The Evolution of Marketing Technologies
A wide-ranging look at the history, challenges and future of marketers and marketing technologies
Good afternoon. Glad to be here. It said that the world is divided into two kinds of people, those who divide the world into two kinds of people and those who don’t. I’m one of those.
So how many of you are marketers and how many of you are technologists? I recognize no other categories. So how many marketers? Many. How many technologists? A couple. Okay. That just gets me a little oriented to who the audience is.
So let’s start off by going back a century and a half. In 1899, less than 5% of the power in U.S. factories was provided by electricity. Most of the power, or virtually all the power was provided by steam engines and waterwheels. The way that power was distributed was there were large line shafts, the long pipes, rotating pipes, on the ceilings of the factories. Those were connected to leather belts, which were connected to the machine tools on the factory floor. It was an astonishingly inefficient way of doing things. You lost about 25% of the power to friction, just running the gears and the belts. It was called “millwork”. Your factories could only be so big, because the shafts could only be so long. Your factories had to be laid out in straight lines, because the shafts were straight. There was dust from the leather belts. There was noise. There was oil leaking down, because everything had to be lubricated. Factories were really a pretty miserable place to be.
Electricity Revolutionizes Industry
Thirty years later, everything had changed. Thirty years later, just under 80% of the power was provided by electric motors. Those electric motors were connected directly to the machine tools on the floor. No more overhead, no more belts, none of that stuff. Imagine being a manager and facing 30 years of constant change, because the change didn’t happen all at once. It wasn’t that they went from line shafts overhead to electric motors. There were actually four waves that have been identified. The first thing they did was they took the electric motors and they attached them directly to the old shafts, pretty much the same mechanism just powered by electricity.
The second phase was they got rid of the old big one shaft, and you had a bunch of littler shafts, which gave you a little more flexibility. Now, your factory didn’t have to be laid out straight. It could be a little bigger, but you still had belts overhead. The third phase was to connect the electric motors directly to the machine tools, and the fourth phase was to actually rebuild the machine tools so they were optimized for the engines. So you had four phases of change to go through over about 30 years.
A Brief History of Marketing
I would argue as a marketer that we are going through a similar radical change in how we do things. It’s going to be a change that’s spread out over a long period of time, and it’s going to go through phases in the same way that the electric industry went through phases. So we’ll talk about what that means. We’ll talk about some of the lessons that we can learn from this previous transition. But before we do that, let’s talk a little about the changes that marketing is going through.
Now, the title of this is, “Evolution from Snail Mail to Multi-Channel Personalization”. But of course, marketing started long before snail mail. If prostitution is the oldest profession, then advertising for prostitution must be like just barely the second oldest profession. We see in Pompeii, some of you will have seen the famous mosaics that advertise the brothels in Pompeii. This is one of the sort of more public, more visible ones that I can show you. If any of you have seen the real ones, you know that they were very creative and very agile back in Pompeii. But marketing even goes back further than that. That’s already, what, 70 A.D. is Pompeii.
My personal theory is that we can go back to the cave paintings. This is not a scientifically validated theory. This has not been published anywhere. But my theory is, we look at this particular piece of art here and this is an advertisement. It’s an advertisement for something I like to think of as Moe’s Barbeque. Moe’s Barbeque had the freshest meat. Moe’s Barbeque had the kids. The kids were very excited to go to Moe’s Barbeque, and Moe’s Barbeque had live music on Friday nights. What’s interesting about that and again this is just my personal theory about this particular piece of cave art, although I think it’s a legitimate piece of cave art, is that the genius who did this, he was selling features. It had the freshest meat. He was selling benefits that the kids love it. He was even selling the social aspect about the music. So here, 40,000 years ago, this unknown genius had actually invented everything that we learn in marketing school today.
So not much changes when it comes to marketing. Pretty much, it’s all been done before. So if you want a slightly more rigorous look at the history of marketing technology, or marketing channels, really, we see again, we go back and [the course of the timeline is not to scale]. Go back 35,000, 40,000 years to cave art, and that was signage. The mosaics in Pompeii are signage. Pretty much, signage is the only marketing channel up until moveable type gets invented, and then it actually takes about 150 years after moveable type is invented in the West, it’s invented earlier in China, for newspapers to show up. That’s your second channel now, is newspapers and handles. I know you can’t read this. Don’t worry about it. But the letterpress, Gutenberg’s press was a hand press, as you know, a flatbed press. Very slow, 240 impressions per hour, roughly. By 1840, we now have the steam press and we have rotary presses, which suddenly can do thousands and thousands of impressions. So the first true mass media marketing doesn’t show up until about 1840, when we get the rotary press.
We then go another 30 or so years and we get to mail order catalogs, Montgomery Ward in the U.S. Still the same technology, incidentally, but you now have the distribution channel of the railroads available that makes mail order practical.
The next big one is 1920, we get radio. 1950, we get television. So we’re slowly accruing new marketing channels over that period of time, and then suddenly things change dramatically.
In the 1990s, well, we get cable TV, first of all, but what we really get is the internet. The internet all of a sudden opens up a whole new bunch of channels, because we have web portals and we have display ads, and we have search ads, and we have e-commerce, and we have blogging.
