TMW #084 | The shortcut economy (episode 1)
Welcome to The Martech Weekly, where every week I review some of the most interesting ideas, research, and latest news. I look to where the industry is going and what you should be paying attention to.
👋 Get TMW every Sunday
TMW is the fastest and easiest way to stay ahead of the Martech industry. Sign up to get the full version delivered every Sunday for this and every TMW, along with an invite to the TMW community. Learn more here.
Here’s the week in Martech:
- The shortcut economy (episode 1). A unifying theory of Martech
- Tracking hype. A history of the tech that didn’t work out
- Everything is a CDP now. Another challenger enters the ring
- Everything else: Decentralizing Instagram, the addiction economy, how privacy regulation helps personalization, JP Morgan on the metaverse, something called “omnipresence” and a search engine but for faces.
Reader note: This is part 1/3 delivered over the next three TMWs.
The shortcut economy (episode 1)
There are many ways to make sense of marketing technology. The Martech Landscape, or the Lumascape or the Stackies are a few ways to think about the industry. Over the years, countless hours have been poured into the conceptual challenge of making sense of more than 9,000 companies operating in and out of the domain of Martech.
With so many products and new categories entering Martech every year, there are a million and one ways to slice and dice Martech to gain a holistic understanding of where the industry is going and why. I would like to offer you a unifying theory for Martech: The shortcut economy.
What is the shortcut economy? It’s a way to explain why some companies are successful in the Martech industry and why so many companies fail. The premise is that the vast majority of marketing technology works because companies need to get around their own data and technology problems by buying software that provides faster, cheaper, and sometimes more effective ways to do things.
The shortcut economy powers most of the marketing technology functions that we see today. Here’s a shortlist with a few examples:
- Marketing automation platforms make it vastly easier to send email at scale
- CRMs sit at the heart of almost every company because they take away the pressure to build and manage customer data
- Commerce tools are turnkeys for payments
- Data visualization software help analysts make sense of data without having to code
- Project management software offers a way to organize a team and process without having to think about it too hard
- Chatbots replace investing in real customer service
- Optimization tools provide a fast and easy way to start running AB tests
- Customer data platforms are an easy to manage data warehouse
The list can go on and on and on. The story of Martech is about how companies outsource, purchase and install software that do things their team can’t, and more importantly, won’t do.
Martech as a shortcut economy is kind of like this path, why take the long road when you can cut around it? Martech is the inside track.
Asking the wrong questions
I’ve sat through enough SaaS pitches to know that the value proposition of marketing technology is to make the marketer’s life easier. Drag and drop editors, audience enrichment without building an API, no-code website builders, and analytics dashboards in the browser are a few ways in which tech is brought to the marketing department. This is all great and wonderful and exciting, regular people can use technology!
But like every promising technology, there are tradeoffs. Marketing and technology teams are mostly arbitrary categorizations in a modern, digital world. No marketer is not trying to harness technology to create business value and deliver good things for their customers. In this way, the shortcut economy thrives because marketers ask very different questions to technology teams.
Technology teams play a vital role as a handbrake for bad technology decisions by thinking hard about how things work over a long time horizon. The problem is that most of Martech, by its nature limits how companies can grow and mature their own technology capabilities.
The idea for the shortcut economy came to me while I was on a call with an email personalization vendor. I asked why their company exists. What I heard was for most enterprise companies, doing personalization is almost impossible because of legacy technology and data environment, insane levels of politics, and having every single initiative needing to be approved by 10 or more people.
This vendor goes around all of that by offering an outsourced email personalization tool, just send them the data and they’ll take care of the rest. When I asked what happens when a company matures to the point of not needing them anymore, the answer was this – when companies try and do it themselves, most of them come crawling back.
In this way, marketers are asking very different questions to technology than IT teams. If a marketing technology can help a team get into the market faster and reach their goals, does it really matter if their company will never be able to mature beyond using off-the-self products? Does it matter if it comes with the cost of unknown technical debt? These are all great questions, but in the shortcut economy, they are ignored and software companies prefer them to be ignored.
The principal-marketer problem
One of the foundational problems in the shortcut economy is the principal-agent problem working itself out in the day to day of marketing. The marketing department is responsible for growing a business, but often the people who are making strategic decisions are not business owners themselves. This creates an environment where the shortcut economy can thrive.
What you measure matters. A lot of operating metrics, like quarterly revenue targets, conversion rates, lifetime value or test velocity are either created or enforced by business agents and not principals. Because of this, marketers are optimizing for targets that don't reflect true business value. This is where Martech offers short terms solutions for short-term goals.
Outsourcing your personalization program to a vendor or buying a complete ecosystem of marketing software, half of which you won’t use, always seemed like the right path when you have operating metrics to reach next quarter. But this is the complete inverse of how principals make decisions.
Principals, when they are good at what they do, see technology as strategic assets that improve the overall value of a company over a long time horizon. Data is an asset insofar as you can use that data to learn about customers or serve them better. Technology purchasing decisions are less about next quarter’s target and more about creating differentiated experiences, products, and services in the marketplace. In other words, business principals plant trees.
