TMW #048 | Should we abandon the 360 customer view? Rethinking DTC, and the privacy imperative.

Jul 11, 2021

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I have two things for your before we start:

  1. Next week, there will be a special edition of TMW - The Martech Quarterly. It’s a recap of Q2, featuring the most popular content in TMW as voted by you!
  2. Another MSoM podcast is up: Adland is an island with Alex Murrel. We talk about the demographic differences between agency folk and the customers they create for. Listen.

Ok, let’s get into things. This week I look at:

  • Abandoning the 360 customer view: Gartner predicts that by 2026, 80% of companies will give up on it. Why?
  • Rethinking the DTC model: DTC was disrupting the retailers, but Covid-19 forced people to stay with the brands they know, and now retailers are disrupting these DTC pioneers.
  • The privacy imperative: Two-thirds of consumers are skeptical about the data collection practices of most companies.
  • 15+ links including: Collecting data on kids, iAddiction, freeing the world from email, and how to kill product thinking.

✍ Commentary

💫 Should we abandon the 360 customer view? Marketing technology teams in almost every enterprise company have been chasing something that appears to be now unattainable - the 360 view of the customer. There’s a bunch of names for this concept, such as the single view of customer (SVoC), but the underlying idea is the ability to tie all of your customer data together to produce better insights and act on those insights through things like personalization. Gartner, long a proponent of the 360 view has come out this week to suggest that by 2026, most companies will abandon efforts to create a 360 view of the customer, and for good reason.

Gartner’s reasons for this estimate are many, and it’s telling that a consulting brand such as Gartner is turning its back on a concept that has likely kicked off many consulting projects. But here’s the thing, Gartner cites problems with data quality, the rapid pace at which customers are using new platforms for shopping, and organizational challenges as major obstacles from progressing the 360 view agenda, not to mention any of it leading to business value. All of these problems have been around forever and efforts to build a holistic picture of the customer, I suspect, reveal deeper data and technology challenges that most companies haven’t addressed before.

These challenges are compounded by an increasingly saturated and complex technology market that has a three-sided supply chain. On the one side is data management, a large market held by a small group of incumbents who don’t have a pressing need to innovate. On the other side, data analytics platforms can only provide value based on the quality and variety of data an analyst can access. In the middle is the fast-growing, incredibly diverse, and complicated data activation market, comprised of customer data platforms, personalization engines and marketing automation suits, all there to enrich and make good use of data across a business. This arena, which directly supports what I call the 360 view industry is a relatively small market and is emerging quickly with a large number of entrants. The problem? Well, not many people actually know how to use these platforms yet.

It’s not only Gartner saying that the age of the 360 view is over, this week another report from Treasure Data in conjunction with Forbes highlights that most are yet to convince the C-suite that pursuing personalization - a discipline highly dependent on collecting multiple points of customer data - is of value to a company. About only 21% of people surveyed are committing more than 10% of their budgets to personalization, with about half of the industry held back by bad data quality and a third saying they have a lack of staff training to progress initiatives. In short, there’s no budget, bad data is a major blocker, and everyone has the knowledge of an intern in this space. It’s not a pretty picture.

So, where do we go from here? There’s strong evidence that most of this research points to an underdeveloped, and emerging industry. If we check back in 2030 the picture would look very different. But there’s a broader consideration here as well, most of marketing and customer experience has been guesswork before the internet came along. This new age has caused a gold rush to collect as much data as possible about the customer. This has enterprise companies, consultancies, and tech vendors saying that a holistic view of the customer is not only attainable but is an expectation for the modern organization.

Yet, as companies have now realized, a 360 view of the customer is an easy way to burn alot of cash, is not truly a viable pathway for customer intelligence, and that people skills and technologies need to mature to support these efforts. Instead, the companies that are getting ahead are figuring out the ways in which expanded views of customers make the most commercial and experience sense and are planning effectively for that. In the end, the future will still look like the past - we’ll continue to guess about what our customers want for longer than we realize. Links: Gartner: Abandoning 360. Falling short on customer experience. Treasure Data & Forbes. The CMO as a data leader?

🛒Rethinking Direct-To-Consumer. The past few years have brought us an interesting unbundling of the CPG and FMCG categories (things you buy on shelves). This is the DTC industry. The e-commerce first, Instagram reliant and bravely independent brands are mostly targeted towards wealthy millennials and Gen Z types who are open to trying a new type of peanut butter spread, soft drink or bag of potato chips. This area of e-commerce is interesting because 1. Most of this is experimenting with how many of these categories can disrupt the supermarket and store with an e-commerce model. 2. The model of a DTC brand is far more data-rich. 3. The sheer scale of new brands starting up in this space.

Two good papers came out this week discussing the state of DTC, highlighting that on one end, there’s a fairly big reckoning for most DTC brands out there, as the pandemic has caused most people to rely on the trusted brands they see every week on the store shelf. And on the other end, the demise of the cookie has a big impact on the DTC digital-first business practice that needs retargeting to work. 2pm, a publication tracking the e-commerce industry, says that this industry requires a rethink - how can DTC transition from an aesthetic excess for a small cohort of customers to proving themselves as a stable, quality assured provider of essential goods? But is that even the role of DTC? I’d say perhaps not. A new report published this week by Sitecore and Ogilvy looks at these pressures on the DTC category. As more traditional retailers jump on the bandwagon, there’s a growing consensus that a DTC approach enables companies to own more of the direct relationship with the consumer. The rationale is that most companies that primarily sell from the shelf could be doing more to collect customer data and create experiences that promote loyalty and a greater share of wallet.

