Overview
“Half the money I spend on advertising is wasted; the trouble is I don’t know which half.” This was a statement made by John Wanamaker about 100 years ago. And it still holds true. The modern equivalent of the first half of the statement would be: “Half the money I spend on adtech is wasted.” If marketers actually did some analysis, the second half would say: “I know exactly which half.” But few do it; most are happy to keep the spending going on Big Tech (Google, Facebook – now Meta – and increasingly Amazon) to have new customers flowing in – even if the bucket is leaky. To make matters worse, almost every marketer is worried about the rising cost of customer acquisition. All of this hurts profits. The day when easy money stops is when marketers and CEOs will need to face up to the harsh reality that unless they curb their ad spends, there is no path to profitability.
In this series, I will argue that for the first time it is possible to cut the waste in advertising on tech platforms. Given that the total spending in 2021 was $400 billion, this comes to eliminating $200 billion of waste being spent on reacquisition and wrong acquisition. This $200 billion is perhaps one of the biggest opportunities in tech. And yet, very little attention is paid on solving it because the focus has been in the wrong place.
The industry has been guilty of the streetlight effect: “A policeman sees a drunk man searching for something under a streetlight and asks what the drunk has lost. He says he lost his keys and they both look under the streetlight together. After a few minutes the policeman asks if he is sure he lost them here, and the drunk replies, no, and that he lost them in the park. The policeman asks why he is searching here, and the drunk replies, “this is where the light is”.”
To solve the 50% adtech waste problem, a good starting point is to remember two quotes. Albert Einstein said: “We cannot solve our problems with the same thinking we used when we created them.” Buckminster Fuller: “You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete.” These have to guide us in the search for the solution.
In my view, the solution can be found by shifting our thinking from trying to optimise adtech spending to focusing on martech and existing customer. It is only by increasing focus and spends on current customers that marketers can reduce the adtech waste. Making martech successful needs a full-stack solution encompassing CDP, automation, engagement, analytics, personalisation, search, product experience, omnichannel two-way communications, AI, APIs and more. It also needs to consider new ideas like Velvet Rope Marketing (VRM), a rethinking of how referral marketing is done, a “progency” (product-led agency), and an adtech-martech bridge. This is the world of Martech 2.0.
The new model that needs to be incorporated into Martech 2.0 is that of Web3 – a decentralised platform powered by crypto tokens to power “Atomic Rewards” – for attention, engagement, and habit creation. Only by first solving the problem of Attention Recession can marketers make Martech 2.0 work. This twin combination of Martech 2.0 and Web3 is the secret sauce that can solve adtech’s waste problem and power brands to exponential forever profitable growth.
