Wednesday, September 07, 2016

Will Marketing Technologists Kill Martech?

I’ll be giving a speech next week on the evolution of marketing technology, which doesn't follow the path you might think. The new channels that appear on a typical “history of marketing timeline”, such as radio in the 1920’s and TV in the 1950’s, didn’t really trigger any particular changes in the technology used by marketers: planning was still done on paper spreadsheets and copy was typed manually up to the 1970’s. Similarly, marketers up that time worked with the same data – audience counts and customer lists – they had since Ben Franklin and before.

It was only in the 1960’s, when mailing lists were computerized, that new technologies begin to make more data available and marketers get new tools to work with it. Those evolved slowly – personalized printing and modern campaign managers appeared in the 1980’s. The big changes started in the 1990’s when email and Web marketing provided a flood of data about customer behaviors and vendors responded with a flood of new systems to work with it. But it wasn't until the late 2000’s that the number of vendors truly exploded.

I can’t prove this, but I think what triggered martech hypergrowth was Software-as-a-Service (SaaS). This made it easy for marketers to purchase systems without involving the corporate IT department, allowing users to buy tools that solved specific problems whether or not the tools fit into the corporate grand scheme of things. Major SaaS vendors, most notably, made their systems into platforms that provided a foundation for other systems. This freed developers to create specialized features without building a complete infrastructure. Building apps on platforms also sharply reduced integration costs, which had placed a severe limit on how many systems any marketing department could afford. Easier development, easier deployment, and easier acquisition created perfect environment for martech proliferation.

But every action has a reaction. The growth of martech led to the hiring of marketing technologists, as marketing departments realized they needed someone to manage their burgeoning technology investments. That might seem like a good thing for the martech industry, but it introduced a layer of supervision that restrained the free-wheeling purchases that marketers had been  making on their own. After all, the job of a martech manager is to rationalize and coordinate martech investments, which ultimately means saying “no.”

The quest for rationalization leads to long-term planning, vision development, architecture design, corporate standards, and project prioritization: all the excellent practices that made corporate IT departments so unresponsive to marketers in the first place. The scrappy rebels in martech departments hear the call of order-obsessed dark side and find it increasingly hard to resist.

And it only gets worse (from the martech vendor point of view). As marketing technologists discover just how many systems are already in place, they inevitably ask how they can make things simpler. The equally inevitable answer is to buy fewer systems by finding systems that do more things. This leads to integrated suites – marketing clouds, anyone? – that may not have the best features for any particular function but offer a broad range of capabilities. When the purchase is made by individual marketers focused on their own needs, the best features will win and small, innovative martech vendors can flourish. But when purchases are managed by the central martech department, integration and breadth will weigh more heavily in the decision.  This gives bigger, most established firms the advantage.

In short, martech today is at a crossroads. Martech managers can follow the natural logic of their positions, which leads to greater centralization, large multi-function systems, and increasingly frustrated marketers. Or they can retain their agility and support new, innovative martech vendors, recognizing that near-term efficiency will suffer. Put so starkly, it’s obvious that agility is the better choice, and there is plenty of discussion in the industry of how to maintain it. But the dark side is powerful, relentless, and seductively rational. Martech managers – and the marketers they ultimately serve – must tread carefully to stay on the right path.


Unknown said...

David, I agree with the landscape that you describe as the backdrop, the question is how do businesses adapt?

I see the key decision for marketing leadership as: Where does the MarTech know-how come from, to drive the right decisions for the business? Three options:

#1 - Hire in-house resources, but that means recruiting and retaining them, and I've seen significant disruption in businesses when these specialized resources move on to new roles.

#2 - Agencies. This will work for large enterprises, but the mid-market may struggle to justify this expense, when, to David's point, they are already paying more for MarTech tools than ever before. And the constant struggle of agencies is proving they align to the goals of the customer (and not time & materials).

#3 - Identify key MarTech ecosystems to be part of, with *trusted* vendors who not only provide the MarTech but provide the know-how to be successful. This could be a single vendor, but MarTech is so expansive most likely it will be 2-3 vendors in key areas, e.g. your marketing automation ecosystem, your content production ecosystem, and your automated integrations ecosystem to name three.

Nikhil Prabhakar said...

David, as always a great post again. Being in the trenches I will 100% agree with the dark side. I meet with vendors on a weekly basis and they are trying to do the same what 10 others are already doing with probably 1-2 main differences. Are these differences much needed by the marketers or some technologist thought it will be good to have? In most cases I don't find a huge difference in overall value props. In few cases I have seen vendors altogether changing their products over a period of 1-2 years are they still don't know what they are solving. Unfortunately few started those companies after looking at the boom of MarTech and not to fulfill a need of industry.

Another thing that worries me this the sustainability of pace at which the MarTech vendors numbers and investment is growing. As per me the MarTech bubble is growing too fast and it will burst atleast once before it continues into its next solid growth phase with limited number of companies and far more mature products. The only thing that will make it burst is the dark side that you have explained so well.

Currently we are handling this situation with a hybrid approach in handling this dark side.
1) All our technology purchase is initiated and based on strong business needs and not due to our desire to buy the next shiny thing.
2) We do pilot projects with most of our vendors to test the product, vendor's willingness to partner in long term and ROI of investment (if we make)
3) All selections are lead by MarTech but all the scoring is done by marketers or the end users of the system.
4) We are taking more time than normal to ensure that we are not missing on most of the items.
5) IT, legal and many other departments are key partners in all our technology procurement.
6) We listen to all many research forms on their recommendations but we lead it with our business need
7) We don't lean towards any big MarTech companies and get sold on their sales pitch that everything is well integrated across all their acquisitions.
8) and many more..

Eventually time will tell if our approach is right :) but it has been working very well for us,

David Raab said...

Hi Rohit. Thanks for describing your process. It's where I hope most companies will end up: striking a reasonable balance between flexibility and control. The right mix will probably be different for different organizations, but I'd say either extreme (let the marketers do whatever they want, or tell the marketers what have to do) is a bad idea. It's interesting that you didn't mention any sort of long-term architecture planning or vision -- is that part of your approach?

David Raab said...

Thanks Zak. I think that as a practical matter, most companies will pick a major platform vendor for things like marketing automation and then be largely limited to products within that vendor's ecosystem. This has some dampening effect on innovation, since it makes it harder to replace the core platform and app developers can only sell to the users of whatever platform(s) they are compatible with. This definitely leads to the "less martech" direction I mentioned in the piece. In theory, there's an alternative of using a separate data layer (e.g. customer data platform) that is compatible with multiple ecosystems, but I'm not sure how many companies will place enough value on flexibility to go the effort of adopting this approach. My heart is with the rebels but it does seem the empire is likely to win.

Nikhil Prabhakar said...

Hi David, Yes we are highly invested in long term vision. We continuously update our long term roadmap based on the changing circumstances, business needs and MarTech landscape.