook and Apple will continue to offer marketers effective solutions through its platforms, while companies such as Adobe, Salesforce and Oracle are likely to continue acquisitions in the billions.
Algorithms conduct strategic changes
Algorithms are a wonderful tool for marketing technologists. In large companies, strategic changes can invite new algorithms. Facebook changes its algorithms regularly; Google, Netflix and Amazon are doing the same. An algorithm does exactly the job it is set to do; it can, for example, highlight video content in your news feed, thereby changing the Facebook strategy and battle to YouTube on most video views. Strategies change faster than before; skillful marketing technologists follow technology shifts closely and a fast choice can have serious consequences – for better or worse.
This development shows how demanding digital marketing has become. Solid technology expertise has become a prerequisite for success and all the great growth companies are strong digital innovators. Digitization also changes decision-making processes; businesses and organisations have analysed enough. For several years, they acknowledged that major changes were about to happen. In 2016 we will experience increased demand for operational consultants with a good understanding of the overall picture, which requires a solid understanding of both the digital, and traditional agency worlds. Changes are happening faster than ever.
This past year I have had an exciting journey together with strong technologists, mathematicians, analysts and data scientists in ESV Digital. I think digital marketing operations form the core of future facing media companies, financial institutions and retailers. Traditional advertising agencies free-up digital marketing directors and technologists, allowing them to move into top management and boardroom positions, and insight and analysis technologies are about to provide marketing with both a higher reputation and value.
The target group is no longer the equal to the media channel
In the future, digital media buying could be compared with the purchase of shares and other securities as losses are narrowed using automated technology and investments allocated to media channels that deliver the strongest results. Optimisations are done using machine learning and pattern recognition; millions of conversion paths will be analysed.
Ad Exchanges is an early start in a media world where the target audience is no longer equal to the media channel. The digital marketer will hunt relentlessly for influential and purchase-ready users. Perhaps the technologies of the future will be so good that they catch the customer at the perfect micro-moment?
Many flagship companies work well with established operating models. They hesitate by changing a historical success model, but no one can take advantage of new marketing technology without changing their culture. Data-driven marketing forces you to set goals. It forces you to ask the question; What do I want to achieve? How should I grow faster than my competitors online?
Data-driven organisations need an infusion of new expertise
Take a look at the current job postings. Can you see that CMO role is about to change? Companies like Apple and Google are characterized by strong innovation and many traditional businesses have much to learn from this entrepreneurial culture.
Peter Drucker once said; «Culture eats strategy for breakfast.» Traditional agencies are now being challenged vigorously. Their resistance to digital marketing has sometimes been strong and opposition to IT nerds has been even stronger. The agencies that hire a CDO (chief digital officer) often have an intention to build a bridge between marketers and technologists, but many people find this difficult. CDOs sit alone with their visions of the future and do not realize what changes are necessary. CDOs are often impatient, and they have difficulty walking quietly through doors when the warning lights are on as powerfully as they are now. Digital transformations are no quick-fix; they are tough and intense and they often take years to implement.
What is the best basis for innovation in a company’s own marketing organization? Small controlled steps and pilots are usually a good start. Invest in technologies that give you insight and a basis for good analysis.
Digitization sets new requirements for advertising and media agencies. The target group is no longer equal to the media channel; it creates a greater complexity. The main change accompanying digitalization is that agencies can no longer distance themselves from the customers’ goals for returns, profitability and conversions in digital channels. The best agencies will take the same role as private banking takes for their best customers. Too many campaigns have been run without active management. That time is past.
The future belongs to the marketing technologists.