A Google Hangout with Eric Picard, CEO of RareCrowds; Chris Scoggins of Datalogix; Andy Monfried, CEO of Lotame; and Chris O’Hara, author of Best Practices in Data Management. Hosted by Stefan Tornquist of EConsultancy.
Today data is like water: free-flowing, highly available, and pervasive. As the cost of storing and collecting data decreases, more of it becomes available to marketers looking to optimize the way they acquire new customers and activate existing ones. In the right hands, data can be the key to understanding audiences, developing the right marketing messages, optimizing campaigns, and creating long-term customers. In the wrong hands, data can contribute to distraction, poor decision-making, and customer alienation. Over the past several weeks, I asked over thirty of the world’s leading digital data practitioners what marketers should be thinking about when it comes to developing a data management strategy. The result was the newly available Best Practices in Data Management report. A few big themes emerged from my research, which I thought I would share:
Welcome to the First Party
Digital marketing evolves quickly but, for those of us working as digital marketers or publishers for the past 10 years, we have seen distinct waves of transformation impact the way we use data for audience targeting. Early on, audience data was owned by publishers, who leveraged that data to control pricing for premium audiences. The Network Era quickly supplanted this paradigm by leveraging tag data to understand publishers’ audiences better than the sites themselves. Buying targeted remnant inventory at scale created new efficiencies and easy paychecks for publishers, who found themselves completely disintermediated. The DSP Era (which we are still in) continued that trend, by completely separating audiences from media, and giving even more control to the demand side. Today, the “DMP Era” promises a new world where publishers and advertisers can activate their first party data, and use it for remarketing, lookalike modeling, and analytics.
The ubiquity of third party data (available to all, and often applied to the same exact inventory) makes activating first party data more valuable than ever. Doing so effectively means regaining a level of control over audience targeting for publishers, and being able to leverage CRM data for retargeting and lookalike modeling for the demand side, as well as a deeper level of analytics for both sides. If there has been one huge takeaway from my conversations with all of the stakeholders in the data-driven marketing game, it is that getting control and flexibility around the use of your own first-party data is the key to success. As a marketer, if you are buying more segments than you are creating, you are losing.
The New Computing Paradigm
In order to successfully activate all of the data your company can leverage for success takes a lot of work, and a lot of advanced technology. Whether you are a publisher trying to score audiences in milliseconds in order to increase advertising yield, or an advertiser attempting to deliver a customized banner ad to a prospect in real-time, you need to store an incredible amount of data and (more importantly) be able to access it at blazing speeds. In the past, having that capability meant building your own enormous technology “stack” and maintaining it. Today, the availability of cloud-based computing and distributed computing solutions like Hadoop has created a brand new paradigm or what former Microsoft executive and current RareCrowds CEO Eric Picard likes to call the “4th Wave.”
“Being a Wave 4 company implicitly means that you are able to leverage the existing sunk cost of these companies’ investment,” says Picard. That means building apps on top of AppNexus’ extensible platform, leveraging Hadoop to process 10 billion daily transactions without owning a server (as Bizo does), or simply hosting portions of your data in Amazon’s cloud to gain speed and efficiency. As digital marketing becomes more data intensive, knowing how to leverage existing systems to get to scale will become a necessity. If you are not taking advantage of this new technology paradigm, it means you are using resources for IT rather than IP. These days, winning means applying your intellectual property to available technology—not who has the biggest internal stack.
Social Data is Ascendant
One of the most interesting aspects of data management is how it is impacting traditional notions of CRM. In the past, digital marketing seemed to end below the funnel. Once the customer was driven through the marketing funnel and purchased, she went into the CRM database, to be targeted later by more traditional marketing channels (e-mail, direct mail). Now, the emergence of data-rich social platforms had actually created a dynamic in which the funnel continues.
Once in the customer database (CRM), the post-purchase journey starts with a commitment beyond the sale, when a consumer joins an e-mail list, “friends” a company’s page, follows a company’s Twitter account, or signs up for special offers on the company’s site. The next step is an expression of social interest, when the consumer agrees to make public his “like” for a company or brand by “friending” a company’s page, following a company’s Twitter account. Beyond the “like” is true social activation, wherein the consumer actively (not passively) recommends the product or service, through commenting, sharing, or other active social behaviors. The final step is having the consumer sell on your behalf (directly via affiliate programs or, in the softer sense, as a “brand ambassador”). This dynamic is why Salesforce has acquired Radian6 and Buddy Media.
For digital marketers, going beyond the funnel and activating consumers through social platforms means understanding their stated preferences, affinities, and that of their social graph. Most companies already do this with existing platforms. They real key is tying this data back into your other data inputs to create a 360 degree user view. That’s where data science and management platforms come in. If you are not ingesting rich social data and using it to continually segment, target, expand, and understand your customers, you are behind the curve.
A “platform” is a system that can be programmed and therefore customized by outside developers — users — and in that way, adapted to countless needs and niches that the platform’s original developers could not have possibly contemplated, much less had time to accommodate. – Marc Andreessen, 2007
Last week’s news of the merger between DDS and MediaBank was certainly exciting. In digital media management terms, it’s kind of akin to rooting for the Yankees; only their fans want to see them grow more powerful, because it sure ain’t good for baseball. These two behemoths have been fighting over agency budgets for the last four years, and have managed to steal a bit of market share from one another, while advancing the cross-media efficiency agenda slightly. The stated hope for this merger is that the corporate combination will give them enough firepower to finish the golf swing and solve the insanely complicated digital media puzzle, making cross media management possible in a real way.
