451 Research recently launched a comprehensive report "The CMO Toolkit" that analyzes the shape and dynamics of the Digital Marketing industry. Within it we established our view of the “Customer Acquisition Cycle,” explained the methods and tools that support this process, as well as examined the competitive landscape in 2013, with an eye on what it might resemble in 2015.
We don’t follow the “CMO will outspend the CIO on IT” theory. However, as an increasing amount of marketing spend is being directed to all things digital it brings an increasing rigor to the management and analysis of how those channels are being used.
- The vendor landscape for digital marketing technology is highly fragmented, and understanding its dynamics requires an understanding of how each element supports the contemporary marketing business.
- The big-name vendor suites are generally non-organic in nature and still growing, which ensures that keeping complete horizontal integration within them is an ongoing battle.
- The enterprise adoption of technology to manage the complete customer acquisition cycle lags the capabilities currently offered by vendors. Few customers are mature enough to have the skill set required to deploy and manage every element of this cycle at anything close to a best-practices level.
- Measurement and analytics -- both of which help to understand past performance and to plan for the immediate future -- are increasingly in focus as the digital share of overall marketing budgets is on the rise.
The Contemporary CMO’s Toolkit
The use of the term “toolkit” in the report’s title is deliberate as like all the toolboxes that sit in our sheds, there are some items we use frequently, some we only use occasionally (and a few we broke the moment that we got them out of the packaging). As a whole they represent where our DIY capabilities lie; if it contains only a hammer and a packet of plasters, then we suggest consulting with a contractor before embarking on any major works. The same could said to be true for digital marketing and what might be in the CMO’s toolkit in 2013.
For technology in general tends to run in advance of the ability of the median organization to be able to handle it. Not just the technology itself, but also the change and process management that it encumbers on a human level. This is certainly the case today for Digital Marketing.
Trendy industry terminology is making an already confused situation worse. The term “Marketing Cloud,” was a once meaningful way for independent SaaS vendors to explain the way in which their slices of digital marketing could work in an interoperable manner, is now just rubber stamped onto any product suite, regardless of its contents. Just because Adobe, HP and Salesforce use the same branding terminology does not mean they are equal in scope and capability. We believe it important that buyers and sellers alike understand better what each of the moving parts (tools) in these suites actually does and how it should contribute to an overarching customer acquisition cycle.
LEMA and graphic ©451 Research 2013
So to understand digital marketing tooling, we have introduced our own variation on how to understand a customer acquisition cycle; LEMA -- Listen, Engage, Measure, Act.
The pervading nature of discourse between customer and seller in social media means that organizations are focusing more closely on how these interactions can be better used to contribute to conversion, as well the more traditional retention purposes. In parallel, the customer’s expectations that their voice will be heard, even without directly contacting an organization is increasing. Being able to find these voices, turn brand demoters into brand promoters and analyize how conversations around campaigns matched their relative success or failure is a challenge that is beyond most.
Add to that mix the multiplicity of natural languages (let alone compressed or anti language) and the capabilities of tools used in this phase need to be able to work proactively and often in very close to real-time.
Often the longest and most involved stage in the customer acquisition cycle, the scale of engagement that takes place is highly dependent on a range of factors, including (but not limited to): the type of product focus (e.g., B2B, B2C); the complexity of the product or service; the method of product or service fulfillment; and which of the aforementioned potential lead types generated during the "Listen" phase might be involved.
Unlike the Listen phase that often only occurs around interactions in social channels, the Engage phase can equally take place within the website of the enterprise itself. For example; a new visitor to a website can be issued with a specific and recognizable cookie, which can then be used to nurture them toward a campaign goal -- signing up for a webinar or attending an event, for example -- using their "click behavior" to modify what they are presented with.
One of the most attractive things about digital marketing overall is the easily available metrics that such activities generate. Indeed, it is that measurability coupled with the general increase in spend on digital as part of the overall marketing mix, which is driving the renewed interest in analytics technology in general. All of a sudden, the CFO is wanted a little more information on where their money is being spend and to what result.
As Engagement tools have increased in complexity and begun to target individuals in a personally targeted manner, measurement tools have grown similarly complex and the progress of those leads that have been listened to and engaged with in an automation process is an important part of this: How successfully has a campaign been able to convert leads? What was the average lead score among those who were acquired against the campaign goals?
The "Act" phase is perhaps the only part of the overall cycle where there are no specific applications required to complete it -- an enterprise will mainly be reusing tool sets that are being applied elsewhere within the previous phases.
If you saw a huge fall-off in conversions at a certain stage in your automated campaign, then it is obvious that this step requires further attention. If you have not been able to convert a single disgruntled customer of a competitive product in a conversion campaign, then reviewing the way in which you are engaging potential customers is of paramount importance. Understanding what direct effect that [n]% of conversions has on a line of business from a revenue perspective will assist this process greatly, and allow this to be built into the next version of any campaigns or other outreach programs.
Technology can be mapped to single or multiple phases of LEMA, for example the suite offerings attempt to capture as much of this as they can in what is presented at least, as an integrated whole. Independent vendors tend to -- as in every other area of technology -- attempt to improve, accelerate or find a new approach to one phase or even a small part of one phase. Where small differences in conversion might mean large amounts of extra revenue being generated, it means that the rate of change and therefore fragmentation is constant (this is one of the reasons why we at 451 Research cover so many small, even single figure employee vendors).
The Competitive Landscape in 2013
In the week that the report was being proofed, one section had to be re-written as Salesforce acquired Exact Target for US$ 2.5 billion. In the couple of weeks since it was published, Adobe have announced their intention to acquire Neolane and Oracle and Salesforce entered a technology partnership -- in essence segmenting the market between each of them, with the former loosely addressing the Enterprise and the latter for the SMB (Small to Medium Businesses).
The market is fragmented in a several respects; the large suite plays are in the main not built upon organic, technical development and the rapid pace of change in this still nascent market is allowing vendors with novel approaches to disrupt. Much of the acquisitional activity has been recent, Oracle in 2012 alone acquired Virtue, Collective Intellect, Involver and then snuck in Eloqua just as the presents were going under the Christmas tree. Focus needs to be paid to the integration roadmaps for these piece parts of all the suites, as to their individual capabilities. For without that integration, there is little to recommend a buyer towards a single vendor solution; a fact that gives newer, and more agile independent vendors hope.
A Look Towards 2015
Analytics is the area where most future development will be centered. IBM is already beginning to suggest that we’re now entering the era of “Cognitive Systems”; systems that will not only be able to tell you what is occurring, but guide you towards the best next step to take.
In practical terms for the marketer, this is likely to lead towards revisiting the age-old problem of “mix modeling“ (determining where you place spend), but in the future with the aid of technology that is able to indicate where it should go. It is these analytics based technologies -- currently the preserve of Fortune 50 companies that can afford to run massive proof-of-concept projects -- that will eventually trickle down to the median large-enterprise customer.
Title image courtesy of Gabriele Maltinti (Shutterstock)
Editor's Note: To read more of Matt's thoughts on marketing's future, read his Dispelling the Chief Marketing Officer Myth