TMW #085 | The shortcut economy (episode 2)

Jun 5, 2022

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Here’s the week in Martech:

  • The shortcut economy (episode 2). A unifying theory of Martech
  • The history of the browser. Tracking Google’s grip on the web
  • Twitter’s privacy fine. Turns out you can’t use 2FA credentials for ad targeting
  • Everything else: Salesforce and TikTok, more on Amplitude CDP, Web3 nonsense making, independent ad servers, content creator report, post-agile marketing, and a good customer service tweet.

✍ Commentary

The shortcut economy (episode 2)

Last week I introduced the concept of the shortcut economy, a unified theory for why there are so many Martech companies, and why some win while others don’t. It’s based on the idea that so much of the marketing technology economy is designed to help companies take a shortcut to value by offering tools to get around pre-existing technology, data, and process problems.

This week I’m looking at what makes up the shortcut economy by answering this question – exactly how does Martech help companies take shortcuts? A colleague in this thread used a helpful analogy for the shortcut economy; in most cases, Martech is like renting a house – it gets me what I need today, but it’s not my forever solution. If buying Martech is like renting a house, then this essay is the property inspection.

Cutting the cornerstone

It goes without saying that there are many technologies that are not shortcuts at all, but rather vital pieces of internet machinery. It doesn’t make sense for every company to reinvent email marketing software, or cloud architecture, for example. There are many companies that need these technologies to function in a digital economy at a basic level. Companies like AWS, or Google function more as cornerstones providing critical infrastructure on top of which every other company operates.

Even still, cornerstones needed to be cut at some point. Over the past 30 years, most companies that are old enough have made several transitions when approaching the internet. Everything starts as experimentation and eventually becomes critical and fundamental in how a company operates.

Remember Pizza Hut? They were the first company to ever sell something online in 1994. Back then, selling pizza over the internet was an interesting experiment that generated PR and positioned the company as an innovative leader.

Now? Dominos ate their lunch as ordering things online transitioned from experimental ideas to a fundamental part of the economy. Dominos is now one of the most mature companies in how they use data and technology to sell pizza. This is just one story to illustrate the changing needs within a company as new technologies are offered to the consumer.


Shortcuts thrive in the wake of innovation

With every innovation brought to the market, it always leaves a long tail of vendors that catch the opportunity by helping companies to harness parts of the innovation. You could say this is true for marketing automation platforms when SMTP became a thing, or demand and server-side technology in Adtech when programmatic advertising was pioneered by Google, and even social media schedulers to manage multiple social media accounts.

Another example, which I unpacked in TMW #083 is the CDP. This technology plays an important role in offering a marketer-friendly database with a set of tools so that companies can get around their own data silos and integration challenges.

But the technology is needed because the consumer expectation for personalized experiences has been significantly impacted by how they deal with global social media, search, and eCommerce platforms. Companies that pioneered personalization like Amazon don’t need a CDP, but your typical retailer does. Meta doesn’t need a CDP, but ABC news does. Why? Traditional companies are working in the wake that innovation created.


Pick your poison: Growth or efficiency

The reason why more traditional companies spend millions on vendors like Salesforce, Adobe, or Oracle is there are usually two needs: Growth and efficiency. Growth is predicated on the idea that the internet is still an untapped repository of new customers and the best medium to keep your current customers engaged and loyal. Efficiency is different in that for most companies to grow on the internet, the only way they can do it sustainably is through managing data and technology and processes in such a way that it unlocks scale and becomes incrementally cheaper.

The shortcut economy leverages these dual needs. Do me a favor, and pick any marketing technology vendor website. The first one that comes to mind. What does their headline say? What are their benefits? You’ll be hard-pressed to find anything that doesn’t include messages about either one of these goals.

In this way, the categories of technology that achieve either growth or efficiency are more focused on some categories than others. Data architecture companies like Segment, Snowflake, and even to some degree AWS say that the cloud is how you achieve the kinds of efficiency and scale that on-prem or sever cannot. You can scale from thousands of records to billions without anything more than a credit card.

Growth comes in a different box. Companies like Adobe, Optimizely, The Trade Desk and even more eCommerce centric solutions like Emarsys or Cheetah Digital say that you can unlock growth through segmenting and targeting customers in ways that were previously impossible. You can shortcut growth by using their data and experience tools or risk trying to navigate debilitating technology silos and do it yourself.

There’s a reason why so many marketing orchestration tools offer various flavors of artificially intelligent content engines. Companies that aren’t innovating are not investing in building their own models, so it’s easier, faster, and more effective to rent one. Like my colleague said, renting gets you what you need today, not tomorrow. And in this way, a shortcut technology can quickly become a bad landlord.


Cookie-cutter capability

This brings me to a question – what does it mean for a company to become more capable with their marketing technology? It is reasonable to suggest that in most cases there are actually two kinds of capability;

  • The skills, processes, and mindsets needed just to use the shortcutting technologies that already exist
  • The actual capability a company creates when they realize they are not in the business of renting technology but are a technology company that builds and connects software for marketing

The former is mostly reactionary, while the latter is proactive. It’s reactionary to rent technology because there is a business case about responding to market change or new forms of innovation. Think for a second about companies like Meta, they created a whole new ad economy and with it an ecosystem of marketing and advertising technologies that make using the platform and buying ads a little easier. The companies that rent tools to use Meta are reacting to what is already there.

