Commentary
Marketing Technology Will Collapse The Digital-Ad Supply Chain
- by Dave Morgan , Featured Contributor, August 25, 2016
This column was originally published in an earlier edition of Online Spin.
I’ve written a couple of times recently about my views on the rise of marketing technology and its implication for our industry. Lots of folks have been reacting to it, so I’m taking that as a message that I should continue to push forward on this meme.
I believe that the rise of mar tech is going to have an enormous impact on the structure and operation of the digital advertising supply chain. Put simply, it will obliterate the supply chain as we know it today.
That the digital ad supply chain is problematic has been a top-of-mind issue among industry leaders for years. The supply chain is massively complex. It leaks tons of data. It leaks tons of money. It is a patchwork quilt of thousands of companies and different technologies and protocols that has been exploited by fraudsters, bots and zillions of redundant intermediaries for billions of dollars a year.
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If that's not enough, the supply chain’s end product, the consumer’s digital ad experience, has become so poor that tens of millions of consumers have turned to ad blockers in the last year alone to remove, declutter and de-clog their digital devices of redundant, irrelevant, annoying ads.
Most of the technology driving digital advertising today is designed to serve the needs of the ad ecosystem -- but not necessarily the needs of marketers. Impressions, cookies, bidding, headers, etc. are bought and sold again and again. These aren’t necessarily things that explicitly drive sales and ROI for marketers. However, what they do always do is drive revenue for the people that buy and sell and trade things, and for the people making the technology to help them do it.
That is going to change. As Peter Drucker taught us, the purpose of marketing is to create customers: nothing more, nothing less. As more and more companies connect their back-end customer and sales systems to their front-end communication channels, activities that provably create customers will get more resources. Those that don’t will be starved.
That level of scrutiny and accountability is going to be applied across all marketing activities, the vast majority of which are now digital, or at least are now all digitally measurable, such as with TV.
That kind of scrutiny will have a clarifying and purifying effect on the digital-ad supply chain. Like gravity on the mighty Mississippi, outcome-based accountability will help marketers’ dollars find that fast and best path to customer creation, cutting right through the hundreds of dams, dikes and canals that ad-tech companies have constructed along the digital ad supply chain's banks (to mix a metaphor here) to siphon off some of its money and power for their own purposes.
Over time, the hundreds of miles -- and thousands of companies and their little towns and hamlets -- of the meaningless, meandering watercourse that the ad tech supply chain has become, will be bypassed, left fallow to turn into ghost towns as ad-dollar nourishment dries up.
Sound farfetched? I don’t think so. What do you think?
I agree, Dave. Moreover, as I have been saying, digital's over reliance on automated systems and its under or non reliance on humans at the working level is a large part on the emerging "problem". Since many marginal "publishers" lack the means to become actively involved with selling ads and formatting them in a sensible way on their websites, most of these small players will be shunted aside, leaving the large entities to revamp their operational systems so users are treated fairly, tracking becomes more of an opt-in thing, and the disruptive aspects of the user's experience are minimized to the point where ad blockers are no longer needed.
Dave, you are 100% on the mark! I have never seen a more insightful article in my life.
The consumer's digital experience is atrocious due to "push" ads. The secret to future success is to put the consumer in total control of his digital experience--what displays on his screen and how long it is displayed. "Pull" technology is the future.
The secret to succes for marketers--and note that I said marketers, not advertisers--is to empower businesses with real time dynamic marketing capabilities and let them compete to out-market each other. The winner is the most creative and imaginative marketer AND the consumer.
Real time dynamic marketing tools that empower businesses to update his "Hot Deals" and "Coupons"in 3-4 minutes to entice consumers to check back often for the savvy marketer's latest special offer. That is savvy marketing!
The great news is that the aforementioned marketing technology is available today. To see the future of mobile marketing view https://youtu.be/erwIgYIQXUQ and http://ClikitySplit.com/teachsmbs
Dave,
Interesting thoughts. I can’t help but think of the difference between open and closed systems here. Every one of these ad tech companies emerged to solve a business problem that existed in the ecosystem. A closed system or walled garden (ala Apple, Facebook, Google) would seemingly solve the complexities. But at the same time, these are among the most profitable companies precisely because they are closed off and there are fewer “mouths at the trough”. So does the marketer realized any real savings in this environment? You get a fragmented system whereby you have to design/develop and learn a variety of systems in order to reach your target audience.
This is reminiscent of the early online services of Prodigy, AOL, CompuServe. Closed systems. Development nightmares. The Internet as an open system evolved and standardized, reducing complexity. We’ve now managed to introduce complexity again. I’m not sure any system, in an effort to reduce inefficiencies, doesn’t become overly complex in time and have the adverse effect. Thoughts?
RJ, Great points. I do think that there are advantges to closed systems for marketers, as long as their are enough of them to create real competitoin of price and benefits. The TV ad marketplace works, and the comapnies and systems are quite closed, because there are 6 or 7 strong TV media owners/sellers nationally, and 2 o3 three in most large markets locally. Whether we will see a robustly competitive oligopoly in digital is yet to be determined. At this point, Google and Facebook have separated themselves from the pack, though Snapchat's growth is promixing and both Apple and Amazon are quite likely to become wild cards. Dave