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Today’s column is written by Martin Kihn, research vice president at Gartner.
We’ve looked at marketing clouds from both sides now, up and down – and still, somehow, it’s their illusions that we recall.
Do we really know marketing clouds at all?
As the godfather of one of the big clouds told me on background, “None of us set out to create a marketing cloud. We all started in a different place and just added to it.”
At least five major enterprise software players are selling marketing clouds – Adobe, IBM, Oracle, Salesforce and SAP – and many others have more modest ambitions. Such marketing cloudlets include IgnitionOne, Kitewheel, Neustar, Nielsen, SAS, Zeta Global and others.
And there is some evidence that the promise of the cloud – an integrated set of components being more efficient than a self-made stack – can work, sometimes. In one survey, 80% of enterprise marketing respondents said they used components from more than one cloud; the other 20% were more or less loyal to one logo.
At least as a cross-sell pitch into the C-suite, the cloud story has an audience. But a scrutiny of the clouds shows a set of offerings that are becoming less alike – rather than more alike – over time. The clouds are quietly dispersing.
Well, each cloud has a unique character that suits it to particular types of marketers and points toward its likely future state. That future betrays a tension between full frontal competition – Adobe vs. Salesforce, say – and a lot more creative partnering, frenemy dynamics and muted exits. And it puts more recent cloudland bulletins in context, such as Oracle’s acquisitions of AddThis and Moat or SAP’s mashup of Hybris and Abakus.
What’s Going On In Cloudland?
We can plot marketers’ needs in layers from emotion to execution: customer experience to customer service. In between we can put advertising, analytics, data management, campaign management and ecommerce. Like this:
The secret to knowing how the clouds can serve these needs and where they are going is to see where they began. There’s a principle in evolutionary biology called recapitulation theory: Living things retrace their history as they grow. We’re usually best at what we did first.
Adobe had a Northern California-based creative cloud before it started its Utah-based marketing cloud with the acquisition of Omniture in 2009. It is an experience company, with creative experience and marketing tools such as content management, web analytics, testing and personalization on websites and apps. It has invested down the stack, but its bromance with Microsoft shows the limit of its appetite to own it all.
IBM is something of a palimpsest, drawing its cloud from web analytics (Coremetrics), campaign management (Silverpop and Unica) and its UBX data exchange. It’s always been more of an enterprise solution seller of software and services rather than a pure product company. Built on big ideas that span the enterprise since the 1950s, its all-in emphasis on Watson points toward a marketing cloud focused on AI-driven customer analytics.
Oracle is the company that offers what it calls “the world’s No. 1 database.” Like IBM, it serves up wide-ranging solutions to global enterprises. Its marketing cloud(s) started with email campaign management for B2B (Eloqua) and B2C (Responsys) users, expanding into data management (BlueKai). But Oracle is unique in separating its marketing cloud from its data-as-a-service platform, and its spate of ad-related data acquisitions (Datalogix, AddThis, Crosswise and Moat) limn a future that starts with a “D”: databases, data management and data.
SAP competes with Oracle in the enterprise software stakes, and its marketing cloud is built primarily on Hybris, the commerce platform it acquired in 2013. With a soul in German engineering, SAP melds its cloud platform with product SKU-level data, homemade SAP XM advertising tools and loyalty management. Commerce-first and self-reliant, SAP can be expected to invest in tools and services to help enterprise customers expand ecommerce across the customer life cycle.
Salesforce springs from the land of leads, customer service and CRM, and its marketing cloud began – naturally enough – with email campaign management via its 2013 acquisition of ExactTarget. It is a customer company, adept at handling personal data and poised to link marketing with the CX back office, such as service and sales. Its more recent DMP (Krux) and commerce (Demandware) acquisitions expand its definition of customer and the depth of its customer data.
Adding Google into the mix just for fun, the clouds map to our layers like this:
Where Are We Going Now?
It’s no coincidence that the clouds are stratifying, while expanding carefully into adjacent layers. Meanwhile, as Adobe’s strong alliance with Microsoft shows, they’re steering demand for non-adjacent layers toward preferred partners. Only dreamers think they can do everything. Expect more such hookups and a tacit expectation that large enterprises, in particular, will use products from multiple marketing clouds in concert in an ad hoc stack.
Now, if all the clouds are different, does the idea of a marketing cloud mean anything? I think it does. Dead center in our stack are data and analytics. Implicit in that core are three things every cloud will need:
Identity: Traditionally, marketing automation systems were built on emails with prospect data; CRM on emails with customer data; commerce on complicated product SKUs; and ad tech on anonymous cookies and device IDs. Combining these approaches into a “cloud” takes more than PowerPoint.
Amplifying the problem are self-contained networks, tough cookie policies, consumer attitudes – you know the song. The future holds a complex mesh of deterministic, probabilistic, owned, acquired and inferred identifiers, as well as a storm of new data sources both known and unforeseen, such as location and biometrics. Identity is becoming the essence of marketing and marketing clouds.
Data sources: First-party data is the marketers’ own, second-party data requires an arrangement and third-party data is available for sale. There has always been a sliding trade-off between value (first-party) and scale (third-party). As marketing digitizes, first-party data expands its scale; techniques like retargeting and lookalike modeling do the same. Meanwhile, many market forces, including those mentioned above, devalue some third-party data. Expect clouds that can handle complex data and workflows around first- and second-party data in particular to thrive.
AI and orchestration: Most of the clouds are confronting Watson with an avatar of their own. VCs are also showing an interest in funding AI startups that promise to deliver an orchestration layer for marketing. Relying on identity and clean data sources, this orchestration layer will presumably bring the quixotic prize of automated, personalized marketing closer.
It could also be a region of romance between ad tech and mar tech. We’ll see. AI is very disruptive, and its impact on the clouds will be to raise the value of identity and cross-channel automation.
So, where are we? The original vision of an end-to-end marketing cloud dissolves. The clouds recapitulate their original strengths and rely on APIs and integration platforms to fill gaps. Cross-cloud alliances appear. And everybody scrambles to own the customer data layer. The more the clouds change, the more they stay the same.
As a wise woman said: Something’s lost, and something’s gained, in living every day.
(Author’s note: This column includes ideas from Gartner’s Andrew Frank and was first suggested by Louis Moynihan in 2016, when he was VP of product innovation at Demandbase.)