Principals know exactly what kind of business they are in and invest accordingly. Marketers, like most employees, are wanting to make their life easier or are striving for the goals set out before them. Marketers are in the game, but they don’t have skin in it.
The consequence, which I’ve seen all too much of, is what I call the transfer effect. When an executive moves from business to business, they will also bring along their own technology preferences and seek to move companies forward on their preferred path. This is itself a shortcut – getting around the systems, data, and politics of most enterprise brands usually results in a new technology platform that purports to solve all the problems.
Not having skin in the game means that it’s always the company that has to weather the consequences of a technology strategy based on short-term goals or leader preference.
The shortcut economy is about perspective
Does my unifying theory of Martech work? I think it helps to explain some of the challenges in the industry from a different perspective. Everyone is talking about buying technology and helping marketing teams to interact with a digital world. But almost no one is talking about giving marketing teams the strategic and technological perspectives needed to make the best possible decisions to balance short and long-term needs.
It’s always tempting to sign up, press a button and everything just works, but something is also lost when this becomes the default mode of marketing operations - companies don’t get to learn the important lessons of truly harnessing technology to maturity. Next week, in episode 2, I’ll be breaking down the technology companies that thrive, and the ones that barely survive in the shortcut economy.
📈Chart Of The Week
Tracking hype. This analysis into which technologies were at peak hype can tell you a lot about our current hype cycles. At one point NFCs were very important, and so was 3D printing and Web 2.0. So much of what’s on this chart does not exist today, and a lot of it found a home in small niches and never broke out to the mass consumer. This is a good reminder that most of what we call technology trends are just different types of freeform experimentation with only a small handful of winners. Link
📰 Latest Developments
Everything is a CDP now. Amplitude announced a customer data platform focused on product analytics. This solves a bunch of problems for unified analysis across a number of channels and products but introduces others when figuring out what to do with data activation. We’re almost at the peak of the CDP, where every man, woman, and child is selling one. Link
Decentralizing Instagram. Adam Mosseri is pushing for Instagram to go full Web3 and embrace a decentralized future where Meta eventually won’t own the platform, data, and monetization. It’s still a pipe dream, and more than a decade away at least, nonetheless it’s an interesting angle from an executive running in the opposite direction to Meta’s business model. Link
DuckDuckGo and Microsoft. DuckDuckGo created a value proposition around privacy, but the company was recently caught giving Microsoft tracking permissions. The problem with privacy-first products is the varying definitions of privacy. Apple doesn’t let others track you, but will personalize your ads. DuckDuckGo is doing the same thing here - we’ll keep Facebook and Google away but will allow Microsoft to track you. Privacy is a fluid concept on the internet, and how consumers understand it comes down to how the platforms define it. Link
The addiction economy. What’s more valuable? Solving problems or addicting people to a certain type of technology? An interesting analysis of how we got to TikTok, Instagram, Twitter, and Robinhood. All companies that built a business on human weakness. Link
The problem with brand purpose. Does your brand need a higher purpose to sell mayonnaise? Probably not. Link
Can privacy regulation improve personalization? Challenging the narrative that greater privacy means less utilization of customer data. Link
🔢 Data & Insights
JP Morgan on the metaverse. This piece covers several data points on the metaverse and a helpful breakdown of Web2 to Web3 characteristics. This is perhaps one of the more grounded takes on the internet movement so far but with some big forecasts. In-game spending will be worth more than $18 billion by 2027. Link
Commerce media landscape. Another Lumascape on the commerce media ecosystem split out by media execution technologies and commerce systems. Link
Advertising continues to grow. I’ve been covering IAB’s reports in the US, Australia, and the UK, and this report from the IAB EU is telling the same story. Advertising spending is only growing, up 30% in 2021. AdTech is still early. Link
The case for contextual over cookie targeting. An exploration. Link
Pokémon Go and crypto. This is the kind of franchise that makes for an interesting angle on token economies. Pokémon Go is the only real breakout AR project which kind of came out of nowhere. With a growing fandom and more advanced tech, there's an opportunity in crypto that only Pokémon can act on. Link
Omnipresence. A lot of buzzwords and fanciful thinking in this piece, but there’s some strong rationale on the role of thinking about marketing and communications in a holistic way. Link
✨ Weird and Wonderful
Just another week in web3. Comedy actor Seth Green loses a Bored Ape he was basing an entire sitcom on. Luna 2.0 the new token to replace Terra / Luna when the stablecoin platform lost $40 billion almost immediately crashes. Beeple, the artist that made NFT headlines with the first high-profile sale at $69 million last year had his account hacked which led to a number of fans losing thousands in a phishing scam. I am willing to listen to anyone who will explain to me how Web3 is ready for the mass consumer. Links: SETH GREEN.LUNA 2.0. BEEPLE.
What we put up with at conferences. A good round-up of visionary statements about tech and marketing that have gone absolutely nowhere. Link
A search engine, but for faces. Can’t put a name to the face? This might help. Link
Make sense of marketing technology.
Sign up now to get TMW delivered to your inbox every Sunday evening plus an invite to the slack community.
Want to share something interesting or be featured in The Martech Weekly? Drop me a line at firstname.lastname@example.org.