Featured in Adexchanger: Marketing data’s third wave

“Data-Driven Thinking" is written by members of the media community and contains fresh ideas on the digital revolution in media.

Today’s column is written by Michael Katz, CEO and co-founder at mParticle.

There are two schools of thought when it comes to how evolution occurs.

There is the gradualism model, first proposed by Darwin, suggesting new species arise through slow, regular transformations. Then there is the punctuated equilibrium model, which posits that evolutions occur in a noncontinuous manner, with periods of gradual change interrupted by short periods of massive transformation.

For marketing data platforms, I believe we are in the midst of just such a moment of massive transformation. If you look closely at current tech trends, you will find evidence of a far more systemic change occurring all around us, and it is not the first time it has happened, either. Just as we saw with the shift from database marketing to web, today’s multiscreen environment calls for new types of strategies and platforms, not just gradual, incremental feature upgrades to web-centric ones.

The First Wave: Database Marketing Era

Data collection for marketing began in the late 1980s at the checkout counter, where data was captured, stored on local machines in rows and columns and batched semiregularly to a centralized database.

Leading up to this revolution, if marketers wanted to influence consumer behavior, they had to invest significantly in broadcast media advertising. As the rise in cable TV gave people more choice in content, it was the deterioration in the effectiveness of broadcast advertising that served as the catalyst for brands to keep pace with consumers through a data-centric approach.

Database marketing married purchase data from point-of-sale systems with user information from loyalty cards, and the first-generation data platform was born. Tracking data at the point of purchase made it easier for brands to keep track of the purchase and return of individual items, and the introduction of loyalty cards helped brands market more effectively to consumers, primarily on a region-by-region basis.

This new, centralized approach to data had a broad and significant impact on retail business. The data-driven approach improved supply chain leverage, informed the creation of better in-store displays and improved packaging.

The Second Wave: The Web-Centric Era

By 2007, there had been a number of ad network acquisitions and significant investment was being poured into ad tech. This influx of capital drove rapid innovation, which led to hyperfragmentation and a digital advertising supply chain that became more specialized and efficient. Eventually the media and data ecosystems separated.

With this shift, Demdex, the first web-centric data management platform (DMP), came to market and was eventually bought by Adobe. The DMP became arguably the most critical component of the digital ad stack for both marketers and publishers alike. Originally marketed as a “data bank,” the premise was that marketers could own the technology that they had outsourced to the ad networks and recapture a lot of inefficiency, while decreasing reliance on key vendors.

The data was not structured in rows and columns anymore – the volumes were massive and captured in real time. Transmission relied on client-server communication via web technologies, such as pixels and cookies, and it provided for better one-to-one marketing opportunities, primarily and exclusively via standardized ad units across websites.

The Third Wave: The Multiscreen Era 

Today, people consume media and transact on their mobile devices more than ever, especially in apps. The Cisco Visual Networking Index and Global Mobile Data Traffic predicted that by 2020, more than three-fifths of all devices connected to the mobile network will be smart devices. In 2015, it also found that global mobile devices and connections grew to 7.9 billion, compared to 7.3 billion in 2014. Meanwhile, two out of every three digital minutes are spent on mobile.

What complicates this is that the strategies that helped brands navigate web challenges are simply not suited for the unique challenges core to success in mobile. Using web solutions to solve mobile challenges is like bringing a plastic butter knife to a gunfight.

Third Wave data have a few defining traits:

Orchestrated advertising and marketing: With mobile and connected devices, digital media extends to every step of the customer journey, even offline steps. And with persistent IDs now used for message targeting in so many different ways, it’s possible to create relationships that progress actual, known people along all of these journey stages without a ton of guesswork. In a Third Wave data strategy, advertising and CRM are always in sync with the most recent information about a user, across every screen. 

Granular privacy and security controls: The flip side of having a singular approach to all manner of customer data collection and delivery is that companies need to be experts at handling anonymous and PII-based data in a safe, secure fashion. When a general counsel revises a privacy policy or the regulatory environment changes, marketers need to be flexible and adapt quickly without a major process and engineering overhaul. A Third Wave data strategy must be able to audit and control exactly which data points are going to which marketing execution tools at all times.

New execution channels and techniques: Display media remains an important channel and will not be disappearing any time soon. However, the media outlets that matter are changing all the time as audiences, particularly younger ones, spend more time in the big apps, such as Snapchat or WeChat.

Marketers would be remiss if they didn’t take advantage of today’s new engagement opportunities, including geotargeted push notifications or app messages. It is not just data platforms that are undergoing a period of massive transformation but also the other players in the surrounding ecosystem. A Third Wave data strategy needs to be connected in the right ways to the advertising, marketing and analytics tools of today and tomorrow.