Contrasting with the latter form of capability, renting technology is responding to today and not tomorrow. They are not in the business of instigating this change in the first place or creating a certain type of advantage by using technology in new ways to capture value. This is why building capability in Martech is more like using a cookie cutter than inventing a new type of dessert.

In the shortcut economy, every technology gets to be famous for five minutes. Demand always swells when companies are responding to, and not instigating change, seek out the right technology to help them best meet the customer where they’re at. But it’s only five minutes, and like the thousands of apps in the Martech graveyard, they too had their moment until the internet swiftly and brutally moved on. Next week, in the final installment of the shortcut economy I’ll be talking about potential futures for the shortcut economy.

📈Chart Of The Week  

The history of the browser. The only reason I’m featuring this is because of how cool it is as an animated data-viz, and how much my boss hates doughnut charts. Other than that, it’s interesting to note that internet accessibility has been largely mediated by four products: Netscape, Internet Explorer, Firefox, and now Chrome. Google’s grip on the web has been the longest in the history of the browser, but people said the same things about Microsoft in the 2000s. Link

📰 Latest Developments

Twitter’s privacy fine. The company was fined $150m for using two-factor authentication details for ad targeting. This sort of blurred lines type of data management stems from a broader issue of vague definitions of what privacy means for compliance and consumer declarations. Link

Salesforce and TikTok. The two companies have formed a partnership around the Salesforce Commerce Cloud which gives merchants the ability to make their products discoverable on the TikTok platform. The interesting thing about the rise of a new social media superpower is not really the content or the audience, it’s the ecosystem of apps that it creates. TikTok is slowly becoming a shopping network and Salesforce knows it. Link

Sheryl Sandberg stands down. I don’t normally cover these kinds of announcements, but I’ll make an exception. Sandberg, the departing COO of Meta is the reason why the company is such a dominant platform. She solved the scalability issue in social advertising that gave the company an outsized advantage and gave millions of small businesses ad targeting capabilities only enterprises previously had access to. She also leaves a long tail of societal issues in her wake. Casey Newton’s write-up is the most balanced view of her tenure. Link

📚 Reading

Amplitude’s challenge to the CDP industry. I featured the news that Amplitude announced a product and analytics-focused CDP last week. This CIO article goes deeper into their strategy and the changing role of the tech category. One interesting element is the company’s approach to undercutting prices. Link

The news media bargaining code deep dive. Last year the Australian government wanted to force Facebook and Google to pay news outlets for displaying links to content on their platforms. What ended up was a chaotic compromise that left many publishers out in the cold and created a golden handcuff situation between the media incumbents and the platforms. This report, from one of the deal’s architects, goes deeper into the approach. Link

Vice on Web3. Some interesting reporting on the nonsense-making movement that is Web3. The article tracks the many companies pivoting to the blockchain for the sole purpose of attracting VC funding. Founders justifying their Web3 startup with reasons like “it’s creating a better internet” or just plain old FOMO are the funnier aspects of this analysis. The lack of definition or focus on consumer problems is one of the most fascinating aspects of Web3 because it offers opportunities to create an advantage in the chaos. Link

🔢 Data & Insights

The rise of independent ad-servers. There is a growing demand for custom ad server offerings that can better suit advertiser needs. For years Google has played a dominant role as the one-stop-shop for display and programmatic, but as publishers and brands become more sophisticated, their options to integrate with a broader set of ad networks become more viable. Link

More research on contextual advertising. The ROI Genome Report from Analytics Partners looks at the growing use of contextual advertising and its effectiveness compared to narrow forms of tracking and targeting. More signals point to the same conclusion: Contextual is working. Link

State of content creation. 2021 was a year of rebranding anyone who posted anything online as a “content creator.” Of course, since the inception of the internet, there have always been content creators, but last year saw a mental shift in how marketers turn the influence of content creators into revenue. This report explores some of the shaping forces of online content creation. Link

💡 Ideas

Post-agile marketing. An exploration into ways of working outside of technology-centered paradigms. Link

Roblox X Gucci. Why is a luxury fashion brand so interested in a platform built for kids? Part of the reason is how high-end brands invest in marketing at a generational level. Creating memorable experiences for a 15-year-old kid can be leveraged as nostalgia in 20 years. What Nintendo is to millennials, Roblox will be for Gen-Z’s, and positioning a brand around cultural memory is what creates staying power. Link

On-chain messaging. An investigation looking at opportunities to build a messenger app on the blockchain. There’s a reason why there are no real products in this space yet. Link

✨ Weird and Wonderful

A good customer service tweet. Link

On-demand strategy. Finally, something that will put me out of a job. Link

What is the least viewed article on Wikipedia? It's actually very hard to answer that question. Link


Stay Curious,

Make sense of marketing technology.

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

Juan Mendoza

Marketing technology strategist at The Lumery, I analyse marketing, data, and technology trends for some of the most well-known Australian and global brands.

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