TMW #042 | The place of marketplaces, identity resolution and the post-pandemic internet

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There seems to be an internet marketplace for literally anything these days, from Amazon, to Uber Eats and Etsy to Bandcamp there are thousands of them. But what are the trade-offs when it comes to selling your products through marketplaces? And how is this changing?

This is what I’m exploring today along with why the identity resolution technology industry has grown by 180% over 4 years and how consumer behavior is changing on digital channels.

Plus there's the 15+ links of everything that mattered in marketing tech this week.

There’s no time to waste. Let’s get to it.

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

✍ Commentary

🛒 The place of marketplaces: Demand vs data. Online marketplaces like Amazon, eBay and Etsy will eventually become a significant part of how future generations will remember the internet. As marketplaces have dominated the last decade, they have also solved a fundamental problem of the web: Demand. But in doing so they have created their own problem for the marketer: Data.

This week a new Amazon-esque marketplace, Little Birdie announced $30M in prelaunch funding in Australia with backing from one of the country's largest banks. The company wants to become the new “homepage of shopping” and as with every other marketplace out there, it is solving the age-old problem of demand and supply in a fractured internet shopping ecosystem. If we trace the origins of online marketplaces, eBay was the incumbent for years until Amazon took a significant place in the center of the internet, becoming orders of magnitude larger than anything else in history. Now, entrenched companies like Amazon and eBay control more than 50% of the web traffic generated by the top 10 global marketplaces.

This has got me thinking - are marketplaces going to become more important to the consumer’s experience or less? People struggle to quickly find and buy things online, and sellers struggle with creating demand. This problem calls for an aggregated middle layer between buyer and seller, in which the middle layer takes a cut, controls discoverability of products, customers' experience, and can increasingly make or break a brand based on its own values. This is both a boon and a danger to marketers who sell outside of their own ecosystem. You can increase discoverability which leads to demand, but it also places the controls over these things into other people’s hands.

Also this week a couple of important indicators made the news and reinforces why I think marketplaces will become more contentious for marketers. Amazon is limiting merchant seller levels ahead of Prime Day this year for the first time. Literally putting a ceiling on how much a merchant can sell during the platform’s busiest shopping day. Couple this with Apple’s botched podcast update rollout, which has enabled subscription payments on the platform, but in doing so the rollout wiped podcasting analytics services and pulled shows off the platform. One is a policy decision, the other is a tech problem, but both of them are a warning sign for those of us who rely on these marketplaces to sustain our brands.

Notice how Apple’s App store built one of the most popular mobile application marketplaces on the planet, which gives them a good reason to continue to take a 30% cut of every sale and ban apps that direct customers to alternative payment methods. In this way, most marketplaces function as a way to shorten the path to purchase for consumers, and as they are becoming more diverse, and more accepted, marketplaces do present an existential problem for marketers: You can't control most things.

If you look at where marketplaces dominate on the internet it’s mostly in the realm of general goods and fast fashion, yet we’re yet to see a marketplace for luxury cars or other high-value items due to consumer expectation. If you’re buying a $5 USB-C cord, then a marketplace is for you, but if you’re spending $500,000 on a car then you’d expect a better experience. To deliver that a brand like Rolls Royce would need to invest in digital channels, data, and design to make the online purchasing experience align as close as possible to the brand promise.

So if you’re heading up marketing and channel strategy for a company and the opportunity arises to make some big distribution gains from sending your products Amazon’s way, why wouldn’t you? Well, I’d say a few things need to be taken into consideration. Whenever there’s a form of third-party aggregation, you lose a sense of who your customer is. On Amazon, you don’t even get the email address of the user! On Apple Podcasts, you get only the slightest insight into who’s listening and from where. This is just standard practice - the marketplace holds all the cards (and data).

