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.
