Marketing has really remained the last vestige of the enterprise to benefit from the arrival of IT and its automation and efficiencies.
Payroll got the treatment in the 1970s, accounting in the 80s, enterprise resource planning and CRM in the 90s. Marketing, not so much.
Enterprise software is now about marketing.
And today marketing technology is one of the hottest topics in IT; and should become one of the hottest topics at the Board Room. With companies spending around 11% of their budgets on marketing, this is a a strategic allocation issue.
What we have seen is billions of dollars of acquisitions and the emergence of a new set of competitors, like Adobe, Oracle, Salesforce, and Microsoft all jockeying for the same CMO dollar.
Read that list again and you’ll realise how crazy it sounds: Adobe (the Photoshop people) competing with Oracle (the guys who make databases for banks) with Salesforce (a CRM product for sales teams) and Microsoft (the operating system guys). This is an industry shift.
We’ve also seen massive innovation amongst smaller companies in ad technology, email handling, data cleaning and social media.
The result is a huge confusion amongst marketers, vendor overload and immense dissatisfaction.
In a a March 2014 report Forrester reports that of the primary ‘social relationship marketing platforms’ (think of the common names heavily used), had a net negative Net Promoter Score of -16.
Any marketer understands the impact of a negative net promoter score. Clients are not loyal. They are looking for something better. And they are confused.
How to make sense of it
We operate a data-driven marketing product and we’ve been thinking hard about how you make sense of both the opportunity and the complexity in the space. One concept we play about with is the analogy between marketing operating systems and marketing apps.
An operating system is the scaffolding which flows horizontally across an enterprise. The operating system is responsible for the core (baseline) functions of the end user – often the things the IT guy cares about more than the marketer. These include things like workflow, compliance, backup, security, integration.
On top of the operating system live applications. These are the things that ultimately provide the customer with end value like Word Processors or payroll apps.
Both operating system vendors and app vendors can be real businesses.
The trouble is for only a few OSs can win. In the mobile space iOS and Android (who uses WinMo, Symbian, Tizen, these days?)
But equally there are many app winners. Rovio, which made Angrybirds, Evernote, Supercell and others.
As the CMO spends, a few marketing OSs will win but many applications will win
As the CMO spends, a social marketing OS will emerge. There can only be handful of these OSes and they are likely to be the ones that best resonate with the CIO. Who then?
Most likely the big players – Salesforce, Oracle, Adobe, Microsoft or IBM. For a detailed data take on these players I recommend reading a series of blog posts by Mike Brown Jr of Bowery Capital.
One the issues marketers have is around figuring out what to publish; deciding what to publish and scheduling content.
These will be solved be app vendors sitting alongside or on-top of the marketing OS because they solve specific application problems.
In this case helping you find audiences of your likely customers and work out, using data and prediction, what to publish; deciding what content to distribute, when to distribute it and who to distribute it to.
Who do we think will win?
Enterprises are standardising on their marketing OS. This decision will be made by a combination of the CIO and the CMO. And the choice will be the tradeoff of IT requirements and multiple competing departments (customer service, insight, brand, advertising).
Many departments will be unhappy because they didn’t win their choice of customer service tool / publishing tool in favour of standardisation.
Big players who can power the core enterprise social marketing OS, the money has to be on three or four of the main five. But notice that not every one of them can hope to get more than 20% market share.
Niche high value apps that can dominate core, hard-to-replicate features that are in demand: In this case the demand for these apps is high and outstrips the particular requirements of standardisation. This ‘niche’ apps could dominate entire valuable use cases.
Think of Photoshop achieving dominant market share in photo editing, or Rovio’s games thriving on every platform.
Two tests are important here: does the app specifically complete a high value, difficult end-to-end use case for amrketing end users? Is that use case difficult? Does it involve ‘hard technology’ rather than just a simple UI layer?
Second: Does your app create useful data (for example about people or audiences) that can flow into other apps in that the marketer is using?
Which companies will be challenged by the shift?
The use cases that were dominant in generation one social – listening, publishing and customer service – may struggle.
This is a tough space, even if you are growing fast now. Why? Most of the major players have bought or built capabilities in this area. And making the case for differentiation can be really tough. Think about apps that compete with iPhoto on the Mac – not very many.
Niche capabilities like toolkits to do sentiment analysis or demographic prediction will find a niche and potentially profitable role. However, they won’t really provide a core function for a marketers and the buying decision may be delegated to data analysts or lower level groups.
They will find their way into themarketing organisation through relationships with the winning apps and OSses.
As a marketer, what should you do?
Start with the apps. The apps solve your core business problems. The apps deliver business value.
The OS is just the scaffolding. More the concern of your CIO than you, integration with any well designed app will be straight forward, even across firewalls.
Finally, make sure that you’ve identified the needs in your team and department correctly and that you’ve got apps that are fit for purpose. No matter how good your Map app might be it’s not going to help you tell the time.
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