Then, we get into the 2000s, and we had social media and video sharing, and music was just talked about, and then we get into the current decade. We get photo sharing and video, and so on. The smartphone finally shows up in 2007, and now we get apps on the smartphone. So we have, starting around 1990, 1991 is the first web browser, we get the sudden expansion, this huge, huge expansion in the number of ways we have to meet people.
The Marketing Revolution
So that’s the first dimension to this history, is we have this very kind of slow, but steady accrual of channels, and then suddenly things change overnight. Now, just to be clear, the fact that we had a bunch of new channels in the ’90s, if anything that understates the importance of the change. Because again, we had new channels, we had radio, we had TV, kind of over the previous century or so. But what happens is, this is not news to any of you, the internet and then mobile starts to take up a huge amount of time. Almost half of consumers’ media time now is spent on the internet, and mobile is more than half of that, and about a third of the ad dollars or so right now. So it’s a fundamental change. Internet really does change everything, not that that’s news to any of you. So just bear in mind, that we’ve gone through this revolution in the ’90s in the channels that are available.
But the channels are just one-dimension channels. The second dimension is data and, again, going back a bit in history as I like to do, you’re all familiar, you’re all inclined to know that the first writing was the cuneiform in ancient Sumer. You may or may not know what was actually on those tablets. We may, because we probably have some archaeologists here. They were tax records, basically. Really, the first sign of civilization is taxes. Why are we surprised by this? But what’s interesting about them is that, what’s in a tax record? You have Shlomo gave a pig in the year of the moon, or whatever it was. You have who it was, what they did, and when they did it. Basically, it’s a transaction record. That is the only data that marketers have to work with pretty much for the next close to 4,000 years. Yeah. We invent paper in China in 100 C.E. Punch cards and address plates show up 1890 or so, and that’s like mechanical data processing. We’re kind of trying to get to real electronic data processing. But 1890, you don’t have computers yet, so we’re doing that. But all we know from 3000 B.C. on clay tablets to 1900 on punch cards is the customer’s name, their address, what they bought, and when they bought it. That’s the only data that marketers have to work with. It doesn’t even begin to change really until the 1960s.
We get Nielsen Diaries in the ’40s. That’s a kind of marketing data, but it’s not about people. It’s not until the 1960s when the computers show up that we now have a way to efficiently capture even a little more data. We can now begin to capture something about what the audience was, “Who did I send out to and how did they respond?” and that’s useful. We get a little more data in the ’80s with loyalty programs and call centers. We can begin to get a little more about how we’re interacting. But it’s not really, again, until the internet shows up that we can really track people in detail. “What did they look at? How long did they spend? What did they click on? What didn’t they click on?” All that data, that stuff doesn’t really show up.
So basically, the history of customer marketing data is pretty much it’s the same from ancient Sumer, up until about 1990. Then, suddenly again there’s this huge explosion in the amount of data that we have to work with, and it continues to grow with mobile. Mobility adds location and some other things and the context stuff. The third dimension we want to talk about is the actual technology used by marketers. Not the channel technology, we already talked about that, but the technology that marketers use to do their jobs. Yet, again, we go back to the clay tablets, and we have customer lists. Again, we don’t really get anything more useful than customer lists. Up until we get to the computer age, it takes a little longer. The computers are in the ’60s, computerized mailing lists in ’70s, really, we begin to get tools to work with those things. So we begin to get list selection tools and merge/purge tools. We get personalized printing. Very early, it’s personalized printing. They used to pre-print the forms and leave a blank, and then there would be a separate printer that would fill in the blank with a name or whatever. This was before laser printers.
The Rise of Marketing Software
It’s not until the ’80s that we begin to get real marketing software, what we would call today the beginnings of marketing technology, and we get campaign managers. The interesting thing about campaign managers, which are tools that let us select these lists, is like that first phase of the transition to the electric factor, are basically taking the old process, which is take a list of names and put them in the mail, and they’re reproducing it kind of function for function on the computer. So there’s still lists, but now we’re doing our list selection on the computer.
We develop a whole bunch of other stuff after that. We develop engines to send email, web content management systems, SEO systems, e-commerce systems, social media, content marketing, so over the ’90s and the 2000s, and the 2010s. But the basic paradigm in marketing technology is still lists. All those things, either they’re working on the actual delivery level of, “How do I run a website? I have a web content management system.” Yeah. It’s a marketing tool. But the actual selection of who gets what message is still basically run by campaign managers.
It’s not until the current decade, not until actually quite recently, the last couple of years, that we’ve seen this fascination with the customer journey. Where we’re finally getting away from lists, from blasting out to campaigns, and really begin to have the technology that lets us talk to customers as individuals.
Dealing with Customers as Individuals
We’ve been talking about dealing with customers as individuals for a very long time, since about the ’80s, actually. Before the internet we were talking about that stuff already. But we only now are really beginning to get the marketing technology that gets away from the old list orientation, gets away from the old campaign management orientation, and really begins to manage customer journeys. So we’re making that transition from taking the old shafts and driving them by electric motor to actually attaching the motors to the engine, and then rebuilding the machine tools to match the capability to the electric motor. We’re just beginning to get to that stage now. It’s been 30 years. The familiar 30-year interval, all of a sudden. So what’s happened now since the ’90s and really since the 2000s is that we’ve seen this tremendous growth in marketing technology.