The way I see the emergence of DTC is through the lens of stages of evolution, a while ago a few small companies said, why can’t we sell groceries online? They gave it a go, enabled by quick-to-market platforms like Shopify, and started disrupting the traditional retailers. DTC went from novel to commodity overnight with the pandemic, and retailers are figuring out that the model could be a viable way to do business, in turn disrupting the small companies that had the original idea. It all comes back full circle, yet DTC has caused a shift in how traditional retailers see the future, and it’s a future that revolves around eCommerce. Links: Reframing direct-to-consumer: Sitecore and Ogilvy. The D2C backlash.

📈Chart Of The Week  

🔐 The data privacy imperative. New research out of McKinsey talks to the consumer attitudes about privacy after interviewing more than 2,000 Americans. A shocking two-thirds have a negative or neutral view on how brands are using their data responsibly. It’s important to realize that the past decade has eroded trust in customer data collection, making it an uphill battle for anyone to convince customers to give away more information than they need to. Link

📰 Latest Developments

UID 2.0 is becoming the industry standard. This week Omnicom announced that UID 2.0, the Adtech replacement of third-party cookies will become the formal methodology for tracking for their agencies. There’s alot of debate about this technology, as it relies heavily on anonymizing and matching first-party data, yet OMG says it’s the most scalable solution out there right now. Link. Also see Solimar, The Trade Desk’s alternative DSP.

Apple will sideload apps. Apple, with the App Store, has created one of the world’s most valuable software marketplaces. The EU regulation authority has announced that Apple will have to enable sideloading apps and app stores within apps in the European market. This is highly likely to force Apple’s hand, opening up many more opportunities for app developers, e-commerce brands, and publishers. Link

The information launches stand-alone publication. The Information is a subscription-first media company in the technology space, and they’ve just launched their first standalone publication outside of their subscription model. This is important as it’s a strong signal that subscription-led media companies are expanding in ways that advertising-based publishers arent and will likely become the center of online advertising. Link

📚 Reading

Brand purpose. A big distraction? You’ve probably heard of the idea of “brand purpose” a concept that reflects the apparent changing needs of customers to understand what a brand stands for, which is usually bundled into some kind of social cause. However new perspectives on the topic suggest that brands would do better if they focus on their value proposition and leave the virtue signaling to the Twittersphere. Link

How to kill product thinking. The ways in which enterprise organizations think about product development are mostly led by business outcomes over customer outcomes and that’s what kills product thinking. Link

iAddiction. Trading apps and games are built on the human psychological vulnerability of addiction. Looking at Robinhood, one app that gamifies trading is one of the most potent examples of exploiting our vulnerabilities. An interesting approach to regulating technologies that take advantage of the ways in which interact with apps.  Link

🔢 Data & Insights

The future of the creative economy. This long report from Deloitte investigates the creator economy, as it has emerged throughout the pandemic. About 7% of total employment is represented by the creative industry or about 20 million people. From all aspects, there is a viable future for creating and monetizing on the internet. Link

Commerce anywhere: A case study. This is an interesting deep dive from Emarsys looking at how retailers are expanding not just marketing channels but transactional channels and how it leads to a 5-6x increase in average order value. Link

The future of shopping. Wunderman Thompson has provided an interesting survey with more than 28,000 consumers across 17 markets. 64% of people surveyed said they would prefer to shop with brands that offer both online and offline modes of shopping and about the same population wished that brands would communicate seamlessly with them. Link

💡 Ideas

Gen Z wants to free the world from email. A perspective from the next generation on how they prefer to communicate online, alot of it has to do with collaborative tools, and instant messaging. Email has been a stable and highly valuable channel in the past, but as generations shift will it become less important? The NYTs think so. Link

Brickit. There’s a difference between using technology to improve marketing and using technology to improve how someone uses a product. Brickit is the latter, it’s an app that can scan a pile of lego bricks and recommend things to make out of the pile. The funny thing is that a technology like this will lead to increased sales at Lego, but the app has nothing to do with the brand. Go figure. Link

Ice cream only. How can you explain what a disjointed customer experience feels like? Here’s an attempt, a store advertising stone oven-baked pizza and burgers, but when you walk in the only thing for sale is ice cream. Don’t get me wrong, ice cream is great, but the experience isn’t. Link

✨ Weird and Wonderful

Agency pays staff’s student debt. I love this story. An independent agency donates $4 million to pay off the majority of its staff’s student debt in the United States. It’s a way to promote long-term staff loyalty and attract new talent, in a way that recognizes the skills people need to enter into this industry. Link

Debit card for kids - collecting staggering amounts of personal data. Greenlight, is a company that enables kids to own a visa debit card, with full control and oversight from their parents. However, it has come to light that the company is collecting alot of data on purchasing behaviors, locations, birth dates, email addresses, and their data policy allows for the sharing of that data. Run for the hills! Link

AWS Infinidash. Someone invented a made-up product for AWS, started tweeting about it, and less than 3 days later, job ads started showing up requiring engineers to have “at least 3 years AWS Infinidash experience.” Infinidash then became a major joke, poking fun at the insane maze of product options that AWS offers. Link

Stay Curious,

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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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