TMW #035 | The bundling of commerce and unbundling of content, cloud security and global ecommerce growth.

Apr 11, 2021

Welcome to The Martech Weekly, where every week I review some of the most interesting ideas, research, and latest news. I try to look to where the industry is going and make sense of it all.

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We’re back to the regular programming this week after a refreshing Easter break and last week’s Martech Quarterly newsletter. I hope you enjoyed the wrap up.

👇 Here’s everything you’ve missed in marketing and tech this week.

✍ Commentary

🛒🎨 The bundling of commerce and unbundling of content. There are two important things happening on social media right now. First, the bundling of commerce: This is the integration of commerce, shopping, and payments with social networks. Second, the unbundling of content: There are now an estimated 17 million creators on social media who are earning direct revenue from their audiences, partnerships, or advertisers. This is powered by the growth of technologies like newsletter platforms, Patreon, and NFTs to name a few. As you can see, there’s a movement of commerce towards social media and content and away from it.

The reasons for the bundling of commerce are clear - iOS 14 privacy changes will limit the data collection, and activation capabilities of any company that wants to sell online, especially if there’s an app involved. And while iOS privacy changes will impact how Facebook and TikTok can monetize through targeted ads, the larger tech companies also own a lot of historical, first-party data and have vastly more capabilities than your average company to make the data work for them. What is happening to commerce on the internet is analogous to the first large-scale shopping mall in the US, in 1952 an “open air” mall was finished, and by 1954 it became the largest mall in the United States. Social media platforms are becoming this century’s malls, aggregating retailers into marketplaces that combine entertainment, socialization, discoverability, and commerce. It’s already happening - there are some major shifts towards D2C distribution with brands like Nike who are cutting distribution rights with at least six wholesale partners in favor of their web channels, now making up 30% of all revenue in 2019. What’s next is D2S (direct to social), even cutting the ecommerce website layer out of the equation. And while some research suggests that Facebook’s shopping features are actually sending more sales to the retailer’s independent stores, it’s only the beginning of the bundling of commerce and integrating it into the existing social infrastructure of the web.

On the other side of the fence, creators are realizing that algorithmic social networks tend to give them a poor deal for monetization, reach, and audience building. For example, you can’t get paid by Instagram for the content you create, but on Youtube you can, and Spotify also sends commissions, but incomes are a fraction of a fraction of the revenue these platforms make. Results are also unpredictable and unsustainable. And so more tools to create and monetize audiences directly are increasing in popularity. You might be asking - what does this all mean for marketing? Well, third-party commerce across social platforms will become more of a focus for marketers, first as experiments and then as the default way of doing business. In other words - you will need to build shopfronts in the future digital malls. More importantly, distribution and audience targeting will become increasingly varied as niche audiences are moving from social networks into individual/group creator platforms. We’ve already started to see Adtech solutions for personalised advertising for Podcasts, it won’t be a stretch to imaging audience targeting solutions for the thousands of newsletters provided by Substack or creators on OnlyFans. Like most things on the internet, value is created when you unbundle and bundle things and it always will come back around again, but the immediate future for marketers will be navigating the bundling of commerce and the unbundling of content. Links: iOS14: Apple vs Facebook ($), Facebook and shopping, monetizing community with Patreon CEO.

🎈 Is “the cloud” going to pop? This week two data hacks made headlines: Facebook from 2019 where more than half a billion phone numbers were recently leaked, and a LinkedIn data scrape stealing about 70% of the total user base - 500 million people. It’s not only social media companies facing large-scale hacks though, we’re starting to see larger, more brazen infiltrations of critical infrastructure systems too like the SolarWinds hack from late last year which has exposed large parts of the US government’s systems. You might be asking - what does this mean for cloud infrastructure? All three of these companies run on the cloud, making them vulnerable to serious hacking, and impacting the companies that run portions of their businesses on top of them. These days, it’s hard to find a SaaS business that doesn’t operate from the cloud, and most companies rely on the security and data processing capabilities of cloud technologies to keep their customer’s information secure. After all, we buy these tech companies for this purpose - you pay the bill so they take care of everything else to do with your data. It’s a matter of trust - can private companies effectively keep customer data secure into perpetuity? Maybe. But now, the risks are piling up against the advantages of using cloud storage - the larger companies like Salesforce, AWS and Azure are all high-value targets for hackers. Not only this, with many Martech products out there, you don’t have full control over the data these systems collect or ingest, and will sometimes have to pay a premium just to get access to an API endpoint! In the 2010s cloud infrastructure was the defining innovation unlocking value everywhere and making compute power accessible to more companies than ever before, but like everything, the risks are there too, and the risks of third-party held customer data are one major reason the cloud bubble might soon pop. Links: LinkedIn hack, Facebook hack, SolarWinds hack, Balaji Srinivasan on cloud infrastructure.

📈Chart Of The Week  

🌏 Ecommerce in APAC. It’s one of the fastest growing regions for ecommerce adoption, far outpacing the western world and nearing $500 Billion GMV. Sign up here to get a link to the full version and the chart. You won't be disappointed.

📰 Latest Developments

Apple is rejecting apps that use fingerprinting for user identification. Fingerprinting is a methodology to track downloads and spend from channels to apps. This is in conjunction with the imminent release of iOS 14.5 which will require all apps to display an App Tracking Transparency prompt to collect permission. Link

Unsplash is being acquired by Getty Images. This is a big deal in the world of content.  Unsplash built an anti-pattern to content licensing, effectively providing free high-quality imagery and graphics and disrupting players like Shutterstock. Last year they passed 2 billion downloads, and as they expand to building creator marketplaces, the support from Getty will be a big boost. Link

📚 Reading

The Martech skills shortage. The rate of technological innovation and change in marketing is far outpacing the market’s ability to adequately train people to harness this technology. It can take years to learn the core skills of most cloud platforms, and by then, there will be something new to learn. Link

Data: Marketing’s blood diamond? The headline of this essay puts in stark terms the future of data collection and ethics. IAB has suggested that 2021 will be the year where most advertisers and marketers will need to reset their ethical outlook on how data is used in advertising. Link

🔢 Data & Insights

Nielsen: Personalisation and retention are not marketing priorities. After surveying hundreds of marketers at a management or senior level across various sectors, marketers who are moving into 2021 will be focusing on acquisition, brand awareness and audience reach. Link

Martech in Europe. There are 3,647 marketing technology products in the EU, about the same amount as there were globally in 2016. MartechTribe just released their own super graphic of EU tech vendors. It’s a big list. Link

💡 Ideas

CVO school. CVO stands for “customer value optimization” which is more or less an evolution of CRO, but looking at the entire customer journey and using data and customer research to drive experimentation to optimize holistically. There’s now a course for it. Link

Why products fail - a short story. I’ve gone back to this Twitter thread a dozen times this week. It tells a story that’s common to those of you in product management. It’s about what happens when your customer research validates a product idea, you get it into the market and it doesn't take off as it should. Link

✨ Weird and Wonderful

Introducing Scram! Scram is hyper-agile marketing practices for a hyper-automation, hyper-growth world. A very funny take on agile practices for April fool’s day. Link

Amazon’s weird army of warehouse drones. In the context of the first-ever unionization vote for Amazon warehouse workers, activity started cropping up again from strange Twitter handles that are dedicated to proving that working for Amazon isn’t that bad. Link

Salesforce and TikTok integration: Why? Link

Stay Curious,

Make sense of marketing technology.

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Juan Mendoza

Juan Mendoza is an expert in researching global media, marketing, data, and technology trends. He is the CEO of The Martech Weekly, a media and research brand with subscribers in over 65 countries.

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