I make my living as a technology analyst. I consult. I help people buy this stuff. I help the companies who sell this stuff. I kind of keep an eye on the industry. So this is where I live. We’ve seen really since 2000, 2005, just the number of new marketing technology vendors has exploded. There’s different data series, but it’s about a 15% per year growth. I wouldn’t get too worried about the fact that it suddenly seems to drop off. That’s probably because the way these databases are built. A new company wouldn’t necessarily show up until it’s been around for a couple years. So chances are, the number of companies that are starting, which is what this is showing, is at least stable. It may not be growing quite as fast. We may actually have kind of hit peak marketing technology, “peak mar-tech” we call it. Now, why now? Why then? Why all of a sudden this growth in…
Software as a Service Drives Marketing
Really, again, it kicks off around 2005, 2006, around here? I don’t know how much you see. There’s 2005. We suddenly get this huge… 2008. Remember, computers, internet has been around since 1990. Why did it take so long? Well, I’m pretty sure, although I can’t prove it to you, that what happens is really the growth of software as a service. All this stuff, what software as a service does… Think salesforce.com, in particular, kind of the leader in the software as a service for marketing industry. 1999, go to 2000, 2003 there. There, peak growth happens just around now.
What software as a service does and what companies like Salesforce do, is they create a platform that marketing systems can work on top of. So all of a sudden, I don’t have to have one system. I don’t have to create a system to gather the data, to assemble it and integrate it, so I get a complete view of each individual customer, to have rules to decide what to do with everybody and actually deliver the messages. I don’t have to build that kind of complete solution every time I want to add a new piece of marketing technology. I can actually just connect into Salesforce, or connect into some other system that has that database for me. Then, just add one little feature, just do website personalization, just do a certain kind of segmentation, for example, just do a lot of specific things. So I can have a lot more marketing systems. It’s easier to build marketing systems, because I don’t have to have a complete set of features involved. It’s easier to deploy them, because I can just kind of plug it in.
So the huge growth in marketing technology that we’ve seen really in the past 10 years or so, is really driven more than anything else by the growth of SaaS. That in turn, now conceptually we’re around 2010, if you want, we have all this technology, now the marketers kind of look around and they say, “Well, I’m a marketer.”
I just saw a cartoon the other day. It said, “I got into marketing, because I didn’t like math and I didn’t like computers. Great. Now, that’s all I do as a marketer.”
So marketers look at all this technology and they say, “Well, okay. Somebody has got to manage this stuff for me. The IT department is not going to do it.” No insults to any IT people, because they run financial systems. They really don’t understand marketing. So companies now go out and hire marketing technologists. Really, just in the last few years that we’ve seen this. I know you can’t read these numbers here. But it says there’s a survey that said 70% of the people on this survey, their marketing department had somebody who was in charge of buying marketing technology. Interesting split. That was about 76% of U.S. companies, 66% of European companies. So a little more advanced in the U.S. than the rest of the world on that, which is probably about right. In addition to the 70% who had them in place, 15% said they were going to hire one within the next 12 months. So pretty much every company I go into today has somebody in charge of buying marketing technology. So Gartner’s survey came out with an 80% figure over having a chief marketing technologist. This same survey here found about 80% of the people who were in charge of acquiring marketing technology had some sort of a marketing title or other.
So we have this, all of a sudden, what you didn’t used to have. These are the bunch of marketers who really weren’t interested in technology. Because remember, up until 1990, there just wasn’t much technology to mess with. Maybe you had a mailing list system. Big deal. A simple campaign manager, if you were in one of the few industries where you even had mailing lists. But now, everybody, every marketer, whatever industry they’re in suddenly has this massive marketing technology. So they go out and they hire marketing technologists.
Well, that kind of changes things. So we’ll talk in a little bit about how that changes things. But the presence of specialists in marketing technology actually makes a big difference. A couple other trends very quickly. Marketing is more responsible for revenue, so that puts a little more pressure on them. Marketing is more responsible for the full customer life cycle.
Caring about Customer Retention
We’ve been talking today about retention. Marketers in some industries didn’t used to care much about that. Now, they do care about it much more. The consumers, of course, have changed. They’re much more demanding. So they expect your technology to treat them the way that they kind of feel they should be treated, and technologies are adopted just faster. We saw that. I didn’t point it out to you as it went by. But if it took 30 or 40 years for radio, between the invention of radio and the commercialization of radio, similar time span for TV, the internet is pretty much adopted overnight. The smartphone is adopted, it seems like within minutes. So things are moving a lot quicker. So we have this whole set of changes and issues that we, as marketers, have to deal with.
