Marketo Conference: Is Predictive Modeling The Future of Marketing Automation?


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Marketo held its annual Marketing Nation Summit this week, hosting 4,000+ clients and partners. The event seemed relatively subdued for Marketo – I didn’t spot one costumed character – but the over-all atmosphere was positive. The company made two major product announcements, expanding the reach of Marketo campaigns into mobile apps and display ad retargeting. Those struck me as strategically valuable, helping to secure Marketo’s place at the center of its users’ customer management infrastructure. Unfortunately, I wasn’t able to gather enough technical detail to understand how they work. I’ll try to write about them once that happens.

As usual for me, I spent much of conference prowling the exhibit hall checking out old and new vendors. Marketo has attracted a respectable array of partners who extend its capabilities. By far the most notable presence was predictive modeling vendors – Leadspace, Mintigo, Lattice Engines, Infer, Fliptop, SalesPredict, 6Sense, Everstring plus maybe some others I’m forgetting. I’ve written about each of these individually in the past, but seeing them in the same place brought home the very crowded nature of this market. It also prompted many interesting discussions with them vendors themselves, who, not surprisingly, are an especially analytical and thoughtful group.

Many of those conversations started with the large number of vendors now in the space and how many would ultimately survive. I actually found this concern a bit overwrought – there are other segments, most obviously B2B marketing automation itself, that support many dozens of similar vendors. By that standard, predictive analytics is still far from overcrowded. At the risk of some unfair (and unjustifiably condescending) stereotyping, I’ll propose that part of their concern comes from a sort of Spock-like rationality that says only a few different products are really needed in any given segment. That may indeed be logically correct, but real markets often support more players than anyone needs. I see nothing inherent in the predictive marketing industry that will limit it to a few survivors.

In fact, almost immediately after wondering whether there were too many choices, many vendors observed that they were already sorting themselves into specialists serving different customer types or applications. Some products sell mostly to smaller companies, some to companies with many different products, some to customers who want new prospect names, some who want to incorporate external behaviors, and so on. Here, the vendors’ perception is more nuanced than my own; they see differences that I hadn’t noticed. Despite these distinctions, I still expect that most vendors will broaden rather than narrow their scope over time. But maybe that’s my own inner Spock looking for more simplicity than really exists.

Probably the most interesting set of discussions revolved around the long-term relation of predictive functions to the rest of the customer management infrastructure. This was sometimes framed as whether predictive modeling will be a “feature” embedded in other systems or a “product” sold on its own. My intuition is it’s a feature: marketers simply want to select on model scores the same way they’d select any other customer attribute, so scoring should be baked into whatever marketing system they’re using. But the counter argument starts with the empirical observation that marketing automation vendors haven’t done this, and speculates that maybe there’s a sound reason: not just that they don’t know how or it’s too hard, but that modeling systems need data that is stored outside of marketing automation or should connect with multiple execution systems that marketing automation does not. The data argument makes some sense to me, although I think marketing automation itself should also connect with those external sources. I don’t buy the execution system argument.  Marketing automation should select customer treatments for all execution systems; scores should be an input to the marketing automation selections.

But there’s a deeper version of this question that asks about the role of predictive analytics within the customer management process itself. Marketo CEO Phil Fernandez touched on this indirectly during his keynote, when he observed that literally mapping the customer journey as an elaborate flow chart is inherently unrealistic, because customers follow many more paths than any manageable chart could contain. He also came back to it with the image of a “self-driving” marketing automation system that, like a self-driving car, would let the user specify a goal and then handle all the details independently. Both examples suggest replacing marketer-created rules to guide customer treatments with predictive systems that select the best action in each situation. As several of the predictive vendors pointed out to me (with what sounded like the voice of painful experience), this requires marketers to give up more control than they may find comfortable – either because machines really can’t do this or because it would put marketers out of a job if the machines could. Personally, I’ll bet on the machines in this contest, although with many caveats about how long it will take before humans are fully or even largely replaced.

However, and here’s the key point that came up in the most interesting discussions: predictive models can’t do this alone. At the most abstract, marketing involves picking the best customer treatment in each situation.  But models can only pick from the set of treatments that are available. In other words, someone (or some thing) has to create those treatments and, prior to that, decide what treatments to create. In current marketing practice, those decisions are made with a content map that plots available content against customer life stages and personas.  This makes sure that appropriate content is available for each situation. Proper value measurement – which means estimating the incremental impact on lifetime value of each marketing message – also relies on persons and life stages as a framework. So any machine-based approach to customer management has to generate personas, life stages, and content to be complete.

I see no inherent reason that machines couldn’t ultimately do the persona and life stage definition. None of vendors do it today, although several appear to have given it some thought. Automated content creation is already available to a surprising degree and will only get better. But, to get back to my point: the technologies to do these things are very different from predictive modeling. So if new technology is to replace marketing automation as the controller of customer treatments, that technology will include much more than predictive modeling by itself.

Republished with author's permission from original post.


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