TMW #052 | The next privacy horizon, the convergence of agency + consultancy, and the five forces of Martech.

Aug 29, 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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👋 Hello and welcome to new subscribers from The United States, Switzerland, Australia, Germany, The United Kingdom, Mexico, Taiwan, Portugal, Argentina, Lithuania, Vietnam, and New Zealand!

Today you’re reading TMW #052, officially a year’s worth of newsletters! There will be some announcements in early October when I celebrate the 1 year anniversary of the official launch.

For now, I have two quick things to share with you:

👕The TMW merch store is now live! Thank you to everyone who did test runs to make sure everything ran smoothly. You can now buy streetwear for the intellectually curious and Martech minded. There will be a bunch of limited-edition collabs and designs coming out, like this one. Shop.

👋 Two friends of TMW, and former MSoM podcast guests are raising funds for some exciting projects. Charles Burdett has launched his latest round of cards, Storyteller Tactics on Kickstarter (I bought a deck) and the lovely folks over at CabinetM are doing a crowdfunding round to help grow the next stage of their Martech management platform. Storyteller. CabinetM.

Alright. Let’s get into it.

This week in Martech:

  • The next privacy horizon. Governments and companies are regulating the web in their own ways, which one is making a bigger difference?
  • The convergence of agency and consultancy land. Accenture Interactive hired the head of a creative agency as their next CEO. What does that tell you?
  • The five forces of Martech: A new WPP and Chiefmartec combined report on the outlook of Martech for 2030 is out. A lot of it is technology solving problems that technology introduces.
  • Everything else that happened: Afterpay’s $156M earnings loss, the meaninglessness of marketing language, what people see on Facebook, the state of streaming, inviting your customers into product development, and how to Google.

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

✍ Commentary

The next privacy horizon. Yesterday I was talking to a good friend who is looking to take his next career step. We were talking about the future of the digital economy and what opportunities you’d bank a decade of your time on. The first thing that came to mind was privacy. Specifically consumer privacy.

You might be asking, wouldn’t AI, personalization or big data be the next big opportunities for people in Martech to work on? And I’d agree, those things are coming, and fast. However, there’s clearly a substrate in marketing technology that is directing the course of all other innovations. And that’s consumer privacy - how companies manage and what governments decide you can do with customer data, the lifeblood of all marketing teams.

This week there have been a number of high-profile actions against big tech companies, the most notable is Amazon’s almost $1 billion fine for breaching GDPR rules. The actions taken against Amazon focuses on how customers opt into marketing content, and how clearly customers can comprehend terms of services when they sign up. If a company with the resources of Amazon can be caught out like this, what hope do other companies have? There’s also been an announcement from the UK government this week that the country will be exiting the GDPR along with Brexit, and forming a same-same-but-different type of data policy. This is going to add more complexity in an environment that is already incredibly hard to navigate.

As the world of consumer privacy continues to heat up, there’s one thing that’s certain - the internet we know and love today will become a highly regulated space, controlled by big government and big tech alike. In the private industries, we’re already seeing the big platforms like Apple and Google self-regulate. Their market power and stronghold over consumer attention directs what every other company can and can’t do. This is happening quickly, and faster than government regulation. And in the chaos of what can feel like an ever-changing free-for-all in what the rules are to protect customer privacy, there’s a new horizon coming for privacy and it consists of three key themes: Phasing out 3rd party tracking, embracing 1st party data, and government legislation.

The first is the end of open-ended customer targeting, most emblematic in the shut down of the third party cookie and the introduction of Apple’s AppTrackingTransparency along with restrictions on data collected in apps. It's been widely reported at this stage that third-party cookies created a privacy risk between sharing customer data across ad networks and created its own shadow realm of bad actors and inflated metrics. Yet, without third-party data, the larger platforms will effectively become walled gardens of their own. They already own the customer relationship, their data and the ability to control prices to access that data in their ecosystem and on their terms. Amazon’s Marketing Cloud is a great example of this, as is Google’s failed FLoC proposal or Facebook’s ownership over the social graph. Advertising and marketing online used to be more diverse than it is today, and this is because of the steady drumbeat pushing the aggregation of customer data to a few large platforms over the past decade.

