Tuesday, March 18, 2014

The Rise of Marketing (Technology)

by Dan Freeman 
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Digital Marketing ManThe abundance of marketing technology companies was described by Scott Brinker in last month’s illuminating post, What if 1,000+ marketing technology vendors were the new normal? The post tackles the rise of marketing technology mostly from an IT perspective. It’s tough to summarize 4,000 words but, as I understood it, the thrust of the argument goes something like this:  First, the rise in SaaS or cloud computing made it much cheaper to start new software ventures, and much cheaper (and less risky) for consumers to purchase. Second, unlike say, traditional manufacturing firms, where economies of scale rule the day, in software firms where success depends on rapid innovation, there are actually diseconomies of scale. Larger, entrenched customer bases, compounded by more management/organizational layers make change more difficult. Hence, we now have 1,000 plus firms broadly categories in the marketing technology sector.

I’d like to add to Scott’s analysis, but from a different perspective: the rise of marketing itself. After all, the notion of cloud computing and diseconomies of scale can be applied to any of the corporate functions—finance, HR, operations, etc.—yet it has been marketing alone that has sprouted this cornucopia of technology offerings. Advertising, and more generally marketing, has been in the throes of transformation for decades, or what the economist Joseph Schumpeter called ‘creative destruction’. To understand it, think of marketing way back…before Social Media, before Google, even before email and the World Wide Web. Content was largely created by a few big ad agencies (think Don Draper) and pushed to consumers. Of course we still have ad agencies doing big TV campaigns but that’s far from the full story.  The Internet browser—Mosaic was the first—made content available to the masses and also spurred a content revolution. Wired magazine described the breakthrough in October 1994:
“With Mosaic, the online world appears to be a vast, interconnected universe of information. You can enter at any point and begin to wander; no internet addresses or keyboard commands are necessary. The complex methods of extracting information from the net are hidden from sight. Almost every person who uses it feels the impulse to add some content of his or her own. Since Mosaic first appeared, according to the NCSA, net traffic devoted to hypermedia browsing has increased ten-thousandfold.”
With content vastly more accessible, a virtuous cycle of content creation and sharing was born. And it’s the exponential growth in content that is at the heart of the rise of marketing.  Google (and its predecessors) have transformed marketing from what was largely a top down, indiscriminate, push of content from a few large agencies, to a much more efficient, bottom up, pull from hundreds of millions of consumers via Internet search. That’s how Google has gone from start-up in 1998 to a $400 billion (last I checked) company 16 years later. Of course we still push content, but at a fraction of the cost through Internet advertising and email marketing, and it’s aimed at intricate demographic and behavioral segments, and individuals that are far more likely to purchase.

The vast bulk of content today is created bottom-up, through websites, blogs, and social platforms. Today (these figures will be outdated almost as fast as you read this) there are over 920 million websites, 40 million WordPress blogs (just 1 of many blogging platforms), 150 billion emails sent per day (yes, that’s billion with a “b”) 500 million daily Tweets, and 4.5 billion Facebook Likes—the ‘Like’ being the ultimate in abbreviated content. And then, there’s mobile content…there are over a billion smart phones and over a million apps in the iPhone catalog.

Add to the proliferation of content, the exponential growth in digital interactions, and now marketing has become more data intensive than Wall Street—hence the acquisition of marketing software firms by tech giants like IBM, Oracle, Microsoft and Adobe.

The transformation of marketing is represented both by meteoric rise in content and the ability of marketers to interact with that content. The primary challenge of marketing today—and the focus of many of today’s marketing technology firms—is managing the proliferation of content and interactions, and harnessing this data to put relevant content in the hands of customers and prospects so that products can sell themselves, or, in the case of B2B, at least do the bulk of the selling work before a hand-off to sales is made.

To the extent that marketing technology firms can help marketers in this gargantuan effort—streamlining content creation, distributing across multiple channels, attracting web surfers, capturing leads, segmenting prospects, quantifying and responding to digital interactions, etc.—they will continue to proliferate.

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Marketing Growth Strategies LLC has been engaged in research, analysis, lead generation, and client implementation in the Marketing Automation sector since 2009 and has recently revised its highly successful 2014 Marketing Automation eBook.

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Monday, March 10, 2014