The Outlook for Marketing Technology

In my opening remarks at the Marketing Tech Symposium on 3-4 November, it was difficult to recap just how challenging 2022 has been.

Markets have struggled, hit by a perfect storm of rising inflation, interest rate hikes and on-going concerns about global economic growth. The war in the Ukraine affected energy prices around the world, and the effect of the pandemic continues to be felt by businesses everywhere.

Australia’s average wage growth wasn’t even half the rate of inflation, yet occupation shortages still doubled. Many employers are struggling to motivate employees to come back into the office, let alone to fill vacant positions too. 

Crypto crashed. Big tech companies laid off swathes of staff. Australia had several major data breaches. Her majesty Queen Elizabeth II's reign came to an emotional end. And if it didn't all seem surreal enough, Paul McCartney was playing Glastonbury, Kate Bush was number one and Top Gun was huge at the box office. 

There is some good news though.

The Australian economy had its best annual growth rate in ten years. The IMF also gave Australia a good 5-year forecast compared to other advanced global economies. Australia’s online consumer spend grew at 14.5% YOY. Digital ad spend was up 22%. And 4 out of 10 Aussie workers enjoyed working from home, with 70% interested in continuing to do so. 

Life’s pretty interesting on the Marketing & Tech front too. Elon Musk now owns Twitter. NetFlix is rolling out ads to customers who want a cheaper subscription. Uber launched a corporate advertising division and Uber Journey Ads. We now have Scope3 tracking the carbon emissions of the ad supply chain in this country. The Out-Of-Home sector made a triumphant return, with higher revenues in their first month back than pre-pandemic times. And Google gave us another year to prepare for losing cookies. 

Make no mistake though, many global advertisers may be considering budget cuts in 2023 and a softening increase in June Ad spend may have been the first sign of a slowdown. Is it time to think about how we would all handle another potentially difficult year ahead? 

Here are my three main considerations and I’d love to hear yours.

1. "Time in the market beats timing the marketing"

Research shows that during the ‘08 GFC, the extended period of market volatility caused some Superannuation clients to switch investments to more conservative options like Cash. Now, that may have initially felt reassuring as markets kept falling but unfortunately those clients locked in a loss on average.

You see, not many switched back out in time, so they missed the rebound in stock markets and a subsequent decade of compounded growth. 

The VAB’s analysis of the past hundred years shows that marketing is no different when it comes to switching spend off and on in a downturn cycle. The data shows that brands who took advantage of cheaper share of voice and actually increased spend during economic turmoil saw a nearly 70% increase in ROI vs. brands that decreased it.

Amazon, Walmart, T-Mobile, General Mills and Hershey all used the ’08 recession to catapult their growth. (Note: Peter Field's words from 16 years ago also still ring true today!).

2. “Proper planning and preparation prevents price promotions”

MarTech plays an important role in helping marketers stay away from heavy price discounts to meet sales targets. Last year’s Mortgage lending in the spring buying season was a perfect example – those with the best digital approval processes were trumping lowest rate and best promotions. 

But there’s a lot of work to do. Deloitte’s recent Privacy study showed that only 30% of consumers were happy with the state of online personalisation. The State of the CMO research suggests that marketers were also using less MarTech capabilities thanks to overlapping features in platforms, talent shortages and too much complexity. 

The right tech will be important in the coming years:

• It orchestrates eCommerce journeys that intuitively up-sell, cross-sell, assist customers and minimize refunds.
• It’s at the core of high functioning loyalty programs.
• It provides marketers the ability to be both broad and highly targeted with paid media audiences.
• It connects marketers to ad platforms to buy incremental share of voice at discounted prices, across many environments.
• It fuels retargeting and lead generation.
• It builds and sequences dynamic creative.
• It helps control the split of emotional brand building, contextual storytelling, and sales activation. 
• It allows marketers to model the channels and mediums that need more or less investment.
• It generates data that reveals quality customer insights.
• And it’s what allows marketers to manage first party data in all of the above.

