Solving the $200 Billion AdWaste Problem: “Brands spend $400 billion a year on digital advertising. Most of this is spent on new customer acquisition. The biggest beneficiaries of the advertising spend are the Big AdTech firms like Google and Meta, and increasingly Amazon and Tiktok. Brands are in a competitive race to acquire new customers and Big AdTech acts as the gatekeepers to digital customers. Attention is auctioned as clicks cost increasingly more each year. For many brands, the CAC (customer acquisition cost) has been rising 40-50% annually. And yet, brands feel they have little or no choice but to continue spending because they have few alternatives to reach out to new digital customers. The result: brand profits are taking a hit, and Big AdTech amasses even more power with their profits…For martech companies, the $200 billion AdWaste can become the new pool of money which multiplies their TAM (total addressable market). Today, most martech companies play in the 10% spending pool (about $50 billion). Newer solutions can substantially expand the available market. But to do this, it is not about adding new features to the martech stack but about taking a very different approach with a fundamentally new insight: attention and data are upstream of transactions, and “Atomic Rewards” (micro-incentives) can help marketers get more attention and data. In other words, persuade marketers to pay their existing customers rather than Big AdTech.”
Digital Marketing and its Discontents and Disruptions: “Digital Marketing too is facing threats from two sides: new customer acquisition and existing customer retention. CAC (customer acquisition cost) has been rising rapidly while competition for a brand’s existing customers combined with attention recession is forcing marketers to offer discounts and coupons to lure them back. Both are hurting profitability and creating angst amongst business leaders: how to ensure continuing growth amidst these twin challenges of increasing costs and decreasing loyalty? … Digital marketing needs a disruption…This is marketing’s future. Earned Growth (a metric based on revenue growth from existing customers and new customers coming in via referrals) should be the North Star Metric for marketers. Email 2.0, Loyalty 2.0, Martech and Velvet Rope Marketing 2.0 are the four horsemen to lead marketers into this new world of exponential forever profitable growth.”
Even as marketers need to shift spending from adtech to martech, they also need to migrate from Martech 1.0 and Martech 2.0. Here is a chart that outlines the transition they need to do:
It is with this background that I think of 4PO – profitability, personalisation, predictions, progency and omnichannel – as the defining trend for martech in 2023. Profitability can only come about with the elimination of AdWaste, personalisation needs data, predictions will be driven by AI, progency combines product with agency-like services, and omnichannel is the hallmark of today’s customer.