Chief Marketing Technologist

The marketing technology ecosystem wheel

Experian — another one of those multi-billion dollar companies engaged in enterprise marketing — released their 2012 Digital Marketer Trend and Benchmark Report earlier this week.

Right up in the front of this hefty 154-page report is a spread on understanding the marketing technology ecosystem — which is clearly the substrate upon which modern marketing is being built. Experian includes a couple of great infographics that help visualize all of the different pieces in that ecosystem:

Any CMO at this point should be able to look at this "wheel" and speak to the marketing technology capabilities that they have in place — or are putting into place — for each segment.

An excerpt from the report's text associated with these graphics:

Consider how marketers can create the infrastructure necessary to support all the above-mentioned activities. The easiest way to break this down is to deconstruct the marketing technology ecosystem "wheel" into a customer intelligence platform comprised of critical marketing information and key "hubs" of functionality.

Built on a foundation of data, this hosted, end-to-end marketing solution leverages a three-hub approach to capture and integrate data from across channels (integration), understand how to maximize customer value (intelligence), and optimize customer interactions with context and relevance (interaction).

Admittedly, that last bit sounds like a sales pitch for Experian's specific solution. But I think the concept they're illustrating is broadly applicable — a core "system of record" platform interconnected with multiple hubs of context-specific solutions. Almost all of the major marketing technologies that would fit into that ecosystem are provided as hosted software-as-a-service.

Why marketing software will never be like ERP

I ran across a thought-provoking article earlier this week on GigaOm — Marketing is the next big money sector in technology — by Ajay Agarwal of Bain Capital Ventures. It begins with the reference to the Gartner report from December the suggested by 2017, CMOs will have larger technology budgets than CIOs, which is a great place to start.

Ajay predicts that a new wave of companies leveraging big data for the benefit of driving marketing insights, "will create several multi-billion dollar winners. And a set of technology companies will emerge as the marketing equivalents of Salesforce and SAP."

Hurrah!

He takes a moment to point at several of Bain's investments in marketing technology ventures: BloomReach, CQuotient, HookLogic, and TellApart. (Hey, for all the benefits of big data marketing, a little PR is still in vogue.) Some very cool companies, actually. He then lays out two main points:

1. The multi-billion juggernauts of back-office enterprise software will have counterparts in the front-office worlds of sales and marketing (well, acknowledging that Salesforce.com, and Siebel before it, already achieved that status).
    
2. Much of the focus of marketing software has been focused on "process," but there's a huge new opportunity for a focus on "data" — and the web is an overflowing cornucopia of such data.

Here's Ajay's graphic of enterprise functions and some of their notable venture successes:

There's conspicuous white space at the bottom, no?

Ajay remarks, "Despite the last 15 years of automation of sales functions, marketing functions have been underserved and underpenetrated in terms of enterprise software. While the other corporate functions have all created multibillion-dollar software companies, the marketing function has only had one exit north of one billion (Omniture)."

At a high level, I vigorously agree with Ajay on both counts: there's a huge enterprise opportunity in marketing, and we've only begun to tap the potential of "big data" in this field.

But I think marketing may play out differently than those other enterprise functions before it. I'll explain why in a moment.

The missing billions in enterprise marketing successes

First, however, I do feel that there are several arguments for multi-billion dollar marketing businesses that aren't represented in the above chart. On the enterprise software angle, both Adobe and IBM have created huge ventures in the space — granted, by the aggregation of many acquisitions and good, old-fashioned organic growth. Teradata probably deserves a mention in this category too, especially with their acquisition of Aprimo. And ExactTarget is well on its way to a billion dollar IPO. Constant Contact has a near-billion market cap of $882 million.

There also an agency angle — I know, a different beast, but one that is increasingly engaged in coopetition with the likes of Adobe and IBM — Digitas was bought by Publicis for $1.3 billion. As for technology service providers focused on marketing, there's Axciom ($1.1 billion market cap), Accenture ($40 billion market cap), Sapient ($1.7 billion market cap).

