The marketing industry is about to face not one but several of those seemingly sudden brutal changes.
Privacy is the change that gets the most industry attention. Our long season of customer data raining freely from the heavens is being replaced – seemingly overnight – by a customer data drought. This is one change we can’t blame on global warming, although it is man-made.
- It’s people’s concerns about privacy that prompts governments to pass laws like GDPR and CCPA, and their counterparts around the globe.
- It’s people’s concerns about being tracked that leads Chrome, Safari, Firefox, and every other major browser to block third party cookies, although you all know that Google just deferred that on Chrome yet again.
- It’s people’s concerns about controlling their data that leads Apple and Android to shut down unauthorized data sharing by smartphone apps.
- And it’s people’s concerns about identity theft and fraud, that leads companies to impose ever-tighter tighter controls on how they collect, use and share customer data, even when it is legally permitted.
The immediate impact of the data drought falls on advertisers. They now find it much harder to assemble audiences, target individuals programmatically, and to connect media impressions with sales results.
Big Tech Under Siege
But there’s an arguably larger, secondary impact. Privacy changes threaten the flow of third-party data into the surveillance marketing engines of Google and Facebook, which between them capture nearly 70% of global digital ad revenues and 50% -- half – of all global advertising revenues.
And privacy is just one of the challenges facing Google, Facebook, and other Big Tech companies like Apple and Amazon. Governments everywhere are reining in the almost unbridled power they’ve let those firms accumulate. Power over not just advertising, but news and commerce, and future technologies like cloud hosting and artificial intelligence.
- Europe recently enacted its Digital Services Act and Digital Markets Act, which are squarely targeted at reducing the power of Big Tech.
- The U.S. Congress may or may not pass new privacy and anti-trust laws, but anti-trust legal action is ramping up either way.
- China has had its own Big Tech clampdown under way for several years now, and Russia has recently followed suit.
What these changes mean is more work for marketers. In recent years, they've been happy to shovel dollars into one end of the Big Tech black box and pipe revenue out from the other, without worrying much about what happened in between. In fact, Big Tech channels have already become less efficient and harder to use, and their volumes are falling. The Duopoly’s share of US digital ad market actually peaked in in 2017, if we believe eMarketer.
This means marketers have to look at new channels, which indeed are flourishing. Retail media, connected TV, podcasts, in-game ads, in-app ads, social commerce, even out-of-home media and humble direct mail, are all gaining attention as marketers are forced to scramble for alternatives to walled gardens that they weren’t really all that eager to escape.
But there’s more.
You may have heard of this little thing called the pandemic?
It certainly accelerated the growth of digital media, contributing to marketers’ search for outlets to supplement Google and Facebook. But the larger impact was a growth in digital commerce, as consumers were forced to buy more online than they had ever intended. This, in turn, accelerated companies’ interest in digital transformations of all sorts: in ecommerce, in hybrid retail like curbside pickup of online purchases, and in remote work for employees.
The result was a crisis-driven acceleration in the pace of change for corporate systems and processes, and dare I even say culture, as companies were forced to adapt to ever-changing customer expectations, working conditions, and supply chain bottlenecks. For truly deep thinkers, I’ll throw in a power shift towards junior employees, who were more attuned than their doddering elders to digital technologies and less committed to old school, top-down management styles.
Fortunately for doddering elders like myself, the kids were trapped at home with us, so they could explain how to use that damned remote.
These changes have very specific technical implications.
- Adoption of no code and low code systems, which make it easier for business users to make changes without help from corporate IT teams.
- Broader access to corporate data to feed the low/no code systems, and to provide feedback about how the new processes were working out.
- Growth of the Customer Data Platform industry, as companies quickly realized that a foundation of clean, accessible customer data was essential to reach many of their new business goals.
The pandemic has faded into the background while our attention shifts to new crises: war, political unrest, inflation, recession, and the unignorable symptoms of accelerating climate change. It feels a bit silly to do this, but let’s look only at how these affect marketing.
- From a tech vendor perspective, uncertainties make it harder to raise new capital or increase prices, and we’ve begun to see some scattered industry layoffs as a result.
- From a tech buyer perspective, company belts are being tightened. While we haven’t yet seen a slowdown in martech revenues, we do know that buyers are more cautious than before.