The other factor at play is the problem of third-party tracking and increasing restrictions around how data is used. This makes the larger marketplace platforms even more valuable to marketers working brand side as they hold a wealth of first-party data. Marketplaces aggregate product and service, creating a first-party data byproduct that holds a broad spectrum of browse and purchase behavior that can be sold within its own end-to-end ecosystem: Advertise, purchase and fulfill. This is the kind of data that was available across third-party tracking, but as this has slowly come to a close, brands have to make a hard choice on whether or not they should invest in demand-side institutions like Amazon and others or if they should continue to strike out on their own.

If you’re comfortable trading first-party data for increased demand then go for it, just know that most brands that are succeeding today are the ones that can prove there’s value for customers by going direct by bringing them onto their own platforms. By doing so, much more about customers can be learned and the better the end experiences can become.

The equation can almost be drawn along the lines of acquisition vs lifetime value. If you can’t collect data on your customers, then you will be constantly fighting (and spending) to stay top of mind or in the top 3 category set in these marketplaces whenever the need to buy again arises. This is something most marketplaces miss with their value propositions, they just can’t seem to see beyond what happens after the immediate sale. Marketplaces of all shapes and sizes are increasingly becoming commonplace, and also increasingly brands have to choose between demand and data, let’s just hope it doesn’t become a zero-sum game. Links:  HBR on disruptive marketplaces. Distribution and demand. The evolution of curated marketplaces. Apple Podcasts. Amazon and Prime Day. Australian marketplace: Little Birdie.

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🙄  Identity resolution is still a massive problem. New stats from the Winterberry Group Forecast suggest that the technology industry which supports identity resolution (the capability to create a single customer identity using multiple sources of data) is set to grow into a $2.6 Billion dollar market. It’s grown more than 188% over the past four years. What I’m seeing in this space is that for most enterprise brands, identities are never fully resolved for a number of reasons.

The first is that the last half of the last decade introduced more digital channels for consumers and as larger brands adopt those channels (like apps and voice platforms) more data is created, and thus not managed in a way that can form a unique customer identity. Also, tracking solutions like fingerprinting and IDFA are becoming more limited and coupled with the demise of the third party cookie, marketers are facing a persistent gap problem in customer data. Greater market awareness on the value of delivering personalized experiences for customers across a range of platforms along with significant challenges in how you can collect and use data means that technologies like CDPs are becoming the focal point for how these problems are being solved.

The problems are more complex though, as for most it’s really hard to measure the business value of creating highly complex relational data strategies that tie everything back to a single user. But what I presume is that the drive is less on delivering business value (as in revenue) and more geared towards solving business problems. As consumers become more privacy-aware, things like data deletion requests are becoming more common, which are a huge headache for enterprise businesses and so regulation and future-proofing how a brand collects data appears to be what’s driving the adoption of identity resolution tools in a business. Report. Analysis.

📈Chart Of The Week  

💉 What does a post-pandemic internet look like? A big survey conducted by McKinsey looks at some of the major shifts in how people are changing the way they interact with digital channels as the vaccines roll out and the pandemic subsides. In 2021 major categories like groceries have seen a significant decline in digital adoption, which suggests that industries that are not native to digital are experiencing the largest amount of volatility through and after the pandemic. Link

📰 Latest Developments

Google I/O conference. Many interesting innovations and announcements this week at the developer conference. The majority of the focus was on AI products like LaMDA, which enables lifelike conversational experiences. A Lot of talk about privacy, including a new Android privacy hub where users can see not only what, but when data is collected on them on a timeline. Link

Amazon acquires 50% of MGM (James Bond). This is interesting for three reasons: (1) Amazon is becoming an ad business and acquiring big movie studios will continue to enable this. (2) The company’s Prime service bundles shopping and entertainment, content is what will continue to draw people into the ecosystem. (3) Films are cultural products that endure time. I still think Pierce Brosnan is still the real James Bond. Why? Because I watched him as 007 when I was a kid. Amazon is creating a content moat to sell more paper towels and ads. Link

Melbourne agency finds $3 billion in wasted ad spend. There’s an old joke in advertising that 50% of all ad budgets are wasted, the problem is you don’t know which half. New digital advertising measurement technology from Next&Co called “Prometheus” can probably help with solving that problem. It integrates with trading desks and most major platforms like Google and Facebook and pinpoints where budgets are ineffective. Link