But the most interesting angle for claiming that marketing has had some spectacular multi-billion dollar successes: Google and Facebook. They're not enterprise software providers, but the lion's share of their multi-billion dollar revenues comes purely from selling technology-powered advertising-as-a-service to marketers. You could argue that they're really media companies, but that's a straw man. Google and Facebook are letting marketers leverage their "big data" and algorithmic prowess to achieve very intimate customer interactions in ways that have innovated marketing far more than any enterprise software package.

(Also note that as a piece of that puzzle, DoubleClick and aQuantive were both multi-billion acquisitions by Google and Microsoft respectively.)

My point is simply that the marketing function hasn't been as anemic in big venture wins as that chart suggests. It's just that the nature of marketing successes has been very different than those in other corporate functions.

Why the marketing software space is structurally different

One of the strongest indicators to me that the marketing software space is fundamentally different than finance, manufacturing, or HR, is the vibrant and varied ecosystem of marketing technology providers:

The above graphic — which, from 6 months ago is already woefully out of date — is just a sample of about 250 companies out of thousands. Many are small, venture-financed start-ups. But many aren't so small either, representing revenues and valuations of tens or hundreds of millions of dollars each. In aggregate, it's a multi-billion kaleidoscope.

There was never anything of this scale of diversity in software markets for other corporate functions. Why?

Two words: stability and standardization.

Finance, manufacturing, even the bulk of HR, may be complex functions, but for the most part, they're highly standardized. In the case of finance for public companies, it's downright regulated. GAAP is GAAP, no matter which finance software you've adopted. Getting creative with finance isn't just discouraged, it can get you thrown in jail. So even though different software packages might have better ways of organizing, visualizing, or managing these standardized processes, the core of what they do is the same.

This meant that there were only so many companies worth funding in those spaces in the first place. And as they matured, it was relatively easy for the biggest players to swallow smaller competitors in consolidation. In many cases, those weren't technology acquisitions — they were customer base acquisitions. They could even get away with discontinuing the acquired products and forcing customers over to their primary platform because they were essentially the same thing.

But not only are these functions relatively standardized — they're also highly stable. With a few subtle differences, finance is managed today the same way it has been for decades. Same for manufacturing. The global scale of manufacturing has expanded dramatically, which increases the complexity of supply chain management to be sure, but the fundamentals are the same as they ever were.

In other words, software providers in these other functions aren't frantically chasing a moving target. And that gives potential new entrants precious few opportunities upon which to mount an attack.

That's not to say that there haven't been a few big innovations. For instance, sales force automation and CRMs were pretty much locked up by the late 90's — until Salesforce.com seized the opportunity to provide them as software-as-a-service. It's still basically the same function, but delivered in a better way (less IT overhead). Manufacturing and other back-office departments may yet have their SaaS revolutions. But that won't necessarily change the fundamentals of those functions.

Admittedly, HR may be a growing exception to this rule. Why? Because companies are starting to make radical changes in how they manage an increasingly mobile and global workforce. Shifting attitudes and expectations about work, epitomized through the Millennial generation, are opening up opportunities for HR software that embraces The Cluetrain Manifesto. But as important as these changes are culturally, from a technical perspective, I suspect there are finitely limited ways by which software providers may reinvent the technology that powers them.

There will be some amazing HR software start-ups, but there won't be anywhere near the gargantuan surge we've seen in the marketing domain.

Stability and standardization do not characterize marketing today

The marketing software space could not be more structurally different than these other functions.

First and foremost, we must acknowledge: the entirety of marketing is in a perpetual state of disruptive innovation. Google changed everything. Then YouTube. Then Facebook. Then Twitter, Foursquare, Groupon, Quora. Apple has changed everything in mobile marketing and apps on our phones and tablets. My list of 131 different kinds of marketing offers a taste of the exponential explosion of new marketing approaches. And the pace of change only seems to be accelerating.

The modern marketing landscape is in constant flux: it is the antithesis of stability.

I'm not just talking about marketing software providers either. The very channels and vehicles they work on top of are still rapidly evolving, with new ones being invented every week. (Take Pinterest for example.) Like my examples of Google and Facebook above, you can revolutionize enterprise marketing without even being an enterprise marketing software provider.

