Big agencies and start-ups are scrambling to develop data-driven marketing technology
Partner, Moore Kingston Smith
Not so long ago marketing was all about the Mad Men of Madison Avenue; Don Draper slugging back three whiskies before 10am then making a barnstorming pitch to out-of-town bosses who were in awe of his talent to spin a killer catchphrase.
Mad Men, the TV show, was based partly on the life and times of David Ogilvy, often referred to as the father of advertising. He is characterised as an instinctive genius but he also invented many of the metrics that were used for decades to measure what impact the clever creative work of his team actually had on clients’ bottom line.
However, in the digital world many of those tools are past their sell-by date – you cannot measure the traction achieved by a Tik Tok dance video about a new range of sofas in the same you would a double page advert in a glossy lifestyle magazine.
This is where Martech, or marketing technology, comes in. It is an umbrella term that covers a broad range of digital tools that assist with marketing workflows; customer acquisition and retention; brand and communications; content and social, and data and analytics.
Our recent Martech Report found the market is now worth $344.8 billion and nothing in media has outpaced its explosive growth in the last eight years. However, we are just at the beginning of a revolution that will have a lasting impact on the wider media sector as it evolves to meet the demands of a content and entertainment hungry audience.
I can’t think of any other point in the history of marketing where brands have invested so much in technology to drive growth.
A vibrant new ecosystem is emerging in which both established agencies and new start-ups are scrambling to exploit artificial intelligence and machine learning to enhance the customer experience. Meanwhile, big brands are employing sophisticated data mining to ensure their offerings reach their target demographic more cost-effectively.
Covid has taken a terrible toll but it has also simulated interest in technology to address issues that would once have relied solely on people. So, it is no real surprise that 61% of respondents to our survey expect marketing technology budgets to rise over the next 12 months.
Much of that investment will come from new investors keen to access a high-growth sector. Martech fits the bill for many – it accounts for the second largest slice of marketing budgets a time when big brands are increasing media spend.
Mailchimp is probably the first martech company most small and medium enterprises have had experience of, using the platform to take their first tentative steps down the path of targeted digital marketing. Last year it was bought for $12 billion by Intuit, a stand-out deal in a blizzard of mergers and acquisition activity that had grown by 214% year-on-year by the middle of 2021.
Marketing services agencies are firmly on the radar of private equity as they go head-to-head with trade acquirers to compete for quality assets and management teams. This will extend beyond the current popularity of digital and data-driven agencies to specialists in sub-sectors such as influencer marketing, design and customer experience.
There is also likely to be a greater level of speculative investment around emerging sub-sectors such as voice and omnichannel – e.g. systems that track what customers are thinking, make sure brands are present on the channels they choose and gather data from these channels.
However, investors must also be aware that there are as many challenges as there are opportunities in this evolving sector.
The big tech players are placing huge bets on structural change to the web itself as physical and virtual spaces combine. Mark Zuckerberg recently announced Facebook’s intention to create a metaverse to be ‘the successor to the mobile internet’ and Epic Games completed an eye-popping $1bn funding round to invest in their vision for a social games ‘metaverse'.
For marketing, creative and communications businesses, working out how to adapt and take advantage of this added layer to daily life is already becoming critical. Today’s clunky keyboards, touch-screen phones and VR headsets will fast become obsolete, but the whole way we design for and interact with the online world will continue to evolve at breakneck speed.
This vision of the future casts the web primarily as a medium of entertainment and commerce, perfect conditions for profitable innovation and product development. Unpredictable as the future of the web may currently appear, there are many brilliant people and projects working to ensure good outcomes.
This movement will include increased regulation – it may be grindingly slow, but it is certainly coming.
Our unstructured approach to web regulation highlights the failings in the current light-touch legal framework and the dramatic implications for many businesses when platforms they rely on to operate change the rules of the game. Nowhere is that drama playing out with more seismic effect than Google’s intention to lead the elimination of third-party cookies by 2023.
Elsewhere, problems around misinformation, digital espionage and anti-trust cases are not being resolved with self-regulation. Much of martech innovation is centred on the collection, manipulation and monetisation of personal data, so intelligent appraisal of how developments such as the European Commission’s forthcoming Digital Services Act impacts future business practices is going to be vital.
As Covid has demonstrated, the emergence of new platforms and digital-first strategies can swiftly upend seemingly resilient traditional commercial models – just look at cinema, for example.
What is encouraging, as ever, is the innovation that follows in the wake of such painful shifts. That has left the media, marketing and tech landscape being redrawn in the internet’s own image – that of relentless change.