Let’s just do a little recap here. The story so far, we have more channels, we have more data, the two things that really change. We have more technology. So marketing is way more complicated. As marketers, we have more decisions to make. It’s not just, “Oh, where should I run my ads? Which TV stations should we… Which TV shows I buy?” It’s, “I have the possibility of sending an individual message to each of you in a dozen different channels. What message should I send? Which of you should I send it to? Which channel should I use? When should I send it? What should it say?” I have way, way more decisions than I could kind of just make manually. Even if I had an infinite number of marketers on my staff to do it.
More Technology, Faster Adoption, Greater Complexity
So we have this need for technology, and we have a lot of technology. We have new responsibilities. We have the faster adoption, so it’s more urgent that we kind of figure out a way to manage this complexity. We have technology that at least potentially offers solutions. But the technology itself is kind of a challenge, because there’s so much of it. So we really have to manage that technology, and now we have these marketing technologists that we hire to help us manage it.
But guess what? The marketing technologists, they have their agenda. They’re not marketers. They’re marketing technologists. They’re not quite the same thing. So we’ll talk about that in a second too. Before that, let’s just do a little bit of background.
The Marketing Technology Layers
What do we talk about when we talk about marketing technology? Here, at Raab Associates, we divide marketing technology into three layers. How do we get all the data? Because of course, we have more customers, more products, more kinds of data, all those different behaviors that we’re capturing. It’s no longer what we used to put on the cuneiform tablet of who bought what, when. Now, we have, again, all what they looked at, what they did, where they went, what they wanted, who they were with, who they talked to, what message they sent, all this stuff. It’s a lot of data that we have to manage and somehow make sense. So the Data layer is important and it’s a challenge.
The second layer that we have, that I’ll call here the “Decision” layer is, “What do I do with all this data? How do I decide what message to send to which person, in which channel, at which time, with which offer, and so on.” So there’s an orchestration component to that that says, “Okay. How am I going to make all those decisions?” Segmentation and Analytics layers, there’s a whole Content Management and Content Creation layer, which kind of goes someplace, it belongs on this layer. Planning and budgeting are here, board reporting and analysis here. So the Decision layer is in some ways the most complicated of these. It’s got the most moving parts. Of course, this is also the most important to get it right. I have to get my… If I make bad decisions, I could have great data and it’s not going to do me any good.
Then, the top layer there, the Delivery layer, what it sounds like, again, this is the actual systems that talk, that interface with customers directly. So this is my web content management, my email system, my mobile apps, or my mobile delivery and my social delivery, search ads, display ads, so on, all of my different systems that acts like Delivery layers.
So the point of this diagram and this way of thinking about things is that those are different functions. They’re not necessarily done by the same system. They’re not all going to be done by one… Nobody has one system to do all these things across all channels. So that’s not even really an option. So the question is, how am I going to split them up? Funny you should ask. We have an answer for that. We have lots of different ways to split them up. So we can talk about just use a separate system, like one channel at a time that does everything. That’s what these silos are over here. So I’m going to have a web system that has its own data, its own decision engine, its own delivery engine. I’ll have an email system that has all its own data. They’ll all function. I can do my job as a marketer. They’re not going to talk to each of course, and by definition they don’t talk to each other. If they don’t talk to each other, then how do I coordinate the customer experience? Because again, remember, my customers are very demanding and they expect that they’re going to be treated appropriately and consistently across all channels, across all interactions, in all situations, at all times. They get really cranky if I don’t.
So I have to coordinate those in my siloed systems, independent systems. I can kind of manually set up the same decision rules in all the different systems, and try to coordinate that way. Good luck with that. So we’re going to have to have some sort of automation. I can automate, just moving over in that direction from my left, your right. I can just integrate it down here. I can still have basically separate systems, but I can kind of have them share data back and forth through a hub of some kind, Bloomy, or there’s a bunch of systems that’ll do that. Easiest transition to make, thinking in terms of your phases again, because it’s pretty much keep [going on all] systems, but just sort of share some data back and forth. But now, I’m replicating data, so I have the same data I’m storing in different places. I haven’t done anything about my decision rules being coordinated, because I still have separate decision rules. Different systems may not actually be able to handle the same data, because web systems think in cookies and email systems think in email addresses, and a call center system thinks about phone numbers. So they’re not quite necessarily compatible data.
The Customer Data Platform
I can say, “Okay. I’m going to at least integrate the data.” That’s what’s called a “customer data platform” going on. I’ll have one customer database. I’ll have all of my different systems feeding data into it. I feel like we’d be close to those arrows there. I have heads on both ends. Data is moving both directions. Then, I’ll build out my unified customer database. So at least all of my systems will be working with the same data.
I’m still going to, however, have separate decision systems, so I’m still going to have to replicate the rules to make sure that people are treated the same. I can play some games, and I can put some things down in the data that kind of put people, say, in segments, and then I have rules that are segment rules, so it’s some consistently.
Or I can take the next level, or I’ll call it here a “marketing cloud”, and I can have the decision layer itself be unified, or at least the key pieces of it that are actually making decisions about what messages to send to people. We’ll call that… That’s what the Oracle and IBM, and Salesforce, all the big marketing clouds kind of are pushing this model, roughly. The argument is, “Yeah. We’re going to have people that are going to unify your data. We’re going to give you one place to make all your decisions, and then you can deliver anyplace you want.”
