Do Interactive Marketers Actually Buy Technology?

I was just talking with Suresh Vittal on my team about how to project interactive marketer investments in technology.  In some cases in the US Interactive Marketing Forecast, we include technology investments in our projections of marketer spend on a given channel (for example, email marketing spend includes investment in email message delivery).  But for the most part, the IM forecast is based on current and projected media spend.

So the conversation Suresh and I had was to think through enough assumptions, to estimate how much marketers invest in technology. 

I'll tell you, my overall hypothesis is that there is not significant investment in technology among interactive marketers today.  I certainly support that IMers spend on agency fees and professional services engagements.  But outside of ad serving and email delivery, what technologies are they buying to aid their interactive program management?  I'm not talking here about content management tools, or commerce platforms associated with managing a Web site.  I mean marketing management packages used to create, analyze and execute interactive/online programs.  It feels to me that most of the interactive marketing technologies that are used, are accessed through a marketers' agency relationship (and likely included as passed-through fees that are paid to the agency).

As interactive marketing investments grow, I see mid-market firms spending more on self-service technologies.  But I think enterprise firms will continue to leverage services relationships instead of packaged solutions for their IM program management and execution. 

I'm interested in writing something on yield management tools and ad serving in the coming months.  So I'd love to hear your thoughts on how interactive marketers leverage technology (sounds like a funny little paradox, I suppose.  But you know what I mean!).

Comments

re: Do Interactive Marketers Actually Buy Technology?

Hi Shar,While I think what you are saying is historically true, I think interactive marketing is actually at an interesting point in its maturity. Many of the interactive marketers I am speaking with sound like database marketers 10 years ago. They are realizing that if they want to get over the next hurdle to better understand visitor/customer behavior and deliver relevant content than they need better access to comprehensive data, skills and tools to help them better analyze behavior, and program managmement and automation tools to help them organize and automate their activities.These needs are driving investment and growth in the "online marketing suite." The entry fee for vendors who want to be on short lists is ease of use, integrateability, and limited involvement of in house IT resources. Thus, the developments we've been watching around SaaS and SOA.Your point about agencies is a great one. Agencies are also beefing up their technical capabilities. And, I think it is reasonable that firms will look to their agency partners to help them select the technologies they buy.But, if you look at very large IM organizations today, it's very likely that they are already investing seven figures in applications like Web analytics, Site optimization, Email campaign management, and so forth. Those firms that have direct customer relationships also tend to have a marketing database and lots of analytic tools -- these may not be "owned" by the IM group (depends on the business) but they serve IM activities and IM typically foots part of the bill.Best,Elana

re: Do Interactive Marketers Actually Buy Technology?

Hi Shar,Great topic to tackle. A few thoughts in response...Enterprise marketers will continue to outsource to agencies for a host of reasons. But small and midsize marketers -- the foundation of the online ad marketplace -- will begin to shift more in house for a number of reasons.First, large enterprises: they often have less in-house savvy. Couple that with layers of fat of many large bureaucracies, and you end of with a give-it-to-the-agency-and-look-the-other way mentality. Short-term, agencies will be important for them, and they'll be even more critical to agencies. Longer-term, I would suspect that enterprise marketers will heavily scrutinize agencies and bring things inside, especially where automation diminishes manual, human advantage. There also will be more competitive advantage for companies when they keep their data inside -- this is especially true with the very biggest marketers.Now, small and midsize marketers: they simply are becoming unprofitable for most agencies. Agency margins are shrinking at the low end because they're staffing costs are rising, and technology costs are booming. It's difficult for an agency to offer technology and professional services. They're conflicting gods to answer to.Because of this agency conundrum, small and midsize marketers will become bigger investors in marketing technology services. They have to -- there's nowhere else to go. Moreover, small and midsize marketers are often more savvy and pay greater attention to performance and payoff, making in-house management with powerful tools very attractive. Also, in the small and midsize segment, there's a thinner line between the in-house marketing managers and the leads and sales generated, which keep the lights on and them employed.Finally, the and critical big picture: the past decade brought some incredible technological innovations, but the paradox is the paralyzing complexity that came with it, stifling the backbone of the online ad industry, particularly small and midsize marketers. But a new wave of innovation has begun, fueled by a thirst to overcome the new enemy: friction and opaqueness wrought by complexity and preservationists.As a result, you shouldn't limit your view of to "yield management tools and ad serving." It's important to connect these tools to the pain of these larger forces.Cheers,-- Max Kalehoff, VP-Marketing at Clickable

re: Do Interactive Marketers Actually Buy Technology?

It's a great topic Shar, and I would agree with Elana's point on the transition in interactive marketing. We're seeing a tremendous shift underway in the market, especially for marketers who work with a sales organization and are held accountable for generating a flow of leads to that organization. To do so, the interactive marketers need to tie their campaigns through to results. In order to do this, they need to be able to profile the recipients' response to their marketing message, score that profile of response, and then use that score to either hand off the lead as qualified or keep it for further nurturing.To accomplish that without the help of technology is daunting, if not impossible, so we are seeing a strong surge in the purchase of technology by interactive marketers. By quantifying their overall marketing results, and then optimizing that program spend, the marketers are able to cost justify increasing levels of technology spend.Best,Steven Woods,CTO Eloqua

re: Do Interactive Marketers Actually Buy Technology?

Hi Char,This is a great topic! Coming from an enterprise software background and having covered the media industry for most of my career, it always amazed me how little was done to make the media planning, buying and execution processes more efficient....I guess that's why I founded this business, but the reality is that there is more pain to come before gain - as media fragmentation continues, there is a significant need for planners to adopt technology and platforms that ease the buyer/seller connection processes. This is particularly true in the premium, guaranteed inventory space, where no exchanges can play (ie exchanges = remnant inventory).As a result, technology driven behaviors and platforms become key enablers both within large and smaller agencies.Look forward to reading more!Rgds,VivekFounder & CEO, AdBidCentral