The next is first-party data, preference, and management. If you can’t target or reach new customers in the next horizon of consumer privacy using other people’s data, the next best thing is to collect more yourself. However, I’m seeing that customers are reacting to this with more questions and hesitation. Sure, asking for more data from your customers makes sense, and investing in something like a CDP to join identities and enrich data is a good move, but what’s missing from the equation is the value proposition to the customer.

Leading brands are expanding data collection to deliver better experiences and introducing things to keep customers coming back. And as more people become aware of what data they are giving up to buy something or consume content, the harder it will become to convince users that their data is necessary. Social networks, like Tiktok and Instagram, are still growing at exponential rates because the value proposition is so clear to the consumer - give us your data and we’ll give you a way to escape boredom and connect with your friends. Having an attractive reason for collecting more data about your customers will become a cornerstone for how brands will navigate this new privacy world.

Government regulation is still at the beginning of the journey and is mostly focused on web tracking, but I suspect government oversight will move into other important areas. While GDPR and CCPA are steps in the right direction, they also introduced us to a user experience that is constantly interrupted by cookie popups and banners. A necessary evil? Maybe. Do I actually read any of them before I accept? Hell no.

Most of this is just a rudimentary shaking out of how government policy is targeting some aspects of the digital economy and not others. Right now consent and preference management are being regulated, but what’s stopping the government to move into data deletion and storage legislation? Or what about identity resolution - the practices of tying together a customer identity from various sources? Or how about how granular companies can go with targeting their own customers with emails or personalized website experiences? All of this is still a fairly open sea of possibilities, and I would expect that regulation will eventually progress from the cookie to the email address and eventually to the transaction. Yet as we’re starting to see, governments are not the most important forces changing the next horizon of consumer privacy. This, my friends, is in the hands of the FAANGs. Links: Amazon privacy fine. UK GDPR overhaul. Ben Evans: Understanding Privacy. Wunderkind on performance marketing beyond the third party cookie. Navigating the new world of consumer privacy.

*By the way, TMW’s first-ever event will be announced next week on the topic of privacy. I’m looking forward to sharing it with you!

Are agencies and consultancies converging? An interesting (and significant) change to the management of Accenture has me asking questions about how agencies and consultancies relate to each other. The news story follows the creative agency Droga5's David Droga taking the reins of Accenture Interactive. He’s a creative leader, transitioning to become the head of a $10 billion-dollar technology consulting company.

My question is that Accenture has always been a hybrid consultancy/agency, and so does this move seems to be reflective of the general shift towards combining agencies and consultancies together? Or something else? Where many have failed on this front, perhaps Droga and Accenture can make it work. The challenge is that leaders on the brand side are increasingly wanting to bring together technology consulting with creative expression. It’s not enough anymore to offer a technology solution without something that significantly augments a customer’s experience.

The opportunity is to bring these worlds together in a way that integrates the best of both. A consulting firm’s workflow, say between an advisor and a solutions architect to an engineer is different from an ad agency dynamic between a strategist and creative director. But these groups now have to work together to pull off great things and advance innovation, requiring entirely new ways of working. All of this comes down to the speed at which every experience is filtered through a digital lens, requiring creative people to be more technologically sophisticated and management consultants to be more comfortable with creative spontaneity. Accenture’s placement of Droga as CEO tells us one more thing: Creativity is becoming a core tenant of digital leadership. Maybe it’s time to pull out the watercolors? Link.