It's a breathtaking whirlwind — so much opportunity for competitive advantage. But it's also dizzying and overwhelming. No one person, even no one organization, can keep on top of it all. Even trying to specialize in just one subfield, such as search engine marketing, is a high-speed roller coaster ride. Blink and you miss some huge development that changes the landscape.

This broadly disruptive environment is fertile ground for start-ups, who can see the potential of a new marketing mechanism and rise quickly with its success. Larger marketing software platforms seek to add support for these new mechanisms as features — sometimes just by acquiring one of those plucky start-ups — but they must continually battle inertia and bloat. The more add-ons you hurriedly slap on to your once sleek race car, the more it begins to maneuver like a Winnebago.

Until along comes a new platform provider that capitalizes on all the learning of how to connect the dots of those disparate marketing mechanisms into a better cohesive whole. Which is very exhilarating, of course, until the next series of innovations starts to drag their architecture in unexpected directions. And the cycle repeats.

But the dynamics of products vs. platforms vs. suites are something I'll save for a future post.

The other axis by which marketing software differs from other functions is in standardization — that is to say, marketing software has almost no industry-wide standardization. Part of that is due to the lack of stability; it's hard to standardize when the ground keeps shifting under your feet. (The only things that are standardized are the APIs that big channels like Google and Facebook enforce to a standard. And those standards evolve darn fast.) But there's a deeper force working against standardization that emanates from the very soul of marketing: the Holy Grail of differentiation.

Marketers don't want their customer experiences to be standardized against their competitors. They want their brands to be unique and beautiful snowflakes.

That drives a constant demand for creative new ways to stand out from the competition, "think different." And the digital environment is infinitely malleable in this regard, far more easily plied by imagination than physical reality. The most common limitations? The architecture, features, and philosophy of the software you've adopted.

Because there is no GAAP equivalent standard in social media marketing — GASP (Generally Accepted Social Practices)? — for how to universally interface with customers on Facebook or Twitter, marketers and marketing software providers are free to experiment with a wide range of different approaches. You can have two diametrically opposed solutions that are both successful in different contexts. One that works great for one brand might be a train wreck for another.

So marketing software providers themselves are differentiated by the approaches they embody in their products, which guide and influence the strategies and tactics that marketers design and execute with them. As I wrote in a previous post, for marketers, you are the software you use.

But there's one more way in which marketing software differs from other enterprise functions: process.

Process in marketing is simultaneously important and impossible

Let's step back for a moment to acknowledge that life is process. Things move forward in organizations via processes — whether those processes are formal or informal, planned or improvised, optimal or dysfunctional. It may be a messy process, but there is one. Process is how strategy materializes, for better or worse.

And a huge portion of the value of enterprise software for other corporate functions has been the systemization of processes it enables and enforces — the grand-daddy of which is enterprise resource planning (ERP), the broad umbrella of Oracle and SAP.

See, while human beings struggle with process on their own — remember all the exact steps to take, at the right time, in the right order, in coordination with everyone else involved in the process — software is ideal for such precision synchronization. That was a big part of the value that software in these other enterprise functions was able to deliver. Automated and semi-automated processes can be incredibly efficient.

But here's the key difference: to a very high degree, businesses can control their processes for finance, manufacturing, and HR. You can bend all of the participants to your will. "This is the process. Follow it." Employees, distributors, vendors, contractors, subcontractors — if they want their checks, they bow to the process. Wal-Mart's supply chain is the epitome of this for an extended enterprise.

It's worth nothing that, along these lines, sales force automation was about automating salespeople, not sales. Important distinction, and confusing the two can lead to delusions of automation. ("Press this button and sales just flow in!")

Marketing is made up of processes too. But the problem, like sales, is that there are two very different worlds of process that marketing faces:

1. Processes within the marketing department (and its various collaborators).
2. Processes that prospects and customers follow to engage with the business.

While processes within the marketing department are as scriptable as any other enterprise function — e.g., here are the steps you must follow to execute an approved campaign-specific special offer — you can't dictate process to your prospects and customers. Or, more accurately, you can try to dictate process to them, but they can choose not to follow it. After all, your customers are primarily beholden to the processes of their own organizations. When there's a conflict, their process wins, not yours.