Is this merger good for the digital media ecosystem? Maybe. Here are the three factors that will determine whether MediaOcean will become the digital media industry’s defacto system:
Standards are good: First off, it helps when everybody is reading from the same sheet of music, and there isn’t an industry that hasn’t benefitted from a common, accepted set of standards. The IAB has done a great job in terms of helping standardize ad sizes and out clauses, and some of the systems and procedures that help oil digital business transactions. An argument could be made that having 80% of agency dollar volume running through the same system brings efficiencies to the entire media buying landscape, but I’m not sure anyone in the industry would say that this was the case when DDS had larger market share.
For digital marketers, a significant hassle has been bill/pay and reconciliation, and that has been an area of focus for DDS and MediaBank across digital and traditional media. There is no doubt they can help standardize the process by which advertisers and publishers reconcile delivery even just by being the largest player – they can bring a de facto standard to bear, but how quickly can they really react to a rapidly evolving space with myriad nuances in ideal workflows for almost every customer? If they can change their DNA, they will be a force to be contended with.
— Platforms are good: Secondly (and most importantly), the right approach to solving this problem is an open platform approach. But none of the leaders in this space have shown any predisposition for opening things up. This is in large part because the technology landscape has evolved so fast that the legacy companies haven’t been able to adapt their systems to keep up. The market needs an open, extensible platform approach to solve its numerous problems, the question is can any of the existing leaders in the space, including MediaOcean, provide that?
My colleague, Eric Picard, learned about the power of platform effects while working at Microsoft over the last several years. He recently educated me on the varieties of platform approaches that could be taken in our space, and has offered to let me publish that here:
* Systems vs. Platforms: The first thing to discuss is that most companies in our space have built systems – not platforms (despite everyone using the word platform for everything.) A system simply exists on its own, is proprietary and closed – it doesn’t allow third parties to build on top of it. This describes almost all the offerings in our industry today.
* Simple Platforms – or Mashups: Most of us have experienced a ‘mashup’ in one shape or another by now. This is where a tool or web site is built that calls to numerous remote services (APIs or Web Services) to build one cohesive interface. In this case, the platform is really all the multiple different systems used ‘behind the scenes’ to create one simple application that you could use. Many web sites use this technique, using various content management systems, ad servers, etc… A lot of the SEMs and DSPs use this approach, building their own interface that hits each of the Paid Search providers or Ad Exchanges via API.
* Consumable Back-End Platforms: Lots of companies now offer API access to their systems. This kind of ‘back-end’ access is then used by third parties to ‘mash-up’ the functionality with either their own or other third party functionality. AppNexus, Right Media Exchange, Atlas, DoubleClick, and numerous others provided this kind of back-end access by API. Some of the more sophisticated providers, like AppNexus and RMX even enable third parties to extend their functionality to some degree – but they don’t make that extension generically consumable.
* Ecosystem-like Platforms: A great example of this is Salesforce.com – which has built out a platform that really begins to live up to the market opportunity that the industry should be looking for. Salesforce enables numerous services that can be consumed, like the platforms and mashups we discussed above. But they also let third party vendors come in and extend the functionality of the core Salesforce platform. They even provide an App marketplace, similar to iTunes, that allows third party vendors to distribute their applications to existing Salesforce customers. This is a powerful approach, but requires a whole new set of skills that most companies in the ad technology space are not quite able to pull off.
Within this overall context of platforms verses systems, you can see the variety of approaches being taken by the various parties in the ad ecosystem:
Google offers third parties APIs to write against, but keeps the vendors playing in the search ecosystem on their toes by frequently changing the APIs, and it’s fairly clear that their goal is to be both the platform and the applications that run the advertising ecosystem. They support third parties, but only as it furthers their end-game.
The ad servers understand that their value is in the engine, much more-so than their workflow. And they’ve opened up APIs to let other workflows plug in and become mashups that ultimately are powered by the smarts of the ad servers behind the scenes.
Donovan Data Systems has brought one mashup workflow to market, their iDesk product. It interfaces with DDS’s other applications fairly well, and can integrate with the dominant ad servers. MediaBank has done somewhat similar things with their application suites, but has taken a more “Google-like” approach when it comes to their business – investing in their own DSP and automated media buying systems. This investment in products that compete directly with the very vendors that would need to integrate into the combined system causes me to pause a bit.
At the end of the day – it’s hard to understand who might have the right DNA among these constituents to actually roll out the right platform to solve the industry’s needs.
–Creativity is good: Finally, I think a development like this is excellent, if it actually creates an environment that transforms where digital media people spend their time. Right now, digital agencies spend most of their time and effort trying to wrangle an “ecosystem” of nearly 300 technology, data, and media providers. They spend the bulk of their time trying to execute media plans, rather than coming up with creative strategies to engage consumers. The mess of systems, lack of standards, multiple log-ins, and unmanageable hoards of data that each system throws off has created the ultimate irony: digital media is becoming the least creative, least profitable, and least measurable channel for marketers. If the merger brings us one step closer to making the digital execution piece easier, and gets the conversation back to creative, than I think it’s a step in the right direction.
After being out in the field, and talking to over 400 agencies about their digital media needs, I know that a standardized platform is what everybody wants. Whether or not MediaOcean is going to be nimble and creative enough to deliver a system that meets the needs of our growing ecosystem is very much in question. Technology has always thrived on choice, flexibility, and open standards. I believe that the company that can deliver on all three will end up winning.
[This commentary appeared in Adotas on 9/29/11]