Now, in reality, the marketing clouds usually do have their own email and web, and all that. So they’re not quite as flexible, but they are pretty open. The good news is if you really want to use a different email engine, you can do that, or a different web CMS, you can do that. The bad news with the marketing clouds is they’re not really that unified on the lower levels. Most of those systems, as you know, are bought through acquisition and just products that they bought didn’t ever really get unified. So they all still have their own decisions. They all still have their own data engines. They look, in reality, a little more like that hub thing, where there’s a little bit of data being shared, but basically you’ve got a bunch of separate systems, even though they’re all sold by Oracle or IBM, I still have somebody from IBM, by Salesforce, by Adobe, whomever. So it’s just sort of a buyer beware thing. What they’re claiming to do and what they actually do, just be sure you know what you’re getting into.
One System Doesn’t Work
The other extreme, of course, is the integrated suite, again, one system to do everything. How nice would that be? I’m not so sure how nice that would be. But the problem is, of course, there’s always something new. There’s always something it doesn’t do. Like, “We’re going to do virtual reality.” Well, none of the suites does virtual reality quite yet, but let’s just say for sake of argument. So the problem with the suite is it’s never going to be complete. It can’t be complete. If it’s complete today, it won’t be complete tomorrow, because there’s always something new. If you want to add something in, some third-party engine you’re going to attach for this magical new channel that just appeared, suites aren’t really designed for that. The benefit of the suite is to tightly integrate so everything works really well together. There’s no integration costs. Everything just flows back and forth. The bad news is, that integration implies some very complicated, rich data sharing and process sharing. So it’s really hard to just plug in some third-party tool, so to speak. So kind of between a rock and a hard place.
Obviously, I have my preferences. You probably can see which ones I like. But these all exist. Different companies successfully use them all. Nothing is perfect. So just because the suite isn’t perfect, doesn’t mean you can’t use it. It just means you want to be aware of what the challenges are with it.
Let me be clear that those were very, very oversimplified diagrams. Reality in most companies looks something like this, and even this is highly diagrammatic and oversimplified. But usually, you have a couple of platform systems, your marketing automation, your CRM, your web. Those are usually three big systems that have their own data, their own decision engine, their own delivery tools.
Then, they have usually a bunch of other little systems that hang off of them to do specialized things, like pull in external data or do predictive modeling, or do content creation, or do budgeting, or do other channels like events or social, or display. Most companies of any size today have at least 20 different systems in their marketing stack. Not uncommon to have 50. Some have fewer, but even the tiniest of companies is going to have a half-dozen. I mean, hell, Raab Associates have a half-dozen and we’re tiny as you get. There’s three of us, counting the two cats.
The SaaS Platform Model Works
So reality is complicated, but the platform model basically works. There are a lot of platforms, and again this is where SaaS comes in. That makes it easy to connect your SaaS systems into these platform things. You can imagine sort of a hub and spoke model, where you have a platform and a bunch of SaaS tools plugging into the platforms.
So let’s talk about what we’ve learned so far. What have we learned from history? Okay. We just went through the history. We learned that when there’s a major technology transition, like the transition we’re going through in marketing right now, the change happens in waves. It doesn’t just happen overnight. Old technology, you go to bed, you wake up in the morning the next day, new technology. It evolves over time as we sort of move from a system that’s optimized for the old technology, like the old overhead line shafts in the factories to the new technology, which is the electric motors attached directly to the machine tools. You go through a bunch of phases, where you have these kind of awkward compromises. Because you make one change, because that’s the only change you can make, and then having that change in place opens up some other opportunities. Which in turn, once that gets worked through the system, now that opens up some other opportunities, and so on, exactly what we see in marketing.
We see that usually point solutions happen first. So there’ll be a specific need in the marketplace. Marketers need a tool to create videos easily, because all of a sudden now I have a video-sharing capability. Somebody will build a video creation tool point solution, and they’ll build a separate podcast creation tool, and a separate email-building tool, and so on, and those will be best of breed. They’ll usually be… Well, the first ones will be sort of iffy. But the specialized systems have evolved over time to be really good at what they do, because that’s all they do. But then, we see that people get a little cranky and they say, “Well, I don’t want to have 20 or 50 different systems. I want to kind of consolidate stuff.”
Efficiency of Marketing Tools
This is where the martech managers come in, because marketing technology managers are people who are hired to make sense and rationalize your marketing technology. That’s what they’re there for. That’s their job. Well, they come in, the first thing they do is they look around and they say, “Oh, wow. We’re buying all these tools. Let me help you Mr. Marketer, Ms. Marketer, buy the tools a little better, and do a lot of tactical stuff. Yeah. We’ll go out and we’ll buy a new campaign manager, we’ll buy a new email system, we’ll help you buy this and that,” and that keeps them busy for a while.
But while they’re doing that, they’re saying, “Oh, my goodness. This place is a mess. We have all these tools out there, dozens of tools. They’re not connected to each other. It’s a pain in the neck to buy these things. Not that they mind that, because it’s fun to buy stuff. But now, I have to connect them all. So I’d say we really have to simplify this. It’s chaos.
