Thinks 465

Quantum gravity sensor opens window into world beneath our feet: from FT. “New device can map objects hidden underground, from utility ducts to archaeological remains.”

Erik Love on Email’s Successor: “A true replacement for email, one that actually allows for effective collaboration across silos. Every attempt at replacement (Slack, Teams, Zoom) has significant drawbacks (not encrypted, requires signing up for an account, time limits or other gated functionalities). Unless email can be completely replaced by a superior technology—one that can be used across different companies, workspaces, etc.—all new communications systems are added on top of email. (You want to use Teams? Great, now I have to check Teams and email. And Slack. And my text messages.) All of this just compounds the problems of siloed, ineffective and incomplete communications systems like email.”

NYT: How a Book is Made. “It started as a Word document, pecked out letter by letter at a dining room table in Connecticut. Now, it is 150,000 copies of a 626-page book called “Moon Witch, Spider King,” with a luminous cover that glows with neon pinks and greens. While digital media completely upended industries like music, movies and newspapers, most publishers and authors still make the bulk of their money from selling bound stacks of paper. Here, we will show you how vats of ink and 800-pound rolls of paper become a printed book.”

Martech 2.0 and Web3: Solving Advertising’s 50% Problem (Part 7)

The Solution – 2

It is time for marketers to not fall victim to the streetlight effect and approach the problem differently. The starting point has to be to focus on the bird in hand (existing customers) before imagining the two in the bush (future customers).

The new agenda for marketers (and CEOs) need to be the following. Think of the attention of customers as the starting point rather than focusing on transactions. Use atomic rewards via Web3 (crypto tokens) to solve the attention recession problem and improve retention. Leverage Martech 2.0 solutions to get past the limitations of Martech 1.0 to drive repeat transactions. Use Velvet Rope Marketing to prioritise the creation of differentiated experiences for Best Customers and maximise customer lifetime value. Consider referral marketing as zero-cost acquisition. Replace reacquisition with reactivation. Use martech data to sharpen targeting for new customers to reduce adtech spending and thus reduce wrong acquisitions.

Here then are the five shifts which brands need to make:

  1. Retention: shifting focus from transaction to the upstream (attention, engagement and habit creation), to stop customers ignoring push messages and thus creating an omnichannel and persistent hotline to them
    • Solutions: Messaging 2.0 (especially Email 2.0), and Crypto Tokens (Mu)
  2. Repetition: shifting focus from ordinary/commoditised experiences for all customers to memorable/differentiated experiences for Best Customers to maximise their CLV, complemented by crypto/Web3 incentives
    • Solutions: Velvet Rope Marketing (with CDP, CLV, BCG) and Martech 2.0 full stack for Unified Customer View
  3. Referrals: shifting focus from inefficient link/code-based requests to targeted marketing which leverages network effects, thus sharply reducing cost of new acquisition
    • Solution: Referrals 2.0, and Crypto Tokens (Mu)
  4. Reactivation: shifting focus from using reacquisition via adtech platform to leveraging a new-gen martech product-led agency to reduce deactivation and drive reawakening
    • Solutions: Progency, which works on KPIs and is paid based on performance
  5. Replenishment: shifting focus to from random new acquisition to smart, high-value acquisition
    • Solution: Adtech-Martech Bridge, with use of martech data to drive targeted new acquisition

Martech 2.0 brings a connected suite of solutions for winning customers’ hearts and money for life. It is anchored on two new ideas: atomic rewards (micro-incentives for changing behaviour) and Progency (a product-led agency that works as an extension of the in-house team, and works on KPIs – just like adtech agencies). Web3 adds a crypto layer via tokens – to power pan-brand atomic rewards. The crypto tokens, overseen by a DAO (decentralised autonomous organisation), are not a property of a single entity; they are a form of value change between brands and customers, without an intermediary.

This integrated construct of Martech 2.0 and Web3 brings together ideas from loyalty, gamifying and crypto to solve the 3 biggest problems faced by brands and marketers: attention recession, limited loyalty, and a cost-effective solution for new acquisition. It is about working at a new level (existing customers instead of new customers) and a new model (using own zero- and first-party data rather than Big Tech data).

These 5 Rs are the secret to exponential forever profitable growth. My belief is that for every additional dollar spent on martech, brands will be able to shave off two dollars from their adtech budgets. The savings thus generated will help drive the profits.

