We’re living in an age of unprecedented change. We experience with Oculus Rift, invest with Acorns, consume video through Hyper, tune into Pandora and navigate with Waze.
Hold on to your hats, spending on marketing tech is about to take off -- US$120 billion over the next decade, up from $1.2 billion today. At least that's what Ashu Garg, general partner at Foundation Capital, sees when he gazes into his crystal ball.
"This is unprecedented growth in any software category I've ever come across," Garg says. "There's a fundamental shift, an irreversible trend, of consumers living in a digital world" that's causing a spike in demand for emerging marketing tech.
Foundation Capital, a Silicon Valley venture capital firm, follows more than a thousand marketing tech companies and has an impressive track record of investments in this market and has invested in companies such as Responsys, Tealeaf, Freewheel, Localytics and others. Garg came up with his $120 billion-in-marketing-tech prediction after many conversations with marketers and data analysis of spending trends.
Money Is No Object
And he's not alone in his rosy view of the market. Late last year, Gartner surveyed 300 companies and found that digital marketing spending averaged a quarter of the marketing budget in 2014. Half of the companies also plan to increase spending this year.
"Gartner's 2014 CEO Survey found that digital marketing was the No. 1-ranked CEO priority for technology-enabled business capability for investment during the next five years," says Yvonne Genovese, managing vice president at Gartner.
There's no question the CMO is the CEO's new best friend in the world of the digital consumer. The traditionally well-defined lines between sales, marketing and customer service departments are blurring, as digital marketers become the tip of the spear on virtually every customer interaction, including closing online sales.
In the world of the digital consumer, 80 percent of media will be consumed digitally, Garg predicts. The 30-second television commercial will fade into a bygone marketing channel, he says, underscored by Super Bowl spots costing half as much in a decade. Goodbye print media, replaced by digital displays and proximity-based advertising. And all media will be personalized to the consumer and bought and sold programmatically, Garg says.
"Marketing is a technical discipline now," Doug Milliken, vice president of global brand development at Clorox, told Foundation Capital. "We have to re-frame things we have been doing for 100 years."
Can Marketers Control the Message?
One of the top concerns among marketers is the changing nature of content.
Digital consumers have embraced an electric, chaotic word-of-mouth rapport with others online. These possibly crowd-sourced conversations are outside a marketer's control. Digital consumers share stuff on social media, participate on discussion boards, read blog posts, watch Youtube videos, scan customer reviews, and trust comments from strangers over marketing collateral.
Even worse for marketers, most of this "unowned" brand interaction occurs during the critical stage of passive shopping, not active shopping -- three out of four consumers will buy from a brand that rose to the top during passive shopping, says Foundation Capital.
Marketers competing with this unowned content can no longer simply deliver inspirational slogans and pretty pictures, rather marketing content must be chock full of customer stories, fact-based data or other relevant information that lifts it above the noise.
"Marketers must publish or perish," Garg says, as well as use marketing tech to identify the best unowned content and then find ways to amplify it.
While content creation, aggregation, analysis and delivery tools are important for marketers, they are only a piece of the larger marketing-tech puzzle. The many pieces, Garg says, are very complex for marketers to digest and incorporate into their workflow. Foundation Capital has identified some 20 tasks that marketers will need to rely on marketing tech to accomplish, ranging from stitching data together to programmatic buying to surfacing relevant insights at the exact right time to take action and help close the deal.