My job is to rationalize things. My job is to simplify things. So you know what? Let’s not buy all these crazy, little point solutions. Let’s look for a tool that several departments can use. Let’s look for a tool that does a bunch of different things, so I don’t have to integrate them. So let’s move from point solutions to suites.” This is like a rule of nature. Every market I’ve ever seen in technology follows this. You start with point solutions. Then, people combine the point solutions into suites, and you have the big debate over, “Oh, best of breed versus suites,” and suites always win. It’s like the outcome is never in doubt.
This is modestly called “Raab’s Law”. Raab’s Law is that suites win. They always win. Everybody always ends up with suites. You can debate best of breed versus suites until the cows come home… I have no idea where that phrase comes from. Do the cows ever come home? But eventually, suites win. So that’s Raab’s Law. Martech managers are contributing to that. They kind of just naturally like suites, because it makes their job simpler and it makes the structure simpler. It’s not that they’re lazy or anything else. It’s just, it makes sense to them, “Yeah. If we could find one tool that would do a good job, it would make sense to buy it. Who could argue with that?”
Well, the one who could argue with that is the marketer who says, “Yeah. But I really like this video generator, because it generates videos that are sideways and I really love to generate sideways videos. The one that’s in the suite you have, it does everything else, but it doesn’t generate sideways videos.” The martech manager looks at him and says, “You can do without sideways videos.” If the CMO listens, they can’t do sideways video anymore. So that’s who could argue. But it’s a losing argument, in most cases.
Software as a Service Changes Everything
Now, the counter-argument is that software as a service changes everything. Anytime somebody tells you something changes everything, like everything that’s ever happened before will now be different because of something, you better be really skeptical of that. So I’m really skeptical of that.
Integration has always been a huge headache. Somebody tells me, “Ah, SaaS makes integration easy. It goes away,” I want to see that. I want to see that one proven before I accept it just on theory. But the theory is that SaaS makes connecting things really easy. That’s what SaaS does. These are systems that are built with APIs. They plug into other systems. So now, all of a sudden, I can just plug in all my best of breed systems, all my point solutions, and I don’t need a suite. I love this story. When we look at sort of what’s happening… The previous side was general history. This is more specific to what we’ve seen in martech. Well, in the industry level, there’s two things going on. We do see a lot of point solutions. You saw that graph of the number of marketing technology vendors. It’s certainly plenty of new vendors being created. Still maybe not quite as many as there were, but still plenty of new ones happening. Because there’s just a lot of new stuff to do, and again the innovation happens with new vendors who have specific solutions.
On the other hand, the suite vendors, the Oracles, IBMs, Adobes, they buy systems. They continue to buy systems, several acquisitions last week or so. They continue to grow and they continue to take market share. So they do appear to be sort of winning that battle, as we would expect them to. But the battle is not over yet. The Death Star still could be exploded. We’ll find out.
It’s Hard to Make Technologies Work
When we look at what marketers are doing, what’s happening in the world of marketers, not really great news, I must say, if I’m a rebel. This is just a bunch of different surveys. But half the marketers in this one survey had not seen the benefits of predictive. Predictive is a great technology. I’m a huge fan of predictive. I’m a total believer in predictive. But it’s hard to make it work. It’s hard to make any of these technologies work. So we get a lot of dissatisfaction. People buy something, they get all excited. They try to do it. They don’t necessarily get trained properly. They don’t necessarily put the effort into it that they should, and we can see a lot of dissatisfaction, a lot of shelfware out there. A lot of software gets bought and not used.
We see people… This is an interesting result that I had not seen in a previous survey. If you remember, it was 23%, seeing too many vendors as their biggest threat to success, 23% of marketers saying, “I have too many vendors. That’s getting in my way.” Now, I don’t know how many of those were the martech guys. You’d expect them to say that. But I think this was marketers as well. So they say, “Yeah. We do have an awful lot of systems around here. Don’t we? Each one’s got its own little interface. Even if it’s kind of integrated and kind of shares data, it does become a challenge.” So marketers are kind of saying, “You know what? Maybe we have a few more systems than we need.”
Again, an interesting and kind of worrisome result in this particular survey, wanting to move technology in-house. Right? Fifty-nine percent planning to do it either significantly or slightly, 32% slightly, 27% significantly, but 59% planning overall to move at least some technology in-house. Moving it in-house means it ain’t SaaS, by definition. Right? So if I’m a SaaS vendor, and remember the growth in martech is derived from SaaS vendors, I have to be quite concerned about this.
I got to 4:00, right? Okay. Get the hook and pull me off here.
So marketers moving things in-house, and again our martech staff moving from that kind of tactical, “Oh, how can I help you buy stuff?” to, “Well, no. How do I plan my long-term strategy, my long-term tech vision, which again is going to almost inevitably lead me to a more centralized approach.” So we see this, a lot of trends that if I were an independent software vendor of a point solution, I might be a little nervous.