Thinks 464

Tim Hartford: “Researchers and policy wonks have long studied pilot schemes such as criminal rehabilitation programmes, public health initiatives or innovative schools. They dread the familiar phenomenon of the pilot delivering sensational results, only to fade at a larger scale. This dismaying tendency was called “voltage drop” by the psychiatrist Amy Kilbourne and her colleagues in 2007. The economist John List has been exploring the causes of this voltage drop, first in a 2019 paper with Omar Al-Ubaydli and Dana Suskind, then in a recent book, The Voltage Effect.”

Bloomberg: “S&P Dow Jones Indices, MSCI and FTSE Russell. Their nondescript names mask their enormous influence. Between them, they design, calculate and manage hundreds of thousands of financial indices that steer capital around the world. In total, over $50 trillion of investor funds are benchmarked against metrics that these three entities control. Like the hedge funds before them, it’s not just companies that fall under their gaze but countries too. By setting the criteria for index membership, they act as gatekeepers, determining which countries are eligible for investment by many of those funds.”

Sherlock Holmes: “Never trust to general impressions, my boy, but concentrate yourself upon details.”

Martech 2.0 and Web3: Solving Advertising’s 50% Problem (Part 6)

The Solution – 1

The problem of rising customer acquisition spending cannot be solved by optimisation or better targeting. The solution lies in the relationships that brands build with their existing customers. Through the years, this has been given short shrift. The brand’s current customer base is taken for granted; the excitement is with new acquisition. This is reflected in the skew of marketing budgets: 80-90% of the spending is done on adtech, leaving only 10-20% on martech.

But martech’s promise comes with its own challenges. Martech is about building deep relationships with existing customers; it is about retention, growth, and cross-sell. Martech is a lot of grunt work, a daily grind for the marketing department; unlike calling up a digital agency and deciding the budget and letting them do the job of getting new customers via the adtech platforms. Martech involves getting into the trenches: collecting data from and about existing customers, segmenting the base, running a multitude of campaigns for the various cohorts, orchestrating journeys, planning how to use personalisation, mixing marketer insights with machine predictions, and delivering messages across multiple channels. Do all this and customers may still go dormant or churn.

As I wrote previously:

In the martech world, unknown customers can now be uniquely identified, thus making it possible for brands to build relationships with them. This entails anticipating their next needs, at times even before they know it. Digital is now not an afterthought but the primary engagement option. For a brand, digital equals data. The hitherto anonymous buyer is now identified. Each customer is as unique as a snowflake. Branding and push messages help in driving this 1:1 engagement – a visit to the website, or opening the app. Every action (or non-action) needs to be tracked so AI engines can further improve the experience. The endgame is omnichannel personalisation, and the bar keeps rising for this. 1-way communication channels are becoming 2-way conversational platforms. Customers want seamless movement across channels for which brands need to ensure experience continuity.

…The ideas and tech solutions are all there for brands to make our experiences better. Atomic rewards. Velvet Rope Marketing. CLV. BCG. RFM. Automation. Journey orchestration. CDP. Omnichannel personalisation. Unified customer view. Next Best Action. Nudges. Conversational AI. Permission marketing. Predictive segments. Preferred channel. QR codes. Send time optimisation. Frequency capping. Interactive messages. Identity resolution.

A new world of brand-customer engagement is possible. If only the individuals making decisions at brands saw themselves as customers at the receiving end. If only the marketing department felt the pain of poor engagement, churn and wasted money. If only the CEO or CMO started thinking like Chief Profitability Officers. If only the idea of exponential forever profitable growth starts taking root. Only when retention and growth become more important than acquisition and reacquisition. Only then will true “digital” transformation happen. Only then will our lives as customers will transition from “delete” to “delight”.

Little wonder then that marketers favour adtech over martech. But adtech has become a giant perpetual money sucking machine. CEOs are now realising it, and so are investors in consumer companies. But the current approach of trying to figure out ways to optimise the ad spends is not going to work. As Peter Drucker said, “Nothing is less productive than to make more efficient what should not be done at all.”