3. “The devil is in the data”

The economic backdrop is not good, but it’s so important to focus on Data Management in MarTech right now. In the wake of serious Data Breaches and forthcoming privacy reforms in this country it’s understandable to be a bit nervous about how that network of 10,000 platforms Scott Brinker mapped out is collecting, storing, processing and sharing data with each other. 

Even if you have an all-singing-all-dancing tech stack, how do you sleep well at night knowing the security and privacy controls are airtight? Being successful with MarTech is not about launching new platforms. It’s about a deep understanding of data and its power to improve revenue and to reduce costs but also its potential to create risk in the process.

Managing that risk isn’t just IT, compliance, or security teams’ jobs to handle. It’s everyone’s.

Notes from Think Tank 3: "Rich 1st Party Data is Vital However How Do We Manage The Risks?"

The purpose of this session was to discuss how event delegates were balancing the use of first party data in MarTech with risk management. There were 20-30 attendees in total, from a range of difference business types.

As we followed the Chatham House Rule, I have not uploaded photos of attendees or quoted anyone by name or company. Thank you to to all attendees for their excellent participation and insights! I have summarised the discussion into the following 3 key themes:

1. The days of checklists are over

• ASD's Australian Cyber Security Centre received more than 76,000 reports of cybercrime in the 2021-22 financial year (+13% YOY). This, plus large scale incidents, have put data security and customer privacy well and truly on business Executive priorities to proactively solve
• Some are finding that internal ownership is somewhat ambiguous still though, particularly with legal stakeholders, who are on a learning journey about the underlying problems. Therefore, many are forming cross-functional working groups (or 'squads') to begin the process of self-regulation
• Prior to incidents, the legislation "had no teeth" so the approach was to conduct checklists in an effort to been see as compliant. However, heavier penalties are being imposed on companies responsible for breaches - regardless of how it happened - so checklists are not nearly enough
• Some delegates even walked away from vendor contracts at a cost if they couldn't pass all aspects of security audits
• "U.K. regulators handed down a record level of anti-money laundering penalties to banks in 2021, and experts anticipate fines to remain elevated as the country's Financial Conduct Authority embraces its powers to pursue criminal prosecutions." Source: S&P Global. This is likely where Australia will go, as the current state is 'frameworks' and not necessarily 'legal requirements'
• While multi-factor authentication and single sign-on have been used to have security control over multiple IT environments, these are now being seen as risky in themselves because of employees having access to too much data. I.e. the 'one front door' could be a major vulnerability

2. "Fire Drills"

• The appropriate cadence for checking risks and controls seemed to be every 6 months and took the form of an audit
• There was one instance of a 40-page playbook for a 'breach plan', so that all stakeholders new exactly what their responsibilities were and what to do in the event of a data breach
• There were also plans for a "mock incident simulation" to test the breach plans - aka the terminology 'fire drill' mirrors how companies prepare for evacuating staff in event of a fire
• These data breach 'fire drills' could be carried out by businesses to stress test their controls and demonstrate to their Executives that the business is as ready as it can be

3. Now is the time to get Senior Leader backing

• Overall, some felt this was an opportunity to actually embrace a compliant culture and 'clean-up' past Marketing Technology practices
• Those who were further into the process also cited their use of Data Governance Councils, where C-Suite and Finance attended alongside data SME's for oversight of data risk management and to make important decisions on topics such as data destruction
• There should be an understanding from businesses that some job roles will need to change in Marketing. They will need to incorporate technical aspects relating to IT and InfoSec, as well as privacy, risk and compliance
• Security risks are very different to Privacy risks and Privacy risks are branching out into growing variations in accordance with multi-regional legislations (e.g. GDPR, California etc). Keeping on top of these growing number of Privacy obligations is going to get harder and harder
• It is recommended to specifically review the Attorney General's website for responses to the proposed changes to Australian Privacy Legislation. Marketers will need to understand how other businesses are interpreting them and the specific risks they may be facing in the new year
• As part of the Data Governance Councils, business should be clear on the policies for customer data that we "need to keep vs. want to keep". If the marketer has not clearly expressed a need for the data value exchange then the default position should be to not keep it