When you understand the drivers for change in a system, you understand the system better. That also holds true for marketing, a field that has changed tremendously over the last 40 years. From Mad Men to Math Men, the job is barely recognizable, with only a few original DNA strings like creative, copywriting and focus groups left.
Modern marketing is defined by three big drivers: performance marketing, walled gardens and trust. In order to develop the right skill sets and mental models, it’s vital to understand how these trends emerged and where they’re taking the field of marketing.
Performance Marketing
Classic marketing was almost exclusively brand marketing (except for maybe loyalty programs). The craft was about burning a story into consumers’ retinas to influence their purchase decisions and lure them into stores with coupons and offers.
Then, broadband internet came along and paved the way for the biggest disruptor the (marketing) world had seen: Google. The mix of ad bidding with freemium search results gave birth to performance marketing. Now, it’s possible to put your brand out there and target users with specific interests along their purchase journey.
Facebook also made it possible to target specific attributes and personalities. We all saw what it looks like when that is taken to the extreme in the 2016 U.S. presidential elections and following privacy scandals.
While Google allowed marketers to focus on explicit interest expressed through search keywords, Facebook took it a step further and provided a push model based on implicit interest.
Facebook and Google own a majority of the digital ad market, but a flourishing contender, Amazon, started competing for bigger pieces of the pie. The popular e-commerce platform provides unique opportunities for advertisers to zoom in on one step of the classic marketing funnel that has traditionally been underserved by the others: transactions.
In 2019, Amazon’s ad revenue grew to roughly $10 billion, which is still small compared to Facebook’s $70 billion and Google’s $134 billion. However, considering Amazon’s ad business is growing 33% year over year and forecasted to approach $16 billion in 2021, the landscape is diversifying. Don’t forget that this ad revenue share is likely to take away from Google’s and Facebook’s pies.
The challenges of performance marketing are growing ad cost per click (CPC) and shrinking returns from organic reach. Marketers need to be smarter about investments and how they target customers.
Walled Gardens
When we talk about Facebook and Google in regards to advertising platforms, we also need to mention them in the context of “walled gardens,” a logical consequence of performance marketing.
Walled gardens, or closed platforms, are controlled systems that regulate the access and usage of their users and other actors. An example of this is social networks that give posts with outward-leading links less visibility.
Next to most social networks, hybrids of search engines and social networks like YouTube are also considered walled gardens. What’s more, Google is in the process of transforming from an open platform to a walled garden. While it used to send traffic to websites, it recently started to answer more searches directly.
The challenge walled gardens impose on marketers is balancing self-promotion with reach. The more aggressively marketers promote themselves or their companies on Reddit, Twitter, Instagram, etc., the smaller their reach and chances of establishing their brand. It’s a turn-off for users and might be algorithmically limited in some cases.
Facebook and Google still provide good margins and returns from advertising but work best in combination with organic reach. However, paid and organic reach take different mindsets. A great example is search engine optimization, which provides free traffic but is much more complex and unpredictable than its paid counterpart.
Trust
As a result of performance marketing and walled gardens, earning trust has become increasingly difficult but important for brands. Platforms like Yelp, TripAdvisor, Better Business Bureau, Trustpilot, Amazon and G2 provide objective reviews for buyers and have made the process so frictionless that consumers have developed the expectation of seeing good reviews before buying a product or service. When was the last time you went to a restaurant with only three stars on Yelp?
The growing number of online scams and privacy concerns only accelerates the need for trust on the internet. For marketers, it’s not just a challenge but an opportunity. Used in the right way, objective online reviews can boost sales and lead generation. They also deliver valuable insights into frustrations and expectations customers have. In a way, review platforms are modern focus groups.
What trends might shape marketing in the future?
No one can predict the future, and sometimes, innovation comes out of the blue and changes everything — just look at the iPhone. Two of the strongest contenders that might change marketing forever are influencers and regulation.
Influencers are not new, per se, but they’re rapidly gaining importance because of the content-abundant world we live in. Information has become universally accessible, which is great but also hard to process. In a world where it is more important to know the right question rather than the right answer, we look to those we trust and admire for guidance. Tastemakers, curators and trendsetters have always existed, but they impact our decisions today more than ever.
Regulation, on the other hand, is a counterweight to free services and abundant information. It’s not just a means to protect consumers from privacy issues and markets from anti-competitive behavior, but a potential change agent because marketing has become so driven by a few big platforms. In the end, the impact will depend on how platforms are regulated (if at all).
Marketing will continue to evolve with the pace of technology. Looking back at how far we’ve come within the last 10 years, I don’t expect it to look the same in another 10 years’ time. As marketers, it’s important to stay on top of the latest trends so we can jump on opportunities as they arise.