Thinks 463

Sridhar Krishna and Anupam Manur: “Roughly 18 million Indians turn 18 every year, of which a large majority enters the workforce. Additionally, at least 100 million people need to get out of the low productivity and low-wage “jobs” in the agriculture sector — the disguised unemployed — and move into more productive non-agriculture jobs. Finally, there’s the stock of unemployed, which amounts to roughly 200 million Indians who need a job today. These do not show up in unemployment numbers in a country where the labour force participation rate is below 42%, the lowest in comparable emerging economies. The required rate of job creation is at least 20 million each year — a target removed from the government’s subdued ambition. The consequences of a large population of unemployed youth can be drastic for India’s social fabric. Unless India creates 20 million jobs every year, we are going to increasingly witness unrest, demands for reservation, political activism, and heightened societal disturbances.”

Arnold Kling: “My experience is consistent with the view that working in profit-seeking enterprises has the highest probability of producing positive social change and the lowest probability of causing social harm. Profits and losses provide valuable feedback on how well you are serving customers with the resources that you employ. If you work at a think tank, the ultimate customers are the donors. A major accomplishment at a think tank is getting a policy proposal enacted. One can hope that this in turn produces positive social change. I think that this mechanism is less reliable than seeking to produce change in the private sector.”

WSJ: “The idea of a spontaneous order emerging from chaos may sound implausible. But in nature it is ubiquitous, from the self-organization of snowflakes and flocks of birds to the hexagonal basalt columns of the Giant’s Causeway in Northern Ireland. The chemist and philosopher Michael Polanyi, and later the economist Friedrich Hayek, pointed to spontaneous order in human affairs by stressing that markets produce an orderly system of prices and production from the chaos of the marketplace. Perhaps it is also the case that the order of language arises not from a hard-wired instinct within the genes and mind of each individual but from the cumulative result of social interactions among individuals.”

Martech 2.0 and Web3: Solving Advertising’s 50% Problem (Part 5)

Past Writings – 2

The Coming Martech Era: Driving Exponential Forever Profitable Growth: “Privacy has become the central theme across the operating systems that dominate our digital lives – Apple’s iOS and Android. Cookies are set to be banished, email trackers are being stopped, and a wall is being constructed between brands and consumers. Without first-party data and explicit permissions, personalised engagement will become almost impossible. This rapid change is creating a new world for advertisers (for acquisition of new customers) and marketers (for retention and growth of existing customers).”

The Coming Martech Era: Driving Exponential Forever Profitable Growth: “Because businesses have not built deep relationships with their customers, their customers do not listen to them. Businesses have either not captured adequate data from their customers or do not even know who their customers are. As a result, what do they do? Spend money where the eyeballs are – Google and Facebook. Both have also accumulated plenty of detailed data on individuals thus enabling sharper targeting. Even after the recent changes by Google and Apple, the reality is that the only entities that will emerge stronger are the ones who have the attention, first-party data and targeting technologies – Google and Facebook.”

Martech’s Magicians: Microns, Micronbox and µniverse: “In the race to acquire new customers, brands are overspending and wasting precious resources. Besides facing rising ad costs and acquiring low value customers, brands are also now facing the prospect of disruption in the form of the coming death of third-party cookies and privacy restraints being introduced by the adtech platforms…This continuous and spiralling spend is unsustainable and will end once easy investor money dries up … What marketers will end up with is a leaky bucket of constant churn. It is easy to spend money on Google and Facebook and get “Gooked”. What marketers need to think of is “Hooked” – how to create hooked customers who have a net retention rate of greater than 100% and who work as micro-influencers to drive referrals from their family and friends to create the exponential growth that is so central to creating a profits monopoly in the category.”

Progency for Martech: The Missing Link: “With FOMO (fear of missing out) engulfing every B2C and D2C brand, this has now become a spending war to acquire every possible digital customer before someone else does it. Easy investor money has fuelled the spiralling spends on Google and Facebook to the extent that marketing departments have become their collection agents.”

The common theme across these writings is that marketers face big future challenges with their ad spending. Unless they regain control of their marketing budgets and think differently, it is going to be very difficult for them to propel their businesses out of the doom loop and towards sustained profitable growth. This is where Martech 2.0 and Web3 come in.

Thinks 462

Swaminathan Aiyar: “It’s time India realises the economic perils of rising protectionism … Aatmanirbhar rests on two pillars: a production-linked incentive (PLI) for 14 selected industries, and a phased manufacturing programme (PMP) that raises import duties, first on finished products and then on components, to incentivise creation of a full value chain. Most successful countries have opted to become part of global value chains (GVCs), specialising in a few components and achieving global scale economies.”