And this is why marketing software will never be like ERP — we can't dictate the process end-to-end.

Marketing is — or should be — obsessed with their customers' processes. How do we optimize the experiences we deliver to flow smoothly and successfully with their processes? If we're going to suggest that they follow our processes, at least in some circumstances, how do we make that enticing and rewarding? Since there's almost always tremendous variation among customers, this is very tricky. One size doesn't fit all.

You could take some comfort in the the notion that at least processes internal to the marketing department should be able to be systematized by software. And some can be. But here's the rub: even internal marketing processes become entangled in addressing customer processes. Many of marketing's processes are inherently about acting on or reacting to customers.

This is why marketing automation is so damn difficult.

It's not that marketing automation software sucks. It's that its mission is impossible to achieve perfectly. The best we can do is systematize pieces of our marketing ecosystem, carefully interweaving what we automate, what we semi-automate, and what we leave under manual control.

The balance is never perfect — but we can always asymptotically improve it. Of course, with the caveat that because marketing is neither stable nor standardized, so that balance is constantly changing. But when we get it even approximately right, the payoff can be huge — which is why I say that process in marketing is both important and impossible.

Which leads me back to Ajay's article, where he proposes that a new generation of marketing software can be more focused on data than process — as a way of overcoming the limitations of the process-driven approach of current marketing automation solutions.

I do agree that more data can help us make better decisions in a number of marketing processes. Yet I still think that process design and management will be the overarching challenge for marketers (and the software platforms that serve them). Better data and smarter use of that data will enable major advancements in marketing's capabilities. But I'm skeptical of the ability for data to self-generate process — at least outside of very specific contexts. Data is potential; process is activation of potential.

So software that takes a hybrid approach to process and big data strikes me as the most promising.

Still, no solution will be perfect. Machine learning, as powerful as it is, is a statistical method — there's always a margin of error. And if you apply machine learning to the wrong data, or extrapolate its conclusions into unjustified territory, or even just foul up the presentation layer of what it outputs, you can end up with a big flopping sound.

Modern marketing software won't be perfect, but it will be amazing

I have no doubt that the years ahead will have several billion-dollar exits in enterprise marketing software. The mostly likely candidates will be platforms that can serve as a backbone for core marketing processes and data repositories, your marketing "systems of record." Arguably, Salesforce.com is one example of this, since the CRM is increasingly owned by marketing. Adobe, Eloqua, IBM, Aprimo, Hubspot, IgnitionOne, Neolane, Pardot, ExactTarget, and many others are all competing to be the skeletal structure of marketing's IT. New entrants will arrive for sure.

But unlike other enterprise functions, where a single platform such as SAP or Oracle pretty much covers everything, I don't believe that backbone marketing systems will be complete one-stop shops for the entirety of the marketing department.

Instead, I think such primary systems will be complemented by a wide variety of so-called "point solutions." Almost all of them will interface to backbone systems, but their specialization will be the key to addressing the instability challenge — and differentiation dream — of marketing for the foreseeable future. (The big backbone winners will be those who make such interactions with other software especially easy.)

The particular combination of backbone systems and point solutions will vary dramatically from company to company, depending on context, industry, vision, brand. The unique fabric of any one particular company's marketing software mix will be a big part of their competitive differentiation.

As a result, this ecosystem will continue to support a tremendous number of smaller ventures, with many more waves of new marketing software start-ups every year. These will result in a number of exits at tens of millions or hundreds of millions of dollars. In aggregate, these will represent multiple billion-dollar subfields within marketing.

Rather than fantasize of "one platform to rule them all," marketers, entrepreneurs, and venture capitalists should embrace the complex, heterogeneous environment of modern marketing. There's no precedent for it in the history of enterprise software. But frankly, there's no precedent for any of the amazing revolutions that are erupting in marketing writ large.

It's also a great time for marketing technologists and a move towards agile marketing management. But I'll close this post here.

Agree? Disagree? Share your perspective in the comments.

Marketing as an object-oriented program?