📚 Reading

How data visualisation is evolving. Everyone struggles with visualising data in a way that balances accuracy, breadth with the story you’re trying to tell. Over time the principles for how data can be used to inform decision-making have changed significantly. This guide outlines five new aspects of communicating data. Link

Every Chinese consumer app is just a massive game. Most super apps (applications that have multiple marketplaces, social networks, and communication tools) have some form of game offering that augments the experiences within the apps. It’s an interesting strategy as gamification continues to blend into the world of eCommerce, and for Chinese developer’s it’s a sure-fire way to capture more attention on their platforms. Link

Scientific crisis and experimentation. In the academic world of the sciences, errors of judgment and methodology are an often occurrence. The capabilities of data and technology have enabled more scientific disciplines (like AB testing) to enter into the business arena. However, most practitioners who are conducting scientific experiments on the customer experience are woefully inexperienced, face unrealistic expectations, and don’t have the support you’d normally see in similar academic studies. Link

🔢 Data & Insights

The next “next” generation and organisational change. A fascinating study conducted by Simon Wardley looks at how generational change is impacting corporate structures, attitudes towards company growth, and leadership. The survey has some interesting insights, like how the next generation is more prone to be outcome-driven over output and are far more likely to “swarm” when problems arise. Not many think about it in this way, but the significant change to how digital teams work will probably come from generational change more than anything else. Link

Digital advertising: Still hitting double-digit growth. New research out of IAB shows that digital advertising spend still continues to increase as the effects of the pandemic start to wind down. In Q1 2021 it’s up 25%. Some correlations: Budgets are increasing again, and many COVID-19 minted digital advertising newbies are finding their feet. Link

Google’s view on the future of retail. Google’s report into how consumer demand is changing in the retail sector highlights a few distinct changes compared to pre-covid. 15% of product search queries are completely new to Google every day, while more consumers are using Google search as an inspiration and discovery tool, instead of solution searching. About 81% of people surveyed said they discovered a new brand online during the pandemic. The balance is shifting away from the web being a comparative and conversion destination, to an important part in how people explore new things to buy. Link

💡 Ideas

The email marketing periodic table. Email is a complex channel, both technically but also creatively. MarTech.com has released an updated version of their periodic table covering all the aspects of email marketing a brand needs to get right to be successful in the channel. It’s quite comprehensive. Link

Audio chat everywhere. Imagine a world where you’re in a platform trying to figure something out and you’re hitting a wall. What if you could audio chat with a specialist within seconds. What if you could drop into an audio chat on a topic of interest without having a leaving a company’s website? Space chat is working on an interesting product in this space. Audio chat as a widget within web experiences. Link

Why fame matters. An interesting perspective from WARC on the value of brand fame over reach, and memorability. As a driver for advertising, fame is something that’s not really discussed at the strategy table yet is enormously valuable. The concept is that it’s not enough that customers know your brand, but they are also aware that the majority of their social circle know your brand too.

✨ Weird and Wonderful

Replacing the EU government with AI. A new study into the attitudes of regular Europeans on technology use for politics had some interesting results. About 51% of people surveyed said they would prefer to replace parliamentarians with an algorithm or AI program. Skews to the younger of course, but is a telling insight into the acceptability of replacing or augmenting human roles with artificial intelligence. Link

Why does every SaaS homepage have illustrated people? You know what I’m talking about. Go to any startup or SaaS vendor homepage and you’ll likely be greeted by flat and geometric illustrated characters of people doing things, but their body shapes are all out of whack. There’s a name for it,  “Corporate Memphis” and it's relentlessly being copied by every web designer on the internet. Link

Amazon’s “mindfulness” booths. About the size of an adult coffin standing upright, ZenBooths are the latest invention of the company. It’s a small portal-sized space in the middle of warehouses that an employee can enter to watch company videos about mindfulness and mental health. Link

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Want to share something interesting or be featured in The Martech Weekly? Drop me a line at juan@themartechweekly.com.