March 12, 2020 | By: Chris Karl
Chris is a Managing Director at Progress Partners and has over twenty years of experience in digital media sales, strategy, ad technology, data, and marketing.
We?re only a few months into the year, but there are some emerging trends that our team has identified and would like to share here as a perspective on things to come. From our vantage point as both principal investors and investment bankers in media & technology, Progress Partners has a unique perspective on the trends that are driving innovation throughout the market. We capture our insights from conferences (CES, IndustryPreview, LiveRamp, ShopTalk, DMEXCO, Cannes Lions), from thousands of meetings and calls with strategics, financial buyers, and start ups. This is a sampling of themes we have captured, if you have comments on trends or thoughts to share, please offer your feedback and ideas with us at email@example.com.
TREND #1: The CMO role is evolving and changing.
The CMO of the future is a product oriented, revenue minded, innovator. At the Industry Preview conference session titled ?Building A Self-Reliant Marketing Org?, Wayfair’s CMO & CPO, Ed Macri discussed the concept of marrying marketing and product – notice that Marci is not only the CMO, but also their CPO: Chief Product Officer (what a combination!). Wayfair has built all of their tech in house and is now a remarkably self sufficient company with growing opportunities around data and media (starts to look a little like a vertical Amazon or Walmart). The CMO of Del Monte Foods shared this thought: “The role of marketing and product Innovation are blending inside our organization.? It is becoming more and more apparent that product and marketing need to work hand-in-hand to be successful. A great CMO with an innovative mind to embrace these distinctions can be the difference maker in an organization. Perhaps this is why Salesforce decided to acquire long time industry trade group the CMO Club? Nothing like owning the world?s largest organized focus group of CMO?s to impact your own product innovation. Look for these difference makers to become more high profile and more visible in market.
TREND #2: INSIGHTS are the new marketing currency in a data restricted world.
Martin Kihn, SVP Product Strategy, Salesforce Marketing Cloud publicly announced the launch of Salesforce?s Customer Data Management Platform (CDMP), a natural extension of their cloud services business. Kiln stated “The more data you have the better to unlock insights,? and naturally if you’re Salesforce that creates more demand for cloud services. In the hierarchy of marketer needs, “Federated Insights sits on top of Big Data”. Insights can be mined from data to create commercial value and sharpen business execution. The CDMP will connect the Marketer?s data to Salesforce Marketing Cloud via a localized software solution designed specifically to mine and extract insights, unifying the client first party data (of all kinds, not necessarily identity based) with the activation layer in the ecosystem. Cloud companies like Oracle, SAP, Adobe, Amazon, and Microsoft are also launching similar extensions of their services under the banner of the CDP. Net Perceptions has been studying the needs of the marketer and comparing those findings to what is available via the cloud companies and the independent CDP?s. These findings and more here in a recent Ad Exchanger piece. Insights derived from the Marketers data will be the standard currency in search of activation via the marketing layer. The question is whether Marketers will want an independent and neutral partner to connect their data to the cloud companies OR will they double down with their cloud partners on these services?
TREND #3: The browser is back. The Chromepocolypse is real.
When the commercial internet was born, the web browser and companies like Netscape were heralded as the gateways to the Internet, which was an immense position of leverage as the starting point for the consumer’s internet experience. Google wasn’t around back then but in the decades since they have developed a healthy market share for Chrome and Chromium powered browsers. Therefore Google’s aggressive move to eliminate third party cookies in the Chrome browser (and Chromium open source browsers) was presented as a move to protect consumer privacy and clean up a messy data ecosystem. As with all things Google does, there are motivations and ripple effects that will be felt for years to come, some thoughts from the European Publisher community on that topic can be found in this Digiday article. One might view this decision as a positive consumer friendly and responsible decision by Google, however there are many insiders that have concerns about the potential of Google consolidating more power. Among all the talk, a common rumor is that Google has grown increasingly frustrated with the industry hack known as Header Bidding; a technology that separates ADX (Google’s Exchange) from DFP (Google’s Ad Server) and gives publishers more control over advertising inventory auction dynamics. When Google has control over the auction with their ad serving clients, they have the ability to deliver demand from DV360 (Google’s DSP), which creates a situation where they control both sides of the market. Header Bidding basically took away some of Google’s leverage – so how do they get it back? They start to control what happens at the browser level.