I ran across an inspiring blog post this week by Jacques Spilka of Whatsnexx, titled Complexity killed marketing automation! (The if-it-bleeds-it-leads school of blog post headlines.)

Jacques made two insightful points:

1. Marketing automation programming can get complicated fast

First, he cut right to the quick of the challenge of marketing automation: for marketing automation to be really effective, it needs to be wielded by the marketer, not by the marketing automation expert.

Most marketing automation packages require fairly extensive setup and configuration, frequently done by high-priced consultants. (It's no accident of strategy that IBM, arguably primarily a technology services company, acquired enterprise marketing software provider Unica.)

"The purpose of automation is to simplify and speed up processes — not complicate things!" writes Jacques. But as marketing automation providers continually add new and disparate features, such as merging in more social media capabilities, the "automated" solution can unintentionally become more complicated to wield than the processes that you originally wanted to automate in the first place.

This complexity can dampen the actual adoption of automation — even if a company has installed an amazing marketing automation platform, they may only be leveraging a small sliver of its capabilities.

Of course, Whatsnexx offers its own marketing automation solution that proposes to address this challenge, so Jacques does have an ulterior motive for making this point. But the statement of the problem they're trying to solve rings true.

2. If marketing is being programmed, can we use an object-oriented paradigm?

Jacques describes their solution as customer state marketing. (Akin Arikan did a nice post on them last year.) If you have some software engineering background, your synapses may already be firing associations with state machines, and that seems to be part of Whatsnexx's intention.

According to Jacques, the key benefits of their approach are:

1. Scenarios display the characteristics of object-oriented programming
2. Scenario programming is procedural

Whoa. Let me do a double take.

We're reading a blog by a marketing solutions provider — selling to marketers — that is touting the characteristics of object-oriented programming as one of the benefits it provides customers. That's pretty bold. I mean, I just recently wrote that marketers should learn how to program, but to have a marketing technology company trying to sell a "better" programming paradigm to marketers is kind of striking.

Yet it resonated with me instantly. (And apparently with Akin too.)

To quote a bit from Jacques's post:

For programmers, [the above two benefits] are significant. For everyone else this sounds like some foreign language — definitely very obscure. Let me put it another way:

1) Scenarios are self-contained. They know how to behave in response to external stimulus (i.e., an event). This stimulus occurs randomly, and the scenarios will automatically respond to the event according to the rules contained in the scenario itself. The scenario only knows what it needs to know in order to respond to the stimulus, and contains all of the information necessary in order to carry out its functions properly (i.e., actions), such as sending the appropriate email.

2) Scenarios follow simple rules, and have a simple program flow and limited branching options. This makes it easy to design state-based event/action program flows that govern how and when a scenario responds to a random customer event.

If that's not pitching to a new generation of marketers — and marketing technologists — I don't know what is.

Even if the net functionality that Whatsnexx delivers is similar to traditional marketing automation systems, the power of a paradigm can't be denied.

Thinking about the modern marketing function as a large-scale object-oriented program stirs the imagination — at least it does for me — and suggests a number of intriguing new ways to organize and coordinate the multitude of moving parts in marketing's environment.

Just as object-oriented programming dramatically changed the development of software — without directly changing what that software was able to do — such object orientation could have a big impact in the way that marketing automation processes are conceived, implemented, and maintained.

Following the object-oriented train of thought, I can't help but ruminate about how object-oriented design patterns might be adapted in the context of marketing-as-a-system. Maybe there are marketing analogs to Adapter, Decorator, Singleton, and Strategy patterns. Or maybe there are entirely different pattern concepts — but patterns nonetheless — that can help structure and standardize this space.

It is unlikely a panacea for marketing complexity, but it could be a better architecture for managing such complexity. I don't know if Whatsnexx actually delivers on this promise — I've only read a few of their blog posts and browsed their web site — but I give them full props for promoting a brilliant way to frame "programmable" marketing.

The Marketing Technology Frenemy Triangle

The title of an article in last week's AdAge Digital was Tech-Consulting Giants Slide Closer to Creative-Shop Turf. The subhead read, "Deloitte, Accenture are among big IT players looking to learn digital biz of marketing brands to consumers."

