Peter Kirwan’s Long View: The client-side data revolution and what it means for advertising

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Peter Kirwan, TheMediaBriefing Experts' Blog, Advertising

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Anyone who works in ad sales should know by now that a massive wave of automation is on the way. Real-time bidding on ad exchanges will kill off a lot of sales jobs. It will cut the cost of doing business. It will transform the way in which we think about advertising.

But in the future, media owners will need to cope with something else: advertising clients who know more about their customers than ever before.

The future is already starting to emerge at Adobe. Most media executives will recognize this $4 billion-turnover US technology company as the creator of PDF software, Flash and Photoshop. In other words: a company whose products are used by production types and creatives.

But there’s another Adobe taking shape. Two years ago, Shantanu Narayen, Adobe’s CEO, decided to start supplying marketers (in particular, marketers who take data seriously) with the equivalent of a digital central nervous system.

In late 2009, Adobe surprised the tech sector by spending $1.8 billion on Omniture, the Utah-based outfit that weathered two dot.com slumps to emerge as the gold standard for web analytics.

This deal was followed a year later by Adobe’s acquisition of Day Software, which supplies sophisticated CMS platforms to large companies. In 2011, Adobe snapped up two smaller outfits, Auditude (used by publishers to serve ads around video content) and Demdex (which offers clever and flexible ways of dealing with large volumes of clickstream data). Finally, just a few weeks ago, Adobe acquired Efficient Frontier, a demand-side platform with roots in search.

So let’s join the dots: what has Adobe achieved in return for $2.4 billion of shareholder cash

The official version, aired during Adobe’s full-year results conference call fopr investors and media last month, involves an ability to help its customers to “create, manage, execute, measure and optimize” their digital marketing.


A pipe dream? Perhaps. For years, the industry has talked about the need for advertising clients – in particular – to start exploiting clickstream data properly. Some do; many don’t. Talk with digital agency folk, and sorry stories quickly emerge about landing pages the IT department couldn’t be bothered to tag, data that remained ignored and campaigns that no-one bothered to optimize.

The ROI of harnessing user data

However, there are three reasons to think that Adobe might be on to something.

The first is the company’s financial performance. During 2011, Adobe’s digital marketing boosted revenue by more than 20 percent.

The second reason: Adobe is not alone. Other big technology companies are similarly intrigued. After acquiring and merging the web analytics platforms Coremetrics and Unica, for example, IBM hopes to infuse the result with what Forrester Research describes as its prowess in ecommerce, business intelligence and predictive modeling. Both of IBM’s giant competitors, Oracle and SAP, have shown interest, too. According to Forrester, Adobe’s rivals also include Webtrends, comScore, AT Internet and Google (whose free web analytics remain vastly popular).

The third reason is the increasing urgency surrounding data inside marketing departments.

Among consumers in the developed world, levels of disposable income are falling, which makes the struggle for cut-through among advertisers more intense. Meanwhile, customers can see - and say - more about their organisations than ever before.

Understanding customers has become more difficult. Old, broad, demographic pigeon-holes into which marketers used to push us are falling apart. Increasingly, the differences between customers seem as significant as the similarities. In turn, this is pushing marketers toward personalised approaches to marketing.

As customers, users and readers this is what we expect. Yet our expectations place serious demands upon hardware, software and engineering talent. When IBM recently asked 1,700 chief marketing officers what they feel least prepared to handle, 71 percent cited the explosion of incoming data. In a separate survey by McKinsey, 71 percent of marketers said that data-driven insights into customers will become “very” or “extremely” important during the next few years. Yet 40 percent cited funding as a constraint preventing better analysis. One-third said they lack the infrastructure and tools to analyse data properly.

This may explain why the market in which Adobe plays is growing rapidly. Adobe reckons the addressable market for its digital marketing solutions this year is worth $6 billion. By 2014, it expects this to increase to nearly $11 billion.

The datafication of old media

Of course, before any of this becomes a real challenge to media owners, we’ll need to see analytics forging a path across the digital divide, opening up the previously-closed domains of print and TV.

The arrival of hybrid platforms like YouView in our living rooms will start the process in broadcasting. As tablets cannibalise newsprint, a real-time approach to data will become increasingly possible in text-based media, too.

Ultimately, this spells doom for the clunky, static, planning tools that media owners, clients and agencies have used for decades to estimate the shape of the world. Historically, these tools have served media owners well by distracting clients from asking about the effectiveness of their campaigns.

Yet down amid of the small print surrounding Adobe’s acquisitions, there’s a further tricky question for media owners.

Not all of the technology Adobe has recently acquired is designed to help marketers. Some of it (for example, Auditude, a platform used by publishers to serve ads around video content) is designed to help media owners sell their inventory more efficiently.


Adobe, for example, might be able to take its understanding of ad trading from the perspective of publishers and put it to work on behalf of clients. Knowledge aggregated from clients could enrich its approach to ad trading.

When and if these opposites – client-side analytics and RTB – meet in the middle, the business of publishing will no longer be conducted on technology platforms. Publishing will become a technology platform.

This will not happen overnight. But it will happen. Increasingly, media owners need to ask themselves a question: when data becomes the common currency of marketing and advertising, what will they bring to the table?

Adobe, like Google, may end up playing on both sides of the fence, making money on the demand side as well as the supply side.

Anyone doing this will have access to a lot of data. And data is power.

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