In the drive towards data-driven marketing, it is easy to overlook one thing - somewhere there needs to be a system to bring together the data, run the campaigns and generate reports on performance. Marketing automation does not just happen. It needs to be created out of the complex web of business systems in which customer data resides, delivery channels through which messages will be sent and mapped onto business processes which have not always been codified.
Little wonder, then, that many marketing departments choose the easy option - outsourcing this challenge to a marketing services provider with a ready-made application suite and database solution. Why try to build a new infrastructure within the constraints of the corporate IT strategy when there a dozens of skilled contractors who can get you plugged in and running in no time?
As Dave Gurney, managing director of Alchemetrics, says: “The whole idea of outsourcing is why we exist. We are there as specialists for marketers - and to some extent for IT as well.” He says the current market is probably as exciting as at any time in recent decades, as seen in Gartner’s recent forecast that CMOs will be spending more than CIOs within the next five years.
That trend is clearly driven by the growing complexity of data feeds being used by marketers and an ever-expanding number of channels within the media mix. Six years ago, Alchemetrics launched its marketing automation platform Informa precisely to address this growing complexity. Now in its third version, the system is being used by Unilever, through OgilvyOne, to leverage its marketing database in the digital world - the tenth year of the relationship between the FMCG giant and the MSP.
For every marketer that decides to use an outsourced service, however, there are ten who keep their systems in-house. Their reasons are varied - for some it is a direct consequence of the corporate IT strategy, for others it is a desire to keep as much of their activity under their control as possible.
“We’ve always had an in-house-developed database,” says Rachel Hall, head of CRM and database at Honda UK. On top of an SQL platform sits a marketing application layer including FastStats to provide the tools required. “There has been a lot of technology investment to deliver on that integration, on data quality and to fix bugs.”
Critically, the database used to sit outside of the marketing function and “was never really used - it was seen as a glorified mailing file that chucked names and addresses over the wall into marketing,” she says. Arriving into the business, her first project was to bring the database under the control of the marketing function. “I had to do an internal PR job to explain that it was not just about names and addresses, it was about telling the business that they could ask us what they wanted to know and we’d be able to provide the answers. We’ve never looked back.”
This focus on business intelligence may well be the defining characteristic of marketing technology projects that get built in-house. Boards and heads of other functions are not especially concerned about whether marketers find it difficult to get their campaigns into the field.
What does grab their attention is learning how that marketing is having an impact on their own concerns, such as sales, distribution, customer management and so on.
“I have been able to tackle a number of ‘urban myths’ in the business, such as the level of conversion to sale from a test drive,” notes Hall. “People in the business didn’t really know because the data had never been analysed.” To win that acceptance did require using the language of those functions, rather than of database marketing. “People understand mailings and ads, they don’t understand propensity models - and they definitely want to talk about business, not technology,” she says.
Even so, there have been important improvements in the infrastructure. Data within Honda UK flows from the operational data stores into the data warehouse and then into the campaign management system. That process used to take up to three weeks but now takes just three hours. “That has massive marketing implications. There is also an internal focus on return on investment from technology. This database is not like Excel - you don’t just right click. It has taken hundreds of thousand of pounds and many months to redevelop,” says Hall.
Cost has long been a driver of outsourcing, shifting a fixed cost in the form of software licences into a variable cost in the shape of a monthly invoice from the MSP. Prices for database-as-a-service have also been falling compared to on-premise licences. “We’ve significantly reduced the cost of our system - what used to cost £20,000 to £30,000 per month we have got down to between £10,000 and £15,000. That has pushed clients towards our solution,” says Gurney.
Where MSPs have an advantage over in-house marketing technology deployments is around the dedicated expertise they develop in industry-standard platforms, such as campaign management or analytics tools. Whereas the IT function may only implement a tool like FastStats or Neolane once in a decade, the database bureau is constantly developing and bespoking these programmes for its clients.
That expertise can prove attractive enough for a client to want to use the MSP as a contract on an in-house implementation. “Three years ago, we were approached by Travis Perkins as a reseller of FastStats. What they wanted was for us to integrate their data feeds, configure and manage the system, but within their in-house infrastructure. That was the first time we had ever done that,” recalls Gurney. Alchemetrics was contracted in the role of a systems integrator, rather than outsourced service provider, introducing everything from the analytics tools to the data security protocols.
Marketing has long been pushing for better technology and support from IT while also needing to be flexible in how it responds to changing market conditions. That can lead to tensions as technology projects have to be carefully scoped and implemented. Big data seems likely to trigger even greater concerns about whether in-house solutions are the way to go.
“It comes down to the perception of failed CRM implementations at the start of the Noughties,” says Ruaraidh Thomas, managing director of Lateral Group. “Companies invested a lot in technology and felt they had been promised a lot without it being delivered. So there is an element of reticence.”
Big data’s main advocates currently are technology vendors, giving this trend a similar profile to that of CRM. To help step around this potential political trap and to get marketers up to speed more quickly, Lateral Group’s parent company DST has created a new division called Global Insight which offers a technology “sand pit” in which marketers can explore the potential of this new data world. “We can support IT as much as marketing. That is sometimes seen as an ‘either/or’ choice, but it doesn’t have to be,” says Thomas.
Closer co-operation between these two big beasts of the corporate stucture is undoubtedly necessary if each is to realise their ever-changing objectives. That may mean calling on the services of external specialists if required. What is no longer a simple question is whether the solution that gets adopted sits within the company or on a hosted system.