You can almost hear the sound of cappuccino being sneezed out in a Madison Avenue office somewhere.

Brian Whipple, the CEO of Accenture Interactive, was quoted as saying, "Clients, in my view, are finding it more credible to reach into marketing from technology" rather than the other way around. Why? Because web sites and online advertising now require complex data analysis, customization, and global management. So now he has CMOs, not just his usual CIO clients, knocking on his door.

But don't worry, Madison Avenue. Whipple stresses that Accenture Interactive's relationship with agencies is "complementary, not competitive." They're working together with agencies to pitch new business. For now.

Meanwhile, creative agencies are becoming more tech savvy. Razorfish and SapientNitro would no doubt both claim that they can match Accenture Interactive's technology chops when it comes to digital marketing apps, web sites, and advertising. Omnicom has its creative technology venture, Code Worldwide. Fabric Worldwide, backed by WPP, touts their new "marketing operating system."

Then you have marketing software vendors, such as IBM, Aprimo, and ExactTarget, who are more than happy to provide integration and technical advisory services — encroaching on the domain of tech consulting shops. One could argue that IBM is more of a technology services firm than it is a software vendor.

Which is okay, because many of those tech consulting firms now have their own marketing software products. Accenture Interactive promotes six of their own marketing software products. Deloitte has alliances with other software companies, such as IBM — but for mobile applications they have Übermind.

It's a fluid mix of competition and cooperation. Coopetition. To visualize it:

To complicate the field further, for many of their respective customers, there's still an ongoing push-and-pull between the marketing department and the IT department over who has what responsibilities (and budget) in this new era. In some cases, CIOs and CMOs are the proxies for these frenemic giants.

But there are some upsides to this frothy mingling:

Creative agencies can use this as an opportunity to shift their revenue models to engagement fees and "subscriptions," like their new coopetitors, and break free of dependency on media buying inefficiencies — which are quickly becoming quite efficient.

Software vendors can take advantage of the deeper relationships with clients that services afford them to better inform their product development. The closer software engineers are to the actual problems that need to be solved, the more innovative their solutions will inevitably be.

And technology consultancies can piggyback on their marketing services mission to develop stronger relationships across the C-Suite — not just the CIO anymore, but the CMO and possibly the CEO — which can save them from the era of shrinking IT authority.

Best of all, these new kinds of competition can benefit CMOs most. It will give them more choices. It will give them more leverage to push their providers to innovate. And it makes the role of the CMO, as the conductor orchestrating the intermingling of these different participants, more valuable than ever.

2011 was a big year for marketing technology

The Jordan, Edmiston Group, Inc. (JEGI), a leading investment bank in the marketing space, issued a report yesterday of 2011 M&A activity across media, information, marketing services and technology sectors.

JEGI reports that those sectors "saw nearly 900 transactions in 2011 totaling $47 billion, a 9% rise over 2010."

From a marketing technology perspective, the marketing and interactive services sector is the most interesting, which had "291 transactions announced at a total value of $15.1 billion in 2011, up 17% and 33%, respectively, over 2010."

Some of the notable Q4 transactions in marketing technology included:

• Oracle's acquisition of RightNow Technologies for $1.5 billion
• Oracle's acquisition of Endeca Technologies for $1.1 billion
• Neustar's acquisition of TARGUSInfo for $650 million
• Adobe's acquisition of Efficient Frontier for $400 million
• Yahoo's acquisition of interCLICK for $251 million
• SDL's acquisition of Alterian for $104 million

I'd also add that 2011 was a particularly big year for investment — or planned public investment — in marketing automation. In August, Eloqua filed to go public. In November, ExactTarget filed to go public, and Marketo raised an additional $50 million (a grand total of $107 million raised so far). Back in March, HubSpot raised an additional $32 million (a grand total of $65 million raised).

What does 2012 have in store?

According to JEGI, "The media and technology markets continue to evolve at a torrid pace, and companies are increasingly seeking assets to drive growth and provide new revenue streams. JEGI expects that a diverse and active pool of buyers, including both strategic companies and private equity firms, both of which have access to capital and will benefit from a steadily improving debt financing market, will drive vigorous M&A activity in the year ahead."

