There are two kinds of company in the digital economy: those with first-party data and those without. The companies that own a lot of first-party data and have direct-to-consumer (D2C) relationships are winning. Think Amazon, Google, Netflix, Uber, Sky, Ocado.
Those companies that lack first-party data risk falling behind and urgently need to find ways to become more like D2C businesses. It is why consumer packaged-good firms, car manufacturers and high-street retailers are fretting about their future.
Data-driven marketing and communications have become the key battleground for brands, as our every move and interaction leaves a digital footprint and potential data trail. Access to data will help to determine the winners and losers in a world where customers expect a seamless, joined-up experience from brands – without being stalked or having their privacy violated.
The paramount importance of data is driving changes far beyond the narrow world of advertising. For brands to understand and serve their customers, they need to manage every touchpoint of the experience – an experience that is becoming much more connected, personalised and optimised through technology, data and dynamic content.
This need for greater control and speed and scale, rather than a lack of trust in agencies, is the primary reason that a growing number of brands have set up their own data-management platforms and are looking to bring more of their advertising and marketing services in-house and on-site in the client’s office.
Customers want "frictionless" experiences, as Keith Weed, the departing chief marketing and communications officer of Unilever, said when he was a guest speaker at WPP’s investor day in London at the end of last year.
Moreover, not being "consumer-friendly" will lead to "disconnected audiences", Ted Sarandos, Netflix’s chief content officer, warned at UBS’s media conference in New York in a dig at movie studios which enforce long, exclusivity windows for new films at the cinema.
Eliminating friction in a digital world is a huge opportunity for the media industry. Many brands already use marketing tech to manage large parts of their business, not just their advertising and media, because content, data, ecommerce and CRM underpin it all.
As the old saw goes, every company is now a media company. In areas such as travel and financial services, the customer experience has become a digital media experience. So Mark Read, WPP chief executive, has made a smart decision by pinning his hopes of turning around the company on technology, experiences and commerce.
Investing in creativity alone is not enough, if brand messages are not informed and supported by data and technology.
The big agency groups are all investing in data businesses in a bid to stay relevant and are offering tools and capabilities as well as services to their clients. Interpublic has bought Acxiom, Dentsu Aegis Network has acquired Merkle, Publicis Groupe has developed People Cloud and Omnicom has created Omni.
Most agencies don’t own much data – certainly not relative to Amazon or Google. Instead they aggregate lots of information, chiefly from third parties, some of which may be of limited value. However, brands need more help than ever to manage the digital customer experience and data – and will never be able to recruit and retain the talent to do it all in-house, hence WPP’s sale of Kantar.
Stephan Pretorius, WPP’s new chief technology officer, made the case at its investor day that agencies cannot hope to own most of the data but they can be an agnostic partner that understands marketing tech, in particular, in a creative way that management consultants or software giants can’t.
"I call it the industrialisation of media," Read told investors at the same event, explaining how WPP must take more of "a factory approach", rather than be "a cottage industry", and have unified, common standards. Otherwise, "we’re never going to apply artificial intelligence" to data and content at scale, he added, although he pointed out that technology should free up people to focus on higher-value, creative tasks.
The industrialisation of media is a sobering prospect, but it reflects the new, global reality.