Help for Marketers
Adtech solutions have been simplified through the years, as Google and Facebook have become the dominant duopoly. Their platforms make it very easy for marketers to spend money and track the effectiveness of that spend. The result is that ad spending has become part of “cost of goods sold” – thus enabling brands to scale up spending for new customer acquisition. Acquisition budgets have had limits slashed as each new customer’s cost and RoI can be tracked. It is possible to pay not just based on a click but for a form fill, transaction or an app install. Digital agencies have facilitated this shift to performance marketing. The efficient supply chain for new customer acquisition gobbles up 80-90% of marketing spends.
Martech is a different world. Customer retention and growth is much harder. Converting the lead to first transaction, persuading the new customer to a second purchase, and then working to create loyalty to maximise lifetime spending – all of this is very hard work. It is also messier – with many point solutions solving lots of different problems. Data gets siloed and integration costs rise. The dream of a single customer view remains distant. And by the time someone in the marketing department gets it, attrition strikes and a new replacement begins the learning journey afresh. As a result, the martech side budgets have stayed small – a fraction of the adtech spends. It is so much easier to hand over money to an agency for a new acquisition than to get into the guts of retention and cross-selling.
And yet, the future success of brands will be determined not by new customer acquisition but by scaling retention and growth. In a world gone by, all one needed was branding and distribution. But the digital world is very different and demands granular actions. Few CMOs are ready for this – because the skill sets skew more digital than creative. Luckily, help is coming.
The first generation of martech solutions were point solutions – solving very specific problems. Marketers adopted these and got some help. But this created the baggage of fragmentation of customer data and spiraling spends on connectors to glue disparate systems together for the elusive unified customer view. The next generation of martech solutions are solving these problems by creating a full stack digital experience platform – transforming the trees into a forest.
The second level of assistance for marketers will come from the emergence of a new type of agency – the “progency” (product-led agency). The progency will build on proprietary martech platforms to provide the same performance-level outcomes that marketers are familiar and comfortable with. Such an agency will have deep knowledge of the martech platforms with skillsets encompassing analytics, software, machine learning, visualisation, and story-telling. The playground for such an agency is the vast pool of data that is generated by every customer action. The progency will drive specific business objectives along the customer journey: move the customer from the first to second transaction in 30 days, cross-sell a new category, reactivate a dormant customer, drive referrals from a best customer, and so on. Each will be measurable and thus can be compensated as a percentage of the benefit accruing to the brand. This will shift spending based on messaging units (emails or SMSes sent) and platform fees (based on monthly active users) to performance – just like the world of adtech. The compact with the progency: deliver tangible upside and get rewarded.
The full stack solution and progency will be the twin foundations marketers and CEOs need for their brand – leaving them with time and money to focus on other aspects of the business to create the “profipoly”.