Add in the Eloqua and ExactTarget public offerings early in 2012, and I think it's safe to say that 2012 is going to be an exciting year for the marketing technology ecosystem.

Looks like I'm going to have to update my Marketing Technology Landscape Infographic soon.

Why marketers should learn how to program

If you work in marketing, you might want to learn a little computer programming. Buy a book. Watch a screencast. Check out Codeacademy.

No, really. Suspend your incredulity for a minute. I'll explain...

It's not because you should have to roll up your sleeves and start writing your own marketing software. I'm the first to acknowledge that not every marketer needs to become a technologist.

However, I do believe that every marketer should develop a comfort with technology. And, over time, advance from comfort to understanding to intuition.

It's this intuition about how software works — call it "software thinking" — that is of immense value to modern marketers.

There are three reasons for this:

First, marketers are now flooded with an ever expanding array of marketing software to achieve their objectives, stay competitive, and keep up with the expectations of increasingly tech-savvy customers. But to non-programmers, software can seem like a black box. Learning how to program helps make that box more translucent. It moves from the Dark Ages of software superstitions to the Enlightenment of software reasoning. Knowing first-hand how software works give you confidence to wield it wisely and decisively.

Second, the cast of players in marketing's universe now includes a wide range of technical professionals: IT staff, software vendors, technical consultants, creative technology agencies, and — increasingly — marketing technologists within the marketing department. Learning a little programming makes you better able to communicate with technologists in their native tongue. It reduces the risk of critical details being lost in translation. It gives you first-hand insight into the concepts and concerns that drive your new technical collaborators.

Third — and by far the most important — learning to program builds up process design skills. Previously, marketers didn't have to do a lot of process design. But today, so much of the power of marketing software is its capability to systematize aspects of customer experiences and internal marketing operations, delivering more tailored marketing at scale. But it requires you to map out and implement ever more advanced processes that get "coded" and configured in such software.

For instance, consider this screenshot from a marketing automation platform (in this case, Eloqua):

This is marketing. It's a layout of a marketing process that a marketer has created — a flow of steps and decisions to deliver the right experience to a prospect and route them to the appropriate stage in the marketing-sales funnel. When constructed well, such automated flows can have a significant impact on your brand and marketing effectiveness.

This is also programming. It's presented in a visual manner, but the process implemented here is structured and behaves as a computer program: if X do Y, else do Z. It's the same kind of thinking that software developers apply in their craft.

Processes like this are springing up all over marketing — not just with marketing automation software. There are processes for managing your content marketing pipeline, running your conversion optimization experiments, handling your social media engagements, and so on.

Sometimes such process configuration is contained in a single software platform. In other cases, you have to design processes that cross multiple software products and define critical human touchpoints — when does a marketer or salesperson intervene, who specifically is that, what do they do, and how does the opportunity progress from there. Even if you just sketch such processes on a whiteboard, you are, in a very real sense, "programming" your organization.

It may sound straightforward at first. But as you invent more sophisticated processes, as you seek to make them more efficient and robust, and as you start to encounter interaction effects between different processes, it quickly gets challenging.

Learning a little computer programming arms you with core concepts and skills for tackling these challenges. You develop a better sense of how to structure processes with maintainability and adaptability in mind. How and why to do refactoring. How to debug a broken process in a systematic way. How to anticipate and handle exceptions. How to use software engineering approaches such as encapsulation and loose coupling.

More than anything, playing around with computer programming — outside the context of an actual do-or-die project at work — is a great way to get practice translating abstract ideas into concrete processes. It builds and tones your "software thinking" skills.

Even if you never write a line of raw software code in your professional capacity, your new strength in software thinking will prove invaluable to your marketing mission.

Marketing technologists mourn Dennis Ritchie

Marketers are paying tribute to Steve Jobs.

But marketing technologists should pay tribute to Dennis Ritchie (standing in above photo, next to Ken Thompson), who sadly passed away this past weekend.

As a great article in Wired points out, Jobs stood on the shoulders of Ritchie. See, Ritchie invented the C programming language, which he and Ken Thompson then used to build the UNIX operating system — which is the foundation of Apple's OS, and so much more.