- Consumers are feeling the pinch of inflation and higher interest rates today, and worry about a recession tomorrow.
It’s an environment where marketing plans are less a roadmap than a deck of contingency cards, any one of which might be played depending on how things develop.
Welcome to the Future
So welcome to the apocalypse: a chaotic present on an unstable path to an uncertain future. What’s a marketer to do?
The best advice anybody can give comes from The Hitchhiker’s Guide to the Galaxy: Don’t Panic.
The second-best advice is to recognize that change right now is both inevitable and unpredictable. So rather than picking one most likely future, preparing for it, and hoping you’re right, your best bet is to be agile, so you can adapt effectively to whatever the future may be.
This is more than just a platitude. We don’t know which channels will dominate as the roles of Facebook and Google continue to diminish. But we do know that there will be a lot of channels, certainly in the immediate future, as media fragmentation grows.
There are specific things you can do to deal with that fragmentation.
- Build more adaptable customer data systems. This means systems that can easily connect to any new channel, both to collect data from the channel as customers interact, and feed data to the channel to support personalized interactions. Easy connection implies open APIs, schema-free data storage, and low- and no-code interfaces.
- Build scalable systems for higher volume and variety of data. Schema-free data stores are part of the solution, but so are cloud platforms that allow effortless, affordable growth on demand.
- Even more important, rely on artificial intelligence to make sense of all this new, ever-changing data. AI removes, or at least eases, the critical bottleneck of using human experts to map each new data source. Remember you might be able to capture data in a raw form without mapping it to a schema, but you still need to identify the data elements before you can use them in a customer profile.
Doing those things automatically, at scale, and with a minimum of set-up for new data feeds and types, is critical to adapting to change as it happens.
- Find ways to create more content. You’ll almost certainly need a greater variety of messages, as you communicate to customers in a greater variety of circumstances – which is what happens when you have more change. You’ll also need to distribute each message in more channels, because everything no longer goes to just Facebook and Google.
- Finally, you’ll need to do a better job of measurement. That’s always been a challenge for marketers, although third-party cookies and convenient if self-serving attribution reports from the walled garden vendors made it easier in recent years. But those cookies and those attribution reports are exactly what we’re losing as we enter the new era. So we’ll have to work harder to find measurement methods that apply to different situations: some where we can identify each customer from start to finish, others where each audience is entirely anonymous, and everything in between.
Anonymous measurement is not a new problem. Some of the old-school methods will still apply, like test/control experiments and media mix models. You’ll also have new options, like data clean rooms and probabilistic models, that old-school marketers couldn’t imagine. The key here is to find techniques that apply to many different channels, because the number of channels will continue to increase.
More First Party Data
The second thing we know for certain is that in the future your own data – first-party data – will become more important.
In part, that’s a natural consequence of the loss of third-party data: you make the best use of what’s available. When you can no longer just buy and test different prospect lists to see which work, you build look-alike models based on your existing customers and have media partners use those models to select your best prospects from their own lists. Or you use a data clean room to match your customers with their customers, which is a more effective way of doing the same thing.
But there’s more to it than that. Consumers are increasingly wary of sharing their data with strangers, but your customers don’t see you as a stranger. They see you as someone they’ve chosen to do business with, in part because they think they can trust you to handle their data properly, and to use that data in their interest.
Let me be clear: this isn’t an option: customers know you have their data and they expect that you’ll use it to help them.
Now, your customers’ definition of ‘help’ isn’t to send them personalized advertisements: in fact, survey after survey shows that most customers say they don’t want any advertisements at all.
What they do want is better service, which in their minds means greater convenience for things like placing an order, receiving a delivery, or making a return. The good news is they also want marketing that looks like good service, such as suggesting a useful product upgrade or more suitable pricing plan. If you do that kind of marketing really well, they’ll rave about how great it is to be your customer.
Let me make my point more directly: the only way you can give really terrific service is to have really terrific customer data. That data is what lets you understand and anticipate what each customer wants and how they want it delivered.
You’ll also need powerful analytics to make sense of that data, which brings us back once more to our friend artificial intelligence.
The Story So Far
Let’s stop here for a quick recap.
- Change is accelerating. And while we can’t predict the specifics, we do know that channels will fragment, and personal data will be harder to get.