Automation as a Marketing Solution
So what do we do about this as marketers? Most of you are marketers. A few of you are technologists. We have to do a few things. All right? The first thing we have to do and probably the most important thing we have to do, to be honest, is we have to plan for complexity. It’s not going away. The world is not going to get any simpler. We can expect that there’s going to be more new channels certainly driven by the internet. They’re going to generate larger vines of data, more kinds of data. Those two things combined mean we’re going to have more decisions to make. Because as we get more data, we have the possibility to, “Oh, let me treat people who are red-headed different from people who are brunettes,” or whatever. I can do that. Of course, if I can do it, I will do it, because it has some value.
So I have more decisions to make. I have more technology to make the decisions. So the world is just going to continue to get complicated. So the first thing you have to realize that kind of, we accept it. Get over it. I’m going to probably need to favor investments that solve multiple-channel problems and serve multiple channels, again. I’m kind of sorry. I’d love to see a lot of cool best of breed stuff out there, a little specialized things. But in reality, to deal with complexity, I’m simply going to have to simplify another way. So I’m going to try to find systems that do more than one thing. I’m going to have to use automation to free up human resources. There are so many decisions I cannot make that, man, I can’t write enough rules. Forgetting about sitting and watching each customer, and deciding, even just writing rules that decide what you should do, the rules themselves are very fragile and rigid, and complicated. So I have to have automated systems, artificial intelligence come in and do a lot of those decisions, so the people can do the more fun stuff.
It’s not that marketers go away. Not even the marketing technologists go away. It’s that we do more interesting things. I’m going to need, when I automate this stuff, when I use AI, I have to be really careful that I can see what the heck is going on. Because I won’t necessarily be able to predict in advance, but I have to at least, at the minimum, really watch very carefully to see what the system is doing to make sure it’s not doing something stupid. Because computers can easily do very stupid things, that being computers, they don’t know they’re stupid. Again, same thing, I have to fail gracefully. If the system does do something stupid, or if some piece of data becomes unavailable, or some channel is down, or something goes wrong, I need to make sure that my systems fail gracefully. Not saying you should fail gracefully. Although, you should when you fail, because you are going to fail and it’s okay to fail gracefully. But your systems in particular should be designed to fail gracefully, is what we’re saying here.
Marketers Must Adapt to Change
The second thing to do is to plan for agility. Because there’s going to be change, because you don’t really know which way that change is going to go, you just have to be able to jump to the agile and jump in whatever direction it turns out you need to jump into. At the start of the transition in the power plants, there was a big debate about direct current versus alternating current. Some of you might be familiar with that. Edison thought direct current was the way to go. Westinghouse and Tesla were in favor of alternating current, a big, so-called “battle of the currents”. It was very exciting, they electrocuted elephants, all kinds of cool stuff happened. But the factory manager, he didn’t know which way to go. So he just kind of had to sort of hedge his bets a little, and probably not commit to either one until it became clear. So that’s what you have to do. You have to just sort of be very careful not to over-commit and be too stuck in one directly too quickly.
The second thing you want to… So how do you do that? You build tools to make these decisions. How do I decide what to invest in? You have to not just look at functionality. The way we used to buy software was we had a list of requirements. We asked the marketers, “Okay. What kind of programs do you want to run?” They say, “Okay. Well, you want to run these kinds of programs. This is what your systems have to do. Let me go out and find a system that does that.” That was great when you knew what programs you wanted to run. But what if you don’t know? Because you don’t know what channels there are going to be, you don’t know what kind of programs. That’s a very rigid way to do things. Now, you have to be much more agile. So you say, “Well, you know what? Yeah. I’m going to look for functionality. Functionality is important. But I’m also going to look for things that are open, things that can adopt different technologies, things that will accept different data types, things that can plug into other components.”
Flexibility, Modularity and Function
Just a second point here, instead of having one big system that’s optimized for exactly the way I think I’m going to do things, only to find out tomorrow it’s not the way I’m going to do things, I’m going to have a system that’s got a bunch of different pieces. Think back to the Data, Decision, Delivery layers, a bunch of different systems that are replaceable, but compatible. I can pop one in and I can pop one out. So if a better predictive tool comes in, I can just swap it out with my old predictive tool. If a better web content manager comes in, better email generator, whatever it is, I just want to be able to pop those things in and have everything else continue to run. So that’s the modular framework. There’s a critical way of managing for agility. So I’m going to select for that, flexibility, modularity, as well as function. I’m going to beware of Raab’s Law. There’s this sort of gravitational pull to buy one system, to buy that suite. Again, that’s Raab’s Law. It says there is this natural tendency for suites to win. Resist that. Fight against the dark side of the force. It’s that. Because if you end up buying that one suite, and then it turns out that one suite wasn’t quite what you needed, it’s really hard to swap out, because you’ve got to replace everything. It’s not just replacing a little module. It’s replacing the whole thing. Very, very difficult to do, almost never happens in reality.
