Over the past decade, every aspect of our global
economy has been touched by the disruptive force of digital innovation, even if
the degree of impact has varied by industry and market. Focusing just on
marketing, we see that Marketing Technology (MarTech) has already improved the marketing
services value chain in dramatic ways. MarTech innovation has transformed demand
generation, audience creation, targeting, consumer conversion, and customer retention
activities.
How will new MarTech innovations impact the
marketing services industry? The winding road of disruptive innovation makes
trend spotting tricky, but there is ample evidence the following four trends
are reaching a tipping point and will have a lasting impact.
1. Performance-based fee structures will become the norm, even for insights companies.
Advertising technology innovations
have facilitated the volume and velocity of digital advertising. Concerns remain
among marketers about the quality of impressions and the ability to reach
intended audiences. In response, MarTech solutions are improving advertising
efficiency through granular audience definitions, effective audience targeting and
offer delivery at the time of the purchase.
New solutions are also tracking
consumers through an entire product purchase journey. This allows brands to “close
the marketing loop” and determine the impact of their activities. The
availability of granular ROI metrics is also raising marketers’ expectations. Their
logic is simple: if new targeting solutions are as good as claimed, and we can accurately
measure ROI, then let’s pay our providers for performance and not promise.
Performance-based pricing demands
are most often made of traditional advertising agencies or marketing enablement
agencies. However, research suppliers are not immune, particularly those providing
marketing mix and optimisation solutions. A few research suppliers have already
embraced this sensibility and have an outcome-based fee structure.
Bottom line: As ROI measurement improves, so will the call for performance-based
supplier fees.
2. The cost of research will decline, but the industry has an opportunity for margin capture.
Emerging MarTech solutions
– most notably Customer Data Platforms (CDPs) – are rushing to integrate and commercialise
an array of digital data streams. By harnessing a company’s disparate data streams
combined with easy-to-use analysis tools, CPDs are promising marketers the
ability to answer important business questions without conducting research. Even
if survey research does not go completely away, there will be an increasing
number of situations where CDPs will replace primary research. This development
will impact the research industry in two ways.
First, as CDPs improve and
adoption increases, research suppliers will lose revenue from clients’ bringing
projects in-house. In response to this threat, suppliers are building their own
data assets and analytic platforms. In doing so, they are creating a second
challenge – managing a changing business model.
Today, research projects are
typically costed by suppliers with a ‘cost plus margin’ philosophy (data collection
+ consulting time + margin.) The lack of
data collection costs, combined with new recurring technology costs not easily allocated
to single projects, makes ‘cost plus margin’ pricing sub-optimal for data-first
solutions. There is some urgency as CDP providers use a “software as service”
(SaaS) model, putting further pressure on suppliers that generate a large part
of their revenue via project-based assignments. Within this threat, however, lies an
opportunity for suppliers to boost margins, provided they rationalise their
costs and can convince clients of the unique value added by their analytical
and advisory services.
Bottom line: Revenue and margin disruption has arrived, and suppliers need to
make a quick strategic pivot in their offerings and accompanying pricing
strategy.
3. Innovations in biometric measurement will drive the creation of an emotional measurement currency for marketers.
While CDP analytics will
substitute for primary research in a variety of situations, there will be a
continued need for fast and reliable methods to anticipate and forecast
market reactions to marketing messages, advertising and advertisements,
as well as new innovative product or services. MarTech is playing a role here,
as well, introducing new innovative methodologies for conducting primary
research.
Once the province of defense
contractors, facial recognition technology has improved dramatically in ease of
deployment and scalability. Most interesting is the development of algorithms using
facial recognition data to determine emotional reactions to stimuli. These algorithms
are being used to test the emotional connections marketers are trying to create
via potential marketing messages and advertisements. This technology is being
used in the product innovation process, assessing emotional reactions to new
concepts as an unbiased way of identifying products that will be successful in
market.
Emotional biometrics have the added benefit of being passively collected. This
measurement technique directly addresses criticisms frequently leveled at
survey-based research: that long surveys with repetitive, stated preference
questions often yield little discrimination and tax respondents’ good will.
Bottom line: Emotional metrics tap consumers’ emotional reactions to marketing
stimuli in a quick and painless measurement methodology, creating more robust
and discriminating insights.
4. MarTech Innovation in Market Research = fewer people with different talents.
MarTech innovation is also
focused on automating the survey research delivery chain – from sample design
and sample sourcing, to questionnaire scripting and data processing, to analysis
and reporting.
In the past, larger research
suppliers achieved margin improvements by centralising operational tasks in
lower-cost markets. The next big wave of cost savings will come from the introduction
of technology that re-engineers and automates survey-based data collection. Re-engineering
workflows is not glamourous, but it is an imperative as clients demand faster project
turnaround and high-quality insights — all at a lower cost. The drive towards
workflow automation will inevitably lead to significant reductions in research
operations teams.
While operations teams
will shrink significantly, AI-driven algorithms won’t do everything. Clients will continue to value the advisory
and consultative support provided by insights companies – albeit for a narrower
set of situations. In fact, advisory services are the value-add that suppliers can
claim and CDPs cannot deliver. Equally in demand will be data scientists –
individuals who can combine and analyse disparate structured and unstructured
data sets. MarTech will facilitate their work, not replace them.
There is a third talent
profile that is equally important, and one that all companies are having
difficulty finding: the data architect. Data architects have a solid grounding
in the business principles, practices and competitive dynamics of a given
industry. In addition, they have working knowledge of the complex data
landscape within that vertical. Data architects are responsible for creating
analytic “blueprints” that translate key business questions into action plans to
find answers from available data sources.
Why is the data architect
needed? Data scientists are well versed in data structures and analytic methods
but lack depth of understanding of the business context. This can lead to
overly expansive or narrow analyses with sub-optimal results. Client-facing
consultants have the business knowledge but typically don’t have enough
understanding of the data landscape. This can lead to mis-directing the data
science teams, particularly if there are multiple avenues that could be pursued.
Unfortunately, this an
emerging skill set, and architects are the new talent unicorn. As an industry,
we need to recognise this shortfall and ramp up training programs to scale this
skillset.
Bottom-line: There is an emerging talent gap that threatens the ability of
companies to deploy data-first solutions.
As MarTech evolves, and the industry
accelerates to keep pace, future innovations will follow quickly. It seems safe
to say that marketing and all its sibling industries and disciplines will once
again become unrecognisable just a few short years from now.