📈Chart Of The Week  

The five forces of Martech. Chiefmartec in conjunction with WPP has recently released their annual white paper on the five major trends shaping the marketing technology industry. The chart below captures the five areas that are in focus. What’s interesting about this report is that much of the technology forecasting is focused on the increased complexity of solutions. For example, building no-code platforms so that marketers can self-serve their own digital solutions is a very hard problem to solve, so is the presumption that AI will take on more critical decisions in a business. Also, the idea of “Big Ops”, technology that augments business processes, introduces even more complexity into how people work together. Technology to solve technology problems is an oxymoron. It's almost as though we need a sister report for how people are going to be trained to manage these forecasted technologies. The future is complex. Link

📰 Latest Developments

Facebook is re-launching its crypto project. After the first attempt to enter into the crypto payments space, they’ve built a new team and rebranded to Novi. Facebook already manages more than $100 billion in payments around the world and is still betting on crypto to be a solution that allows for easier and cheaper global payments. Novi. Overview.

Sastrify, a new way to manage Martech. There was once heaps of competition in SaaS marketplaces, but then G2 took the majority share of web traffic and everyone else gave up. This new company seeks to challenge the incumbents by offering a SaaS platform management tool to automate procurement and licensing fees. They also promise $12,000 savings in the first year on the lowest plan. Confident. Link

Afterpay increases lost revenue by 700%. Afterpay recently got acquired by Square and so this news isn’t great timing. The loss in revenue is quite staggering. The company reported a net loss of $156M. In the previous year, the revenue loss was $19.8M. Sure they’ve grown a lot, but shouldn't the gap between profit and loss be narrowing? Link (P.S. You can read my analysis on the future of Afterpay in last week’s newsletter).

📚 Reading

The meaninglessness of marketing language. Marketing Week is talking about our poor use of language in marketing again. Ironically, marketers should be leading the way with clarity and precision in language, because after all, aren't they the ones talking to customers. 🤷‍♂️ Link

Re-invented marketing. A great piece by Rishad Tobaccowala talking about the need to change how marketing is understood in business. His point is that the internet has tipped all the buying power to consumers in an unpredictable way, yet the discipline of marketing pretends that this is not the case. Link

The history of management consultants. If I could survey the decision-making landscape of Martech, the companies that control most of the influence in the industry are the large management consulting firms. The Atlantic did a deep dive into the history of the big ones like McKinsey and BCG and attempts to explain how these consultants changed the trajectory of executive decision-making forever. Link

🔢 Data & Insights

What people see on Facebook. Incredible statistics on what people actually view on Facebook were released from the company last week. Casey Newton helpfully analyses some of it and suggests that the top 20 most viewed posts are mostly plagiarized content and reports of COVID-19 vaccine-induced deaths. Some of these posts are racking up more than 80 million views 🤯. FB. Casey. NYTs

The state of streaming. Group M has done a very interesting research study into the consumption of streamed content as an analog for how traditional TV continues to decline. In the US, 28% of all TV consumption came from streaming services. In 2019, that number was 14%. What’s interesting about streaming is that most of the popular services don’t allow advertisers in, opting for subscriber revenue instead. Link

Spending in Australian digital advertising reaches $11B milestone. In the last financial year all sectors of digital ad spend have doubled 🚀  Link

💡 Ideas

Inviting your customers into product development. This rundown of how you could directly involve customers in product development picks up on one thing we tend to forget about in product management: You really need to focus on user needs. Link

The internet's version of renting. In today’s world, many of the ways in which we do commerce happens on platforms not belonging to us. This is a digital equivalent to renting vs owning a home. From using Stripe for payments to advertising on Google or even publishing on Substack, renting on the web is ubiquitous. Here’s an examination of the long-term implications of building internet companies on rented ground. Link

Communities. There are a few verticals that benefit from online communities: Media, SaaS, publishing, arts, sports, and consumer products. However, alot of the tech and strategy for community building is still underdeveloped, and it’s because marketers don’t know how to build and sustain it. Link

✨ Weird and Wonderful

How I experience the web today. Link

The flaws of the enterprise. A series of hilarious charts that sums up most problems with doing tech strategy in enterprise businesses. Link

How to Google. I’ve been googling for at least 15 years and I’m NOW just learning that there’s a better way to search. 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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