Milind Sohoni: “A recent report estimates that about 8 lakh students travel abroad for higher education every year and spend $28 billion or 1 per cent of our GDP on this. Of this, about $6 billion are fees that go to foreign universities. This is about Rs 45,000 crore, which is adequate capital to start and run 10 new IITs, IISERs or JNUs or any such elite institution every year. And yet, by the recent CAG report, the eight new IITs started in the period 2008-2009 are not doing well at all. The clutch of new private universities too has not managed to dent the above exodus of students and wealth. Thus, even after 70 years of Independence, and the last eight years of vigorous policy initiatives, we neither have aatmanirbharta nor a value proposition in higher education. Why is that?”

Maya Angelou: “We write for the same reason that we walk, talk, climb mountains or swim the oceans — because we can. We have some impulse within us that makes us want to explain ourselves to other human beings. That’s why we paint, that’s why we dare to love someone- because we have the impulse to explain who we are. Not just how tall we are, or thin… but who we are internally… perhaps even spiritually. There’s something, which impels us to show our inner-souls. The more courageous we are, the more we succeed in explaining what we know.” [via Shane Parish]

Digital Dialogue with Prasad

My conversation with Prasad Shejale at “Digital Dialogue with Prasad.” I spoke about my journey as an entrepreneur in IndiaWorld and Netcore Cloud. We also discussed how the coming decade will see big spending shifts from adtech to martech. And we ended with a rapid fire round.

Thinks 461

Anticipating the Unintended: “A more fundamental question on public finance that doesn’t get covered is this. Who does the money belong to? I mean, of course, it belongs to the government. But where did it get this money from, to begin with? I guess the simplistic answer is it earned money from providing services to its citizens and taxing them for it. Then it built up the surplus, invested the money in creating assets that generate good returns, improved the productivity of the citizens that in turn helped in increasing revenues and this continues nicely so long as it keeps its expenses below its revenues. As we see all around this isn’t as easy for any government. Over time it spends more than it earns and creates a deficit. Then it goes into debt to bridge this gap. If that isn’t forthcoming, it prints more money. All of which is like taking a loan from future generations. And this sort of a giant Ponzi scheme of borrowing fresh money to pay past debt continues. Someone will be left holding the can in distant future. But who cares.”

Shane Parish: “When people seem uncommonly disciplined, look for a powerful ritual hiding in plain sight. It’s not that they have more discipline than you or I, but they were able to turn that discipline into consistency with a ritual. Short-term results come from intensity but long-term results come from consistency. Turning intensity into consistency unlocks a powerful asymmetry.”

Shashi Shekhar: “Perhaps, we Indians are content by nature. During this visit [to Moradabad in UP], I met those who became jobless and were forced to leave their place and craft. They are unhappy, want to change the situation, but do not want to get rid of the shackles of religion and caste while voting. They know that polls are the key to making a change, but they are reluctant to use them. They do not think they can use their economic status to change their social existence. This is nothing less than a boon for the leaders. Instead of giving the report card, they find it easier to mislead them with slogans. Is it suicide for your political career to make the lives of others easier? I have asked this question many times, and each time, a confused silence is there before me. When will this confusion end?” Sagarika Ghose: “The voter does not get to access any new political talent and does not have any new choices available to her because in every election it’s the same cast of characters with a degree of ideological convergence, an endless rotation of the same ruling elites. The political space drastically shrinks and younger, newer energies find it near-impossible to get their foot in the door.
When new forces do emerge…every effort is made to keep them out. The closed club of politicians, who are the majority, wants to keep the gates shut. Startups and disruption are buzzwords in the economy. But political startups are very difficult to set up and very tough to run.”

Economic Times on Netcore’s Future Plans

Economic Times had a story on Netcore’s forward looking plans around acquisitions and IPO:

Netcore Cloud will start the process of making filings for its Initial Public Offering (IPO) in two months, Rajesh Jain, the founder and group managing director of the bootstrapped Software as a Service company, told ET.

The firm is also looking to make several acquisitions, including one upwards of $100 million and multiple smaller ones, in its bid to widen its software offerings ahead of the IPO in the first quarter of the next calendar year.

Jain said the company was focusing on product analytics, customer data platforms, email intelligence and loyalty for the acquisitions. These segments have drawn large investments as digital businesses scout for software that can give insights into customer behaviour.