- Agility is the key to dealing with both those changes. Agility allows you to exploit whichever channels turn out to be important. And agility lets you take full advantage of whatever data you’re able to collect.
Building for Agility
The final question, then, is how do you build for agility? And that’s a paradox, right? How can you build a solid, stable platform that allows you to be flexible?
Well, it’s not really a paradox. Imagine you want to build a ballet theater.
The stage of that theater will feature the world’s most agile, flexible, dynamic ballerinas, appearing in a wide variety of shows. In fact, that same stage may also host operas, orchestras, musical theater, and maybe even a circus or two. The theater has to be flexible and adaptable to accommodate these diverse uses, but also strong and solid enough to support leaping ballerinas and trudging elephants without collapsing under the strain.
It’s the same for your marketing stack. The customer-facing systems in your stack are ballerinas: talented, hard-working, and exciting, they’re the stars of the show.
But they’re also replaceable. Dancers come and go from season to season and even one performance to the next. Lose any single dancer, and the show will go on without missing a performance. Lose the entire corps de ballet, and at worst you’re delayed a few weeks as you rehearse their replacements.
But if the theater burns down, you’re out of business for a very long time.
As you’ve no doubt figured out by now, your Customer Data Platform is that theater. It’s the repository of accumulated knowledge and resources that enable your business applications to adapt and thrive in the face of change.
We’ve already listed technical features that make this possible:
- easy connectivity to new sources and destinations
- flexible, scalable data storage
- efficient content creation and conversion from one channel to another
- alternative measurement techniques for different situations
- privacy-supporting technologies such as data clean rooms and policy enforcement, and
- enabling technologies like artificial intelligence, composable architectures, and no code/low code tools
The key point here is you need a clear separation between your stable, central customer data system and the applications which depend on that system. That separation is what makes it relatively easy to add or change applications without disrupting other parts of the operation. Violating the separation is dangerous because any application that also stores centralized data cannot easily be replaced.
The ballet analogy for that is a principal dancer who’s also the director and choreographer. Losing that person shuts down the operation, or at least requires a long period of retooling while you recruit replacements for both jobs.
There may be times where you want to take this risk, because the one person, or one system, is so good at both roles that you build your organization around it. But you should at least recognize what you’re doing is dangerous, and be sure it’s really worth the taking the chance. You’ll also want to take out the technology equivalent of key person insurance, doing whatever you can to minimize your reliance on that dual purpose system and to separate the platform from application functions.
I should also stress that separating the platform from applications doesn’t free you to use any applications you want. You still need applications that integrate well with your platform, and ideally will complement the strengths and weaknesses of the applications already in place.
We could say it’s like hiring ballerinas who fit the company style, but let’s give those poor ballerinas a rest.
Agility Beyond Technology
You should also recognize that technology is just one part of agility. People and process are at least as important. You have to support the technology with training, governance, organizational alignment, leadership, recruiting, and reward systems that empower staff respond effectively as new conditions arise.
A few guidelines include:
- Decide on data, not intuition. That’s been the goal forever. But it’s much more important when intuitions are less reliable because they've developed under conditions that no longer exist.
- Experiment, don’t optimize. Optimization is based on fine-tuning parameters over time. This only works when the underlying conditions are stable. In a period of rapid change, it’s more important to uncover big new opportunities than to squeeze small improvements out of the old ones.
- Measure outcomes, not inputs. When conditions are stable, the relation between inputs and outcomes can be discovered. This means you can measure one to predict the other. In unstable conditions, the old assumptions don’t apply. So you’ll have to put in the extra effort it takes to measure outcomes directly.
- Manage customers, not departments. What I really mean here is to manage the customer experience across all departments. Customers don’t know or care which department controls which part of their experience. They only judge the company on their experience as a whole. Departments working in isolation from each other cannot see the ultimate results of their actions. The only way to deliver good outcomes is to cooperate and manage from the customer’s view.
Let me focus on that last point for a moment, because it’s especially important.
Agility cannot be just random leaping about. It needs a purpose, so you know which direction to leap. And in business, the purpose of agility is to deliver great customer experience.
I hope the core message is clear:
- In uncertain times, agility is the key to success.
- Agility is more than being flexible. Quick, effective response to change requires strong, stable base of technical and human resources – including a solid Customer Data Platform.
- The purpose of agility is meet the one goal that never changes: delivering a great customer experience.