So on the one hand, yeah, it’s really tempting. On the other hand, there may be situations where you want to do it. On the other hand, don’t get sucked in too much. One approach that’s talked about to do that is to have a core versus edge. So you have certain core systems, some of those platforms we were just talking about. Those can be a little bigger. Those can be a little more complicated. Those are a little more stable, and then you play with the systems that plug into those around the edges. That’s a pretty standard model that’s used to try to make things more agile. I would argue that in addition to the core/edge model, you want something beyond the edge, because the core/edge is still controlled by your marketing technologists. I mean, your marketing technologists who are wonderful people, are going to want to sort of centralize things, simplify things, because that’s their job is to simplify and centralize. So they’re going to do their job. But that means saying no to marketers. That’s their job is to say no. “You know you can’t have the video tool that makes sideways video. Sorry. You just can’t have it.”
Well, you want to have a certain amount of technology, a certain amount of funding that’s beyond the edge, that’s outside of their control. So if the marketer really, really, really wants to buy that crazy sideways video tool, he can buy it, she can buy it, and the martech managers can’t absolutely forbid it. They can make it harder. So you want to have that little safety valve, just to make sure that the marketing technology department doesn’t end looking like the old corporate IT department, which of course prevented any kind of innovation whatsoever, totally centralized, totally rigid. There’s this natural tendency to have that happen. You want to really push back and have at least a safety valve beyond the edge that prevents that from happening.
Plan for Change, Manage Change, Accept Change, Embrace Change
Finally, I think this is finally, you want to plan for change. Change is generally thought of as a bad thing. Most people don’t like change. Most organizations don’t like change. They resist it. They kind of try to make it as slight as possible. We can’t do that. The world is too dynamic. The marketing world is too dynamic. Change is not just inevitable. We have to have a positive attitude saying, “Change is good. We like change.” Or at least, treat it as normal. Expect change will happen. Then, the minute you see change as normal, not the exception, but the rule, now you start to build skills in change management, because you know you’re going to need them.
Now, you start to think about working across departments, both within marketing. So the email guys and the web guys, and the direct mail guys, and the call center guys, they’ll talk to each other, which they don’t necessarily do in a lot of companies. Not to mention between marketing and operations, marketing and sales, marketing and finance, all the other departments you have to work with.
Particularly, as we look beyond marketing as an acquisition to marketing as the full customer experience, where marketing really does want to have a major role, sometimes even the leading role in determining how operations treats your customers. This gets back to retention. Of course, to make all that happen, you have to build support for senior management, because senior management is the only one who can really make work things happen across departments.
So back to our friends, the factory managers. If you were a factory manager in, say, 1900, you had a really tough set of decisions you had to make, maybe not every day, but certainly every year. Do I invest in the latest technology, or don’t I? If I invest too soon, then somebody else and a better technology comes along six months down the road, now I’m stuck with this bad technology and I can’t afford to throw it away, because I just bought it and just throw it away and my competitor has an advantage, and I lose the game. If I invest in a technology that turns out to be a dead end, if I invest in direct current and it turns out the world goes alternating current, I’m in really bad shape. Because now, I have to rip out a whole new infrastructure, and again I probably can’t afford to do that. I lose the game. If I do nothing, I don’t invest at all and my competitors invest, and their costs go down and my costs don’t go down, they underprice me, I lose the game. So I have to play. I can’t not invest. But I have to play wisely.
Making Smart Decisions in Marketing
I guess there’s a lot of gambling people here, and I know nothing about gambling. But I’m sure there are good and bad strategies in gambling about how much you can risk, and so on. That’s what all this is really about here, is how do I make smart decisions? It’s not a surprise that this is the period, early 20th century, when things like return on investment are invented. That was invented 1912 at DuPont. It didn’t just magically appear, and it wasn’t written on any tablets that came down. It actually was invented by somebody, and was invented during this period when people had to do a better job of making business decisions. Flow charts. Flow charts are actually invented by somebody. In fact, they’re invented by Frank and Lillian Gilbreth, the Cheaper by the Dozen people. Again, a way to make more rational decisions about business. The whole scientific management movement kind of blooms during this period. It’s a little early, but it really hits its peak right around the early 20th century. So those managers who were managing this transition, and of course electric power was just one of the things that was changing, they developed a lot of tools to help them to make smart decisions. You, as marketers and marketing technologists, have to similarly develop a lot of tools to make smart decisions.
You have to plan for change, manage change, accept change, embrace change, perhaps, even. Above all, you have to realize that you have to avoid the seduction, the false economies of rigidity. Avoid Raab’s Law. Fight against Raab’s Law. Don’t commit too soon to a specific thing. Don’t employ your eggs in one basket, whatever it is. Don’t just try to make one solution that’s going to solve everything. Recognize it’s going to be a period of incremental change. You’re still in the midst of it. Just plan for that to continue.
You have to recognize that marketing technology exists to serve marketers, not the other way around. So don’t let the marketing technologists tell you what to do. Even though it may be rational, it’s not necessarily the right thing. You have to remember that marketers exist to serve customers. That’s why we, as marketers, exist. So ultimately, do what’s going to serve the customer and you will be one of the ones who wins the game. You’ll be one of the ones whose factory doesn’t go out of business. You’ll be one of the ones who survives and thrives in this very dynamic environment. That’s kind of the end of my little spiel. We have time for questions, not much.