Opinion Opinion | July 8, 2016

Three martech developments you need to know: Industry consolidation, Google’s move into the DMP space and data regulation

The Drum

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Richard Dunmall
Richard Dunmall
CRO, Media iQ

The martech space is seeing a lot of consolidation in a bid to reach omnichannel consumers, while Google’s entry into the DMP space is reverberating across the industry. The Drum explores the key developments shaping martech right now.

Salesforce moves into e-commerce

CRM giant Salesforce has made a decisive $2.8bn move into e-commerce with the acquisition of the DemandWare platform, adding to its strong cloud platform line-up (marketing and service clouds) with the creation of a Salesforce Commerce Cloud. The move follows a buy-out of Marketo by San Francisco-based Vista Equity Partners for $1.79bn and is unlikely to be the last big deal we’ll see in this space – worldwide spending on digital commerce platforms is expected to grow at more than 14 percent annually, reaching $8.544bn by 2020, according to Gartner.

The buy gives the CRM behemoth a powerful customer experience management story, blending native CRM with marketing automation via the now-three-year-old ExactTarget acquisition, and now an e-commerce infrastructure player that already counts retail brands such as L’Oréal, Adidas, Crocs, Puma and Callaway as clients. Arguably, Salesforce is playing catch-up with Oracle and SAP after they acquired ATG and Hybris respectively.

Mark Zagorski, chief executive officer at Nielsen, thinks the acquisition highlights the ongoing consolidation in this area: “Consolidation is a big theme in this cloud marketing space, and the deal certainly won’t be the last we’ll see. However, at some point consolidation will start to run out of steam and we’ll see the opposite happen. The key is not to stray too far from your core competency – if your core is in CRM, how far can you afford to go outside that?”

Mark Ash, managing director of Teradata Interactive International, agrees: “We’ll see a great deal more consolidation in an effort to meet the needs of the omnichannel consumer. Marketers shouldn’t consider a platform based on its current functionality – in a year’s time, it could be out of date and not be able to meet the needs of your consumers.

“It’s also not about having every execution point. Some cloud vendors force customers to pay for an all-singing, all-dancing martech stack even though some of the functionality isn’t relevant for your customers or is hardly used, so marketers end up paying over the odds just for bells and whistles that have no relevance. There is an opportunity for martech/adtech clouds to provide customers with a more flexible/modular approach.”

Google moves into DMP space

Meanwhile, Google’s long-awaited – and much rumoured – entry into the Data Management Platform (DMP) space has come at last. Google Analytics 360 Suite aims to simplify unifying and syndicating marketing and advertising data across channels. With native AdWords and DoubleClick integration, as well as integration with other DSPs, it rounds out Google’s DoubleClick tech stack neatly. On the flip-side, Google isn’t the first to this party, with a host of existing players at all levels – Oracle, Adobe and Facebook’s Atlas, to name just a few.

Richard Dunmall, chief revenue officer at Media iQ, said: “The move makes sense for Google, DMP being the missing silver bullet in its stack, and it has created a seductive story for marketers, a powerful walled garden that needs to be considered. But it does feel a little like marking your own homework. Wider integration looks to be somewhat limited, and of course, there’s likely to be considerable self-interest on Google’s part in terms of the recommendations you’ll get from this suite.”

Dunmall continued: “It is an interesting question as to what scale of customer Google is actually targeting here. The really big players are becoming much more sophisticated, have their own DMP technology that they’ll likely trust more than Google, but a turnkey, off-the-shelf product like this could well be a strong option for smaller enterprises.”

Zagorski agrees: “I can’t see this gaining major traction with Tier One enterprises. You have to look at a tool like this, created by a company in Google’s position, with a slightly suspicious eye – what are its motivations here? It’s a smart move, and will shift more Google media, but the lack of independent validation will be a concern. For smaller businesses, though – and a large percentage of Google ad spend comes from these players – it’ll undoubtedly be a useful tool.”

Although the spec of the Audience Center interface will undoubtedly evolve over the coming months, Google has been clear that its ‘people-based marketing’ play is no flash in the pan, and will compete head-to-head with Adobe Audience Manager and Oracle BlueKai. Simplicity in UI and data visualisation is key here, as is the partly open nature of the platform, especially from a data point of view. Creating a rich data blend by allowing imports of your first-party data, then adding audience data from sources including YouTube, Android, Gmail, and search, plus a range of new third-party sources, is a potentially potent offering.

Michael Baumgaertner, director of media and trading EMEA at Accordant Media, said: “This is great news for marketers, as they’ll have another powerful option to consider. There’s an increasing focus on first-party data, and that’s something Google has recognised here. I am somewhat in ‘wait and see’ mode in terms of adoption, especially on the DMP – is it better for business X than Oracle or Adobe? That’s hard to say right now…”

It’s fairly certain the move is just the next step in the ongoing arms race, as Mark Williams, director at Results International, points out: “I am curious to see how Oracle reacts. After all, it has spent billions of dollars on acquisitions to build its Data Cloud but has yet to make a play into programmatic ad tech. Oracle’s USP is its strong integration with a customer’s CRM and, with its acquisition of Datalogix, the ability to offer them a bridge between digital and offline marketing channels. These are two capabilities neither Google nor Facebook can offer to the same scale.

“DMPs are the logical cross-over between the enterprise software and adtech players, but as yet neither side has made a play for the other’s core revenue stream. It will be interesting to see if this potential area of competition in the tech stack will stimulate acquisition across the sectors.“

Europe moves to unify data protection

The General Data Protection Regulation was formally published by the Official Journal of the European Union on 4 May and comes into effect in May 2018. The new ‘harmonising’ data regulation is set to bring considerable change to the marketing industry, and not just due to the considerably tougher fines for breaches. A two-tier system sets a fine of up to €20m or four per cent of global annual turnover for the preceding financial year, whichever is the greater, for the worst breaches, and up to €10m or two percent of global annual turnover for lesser infractions.

The GDPR is broadly designed to protect consumers in a host of ways, bolstering protections for under-16s, and attempting to limit wholesale profiling and long-term storage of non-relevant personal information. A key proviso is around obtaining consent, which must be given clearly and affirmatively.

Carolyn Bertin, an IT law and data protection specialist at Keystone Law, said the GDPR will have a significant effect on industry practices.

”Existing databases may need to be re-evaluated if they contain bought-in lists etc, to ensure the permissions paper trail is in place. There are plenty of questions for the industry to grapple with, such as ‘is opt-in still reliable?’, but the big story is that businesses have two years to get their houses in order from an audit point of view.”

Neilsen’s Zagorski was more sanguine. “There will certainly be challenges for data controllers, but from a decade’s worth of industry perspective there has always been a positive dialogue with regulators here,” he said. “There will be technical, procedural and legal solutions to ensure that consumers are protected and business can continue.

“When you look at the data chain this is about transparency, and strengthening transparency is good for everyone.”

However, Teradata’s Ash sounds a final note of caution: “It will certainly have an impact on those sectors that have traditionally relied on data companies for list rental – some catalogue companies, insurance and finance, and so on, where a lot of DM activity is based around pre-profiled lists, as well as third-party email data providers who collect data under a vague opt-in. Whether you are recognised or not, it makes no sense at all for consumers to not know exactly where their data is going after they register.”

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