By setting industry wide rules at the browser level Google is in a position to create new solutions around how identity is managed within the browser and regain some of that leverage. This reintroduces the power and influence that the browser has over how the entire monetization ecosystem works. This “edge of market” position puts everyone that renders a page inside the Chrome browser at Google’s mercy (unless maybe if you are a CDN that is delivering the web page to the browser OR the device on which that browser resides, Operating System and OEM’s. These players have the potential to reintroduce neutrality to the market because they have enough scale). When it comes to identity resolution matters this year, think about who is in a position to move the market. (Spoiler Alert: There are very few companies).
TREND #4: CTV is the second coming of the Internet.
Traditional broadcast TV is rapidly declining in percentage of total viewership. The future of TV is here and it?s called CTV. Connected TV?s that access an endless (and sometimes overwhelming) amount of content on demand, whether streaming on a paid subscription or ad-supported business model, will soon overtake traditional broadcast and cable TV in terms of time spent and then in terms of media spent. This is a certainty. The market can expect to experience a significant sequential revenue growth for the next 5-7 years resulting in the obliteration of some companies that have serviced the broadcasters. By some estimates cord cutting cost the TV market 7% of their audience in 2019. CTV’s are now in 3 out of 4 households and CTV looks like the web circa 1998 with explosive growth ahead; 20% year over year growth rates anticipated for the next several years. Think about it – look at all the waves that hit us with the Internet: operating systems, search systems and marketplaces, ecommerce applications, social platforms, infrastructure companies, messaging platforms – they are all now entering the TV universe. This is one of the most clear cut growth markets we have seen in the last twenty years and we still have not seen a clear cut winner on the hardware side of things. Consider Netscape?s position as the gateway to the Internet and what Microsoft did to them when they built Internet Explorer into the desktop computer. What will come of Roku? Hulu? And the others. Will they be Netscape or are they the CTV gateway? Will Apple, Samsung, Sony, Amazon, Vizio, or Microsoft create this generation?s killer product that reimagines the form factor of what we now call the TV? Innovation is coming, it always does. And finally, we expect all cable systems (MVPDs) to virtualize the cable box and exist entirely through IP delivery (VMVPD).
TREND #5: eCommerce is on the rise and it?s everywhere!
Our work in the ecommerce space recently has opened our eyes to the complexity and variety of ways that companies are working to manage the customer?s journey through the online shopping experience. Next time you shop online consider the number of solution providers that are touching your path: from customer journey optimization providers, affiliate and referral partners, customer ratings and review solutions, artificial intelligence recommendation engines, social commerce tools, fraud and security management, payment solutions, and logistics providers. Running an ecommerce website today can be a daunting task, but there are healthy ecosystems that have evolved around the world?s largest ecommerce platforms (companies like Shopify, Big Commerce, Magento, Wix) and plenty of companies operating in the service layer that surround them that will do the heavy lifting from technical to marketing services. This ecosystem is alive and well, according to a recent IBISWorld Industry Report ?revenue for the industry has risen at an annualized rate of 14.1% over the five years to 2019, including an anticipated 11.4% increase in 2019, to reach $546.1 billion?. This market towers over the media and advertising market in relative size and yes, is still growing. What?s driving all that growth? You can attribute the growth to many things including: the rise of DTC (bringing more products to market and leveraging social distribution), the proliferation of shopping destinations and choices (is there anything you can?t buy online?), consumer confidence in a secure web, and maybe just demographics (many online shoppers never had a moment of doubt about putting a credit card into a mobile device and buying a pair of sneakers from China – it just works!). If you?re building a company in this space, you probably already know that there will be competition, but you should also know that this will be a growth market for the foreseeable future. We like companies like Shoppable that are reimagining the affiliate model and how consumers purchase products at the point of inspiration. This type of solution is readymade to bring seamless checkout to the consumer in a matter of a couple clicks, no matter where you might be online (in an article, in a movie, on an app, in a banner ad). We have spoken to many publishers over the last few months, and we?re hearing from most of them that e-commerce has become their fastest growing revenue channel. A smart strategy to diversify businesses beyond paid subscription and ad support revenue.
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