As one famous programmer, Rob Pike, said to Wired, "Pretty much everything on the web uses those two things: C and UNIX. The browsers are written in C. The UNIX kernel — that pretty much the entire Internet runs on — is written in C. Web servers are written in C, and if they're not, they're written in Java or C++, which are C derivatives, or Python or Ruby, which are implemented in C. And all of the network hardware running these programs I can almost guarantee were written in C."

"It's really hard to overstate how much of the modern information economy is built on the work Dennis did."

On a personal note, C was my first love (as a programming language).

Read the full story on Wired.com.

Eloqua files for IPO, new bellwether for marketing tech

While much of the marketing world was caught up in the announcement of Steve Jobs' resignation as the CEO of Apple, e.g., The Meaning of Steve, a much happier piece of marketing news slipped through the commotion: the marketing technology company Eloqua filed to go public with a $100 million IPO.

As disclosure, my company, ion interactive, is an Eloqua customer, and many of our customers are also Eloqua customers — we've found great synergy between our post-click marketing software and Eloqua's platform.

But what really excites me about this news is that it would be the first of a new generation of marketing technology companies to go public — and has the potential to serve as a bellwether for the state of the new marketing and the public market's assessment of that opportunity.

Sure, there are other public companies adjacent to this space. Salesforce.com is the big one — certainly similar in terms of being a SaaS that has been adopted by sales and marketing alike. But Salesforce didn't represent a new way of doing sales, simply a (much) better way to provide CRM technology. Similarly, Unica was a public marketing technology company before IBM acquired them, but their foundation was on technology that powered the previous generation of marketing operations. Constant Contact is a successful public email service provider, but they've been more of a champion for the broad adoption of email marketing, part of the first generation of Internet marketing technology.

Eloqua represents a huge wave of companies that are defining the new marketing operations. Many of the players included on the marketing technology landscape infographic I published earlier this month fall into this category. There's been huge investment in this sector over the past 5 years. Eloqua's IPO will be an important test of how ready that investment is to mature.

Given the overall market's current ups-and-downs, this may be a bumpy ride. But if Eloqua breaks through under these conditions — and I hope they do — it will be a referendum on the potential of this space in spite of (and maybe even because of) an uncertain economic climate.

The following are excerpts from Eloqua's S-1 registration statement, where I've highlighted some of the information that I found most interesting. They did, however, fail to state an essential piece of information: it's pronounced EL-oh-kwa (like eloquent), not eh-LOW-kwa.

On customers and market opportunity...

Our solutions are particularly suited to modeling and supporting the complex sales processes of both business to business, or B2B, sales and high-value business to consumer, or B2C, sales. As of June 30, 2011, we had over 1,000 customers, encompassing a wide spectrum of industries, including the technology, financial services, entertainment, manufacturing, business services and telecommunications industries. Our customers include Adobe Systems, American Express, Cummins Power Generation, Dell, The McGraw-Hill Companies, the Miami Heat, National Instruments, Nestle S.A., Siemens AG, Standard & Poor's, VMware and Wells Fargo. Our ten largest customers accounted in the aggregate for less than 12% of our total revenue in each of 2010 and the six months ended June 30, 2011, and no single customer accounted for more than 3% of our total revenue during either of those periods.

On market opportunity...

Forrester Research, Inc. predicts that spending on interactive marketing in the United States will increase from $34 billion in 2011, or 18% of overall U.S. marketing expenditures, to $77 billion in 2016, or 35% of overall U.S. marketing expenditures. Within this category, spending on email, mobile and social media marketing is projected to grow from $4.7 billion in 2011 to nearly $15.7 billion in 2016, representing a compound annual growth rate, or CAGR, of 27%. Business spending on automating, analyzing and optimizing marketing and sales functions is also projected to increase. International Data Corporation, or IDC, predicts that the marketing automation market will grow from $3.2 billion in 2010 to $4.8 billion in 2015, while the CRM analytics market, which includes marketing and sales analytics, is projected to grow from $2.2 billion in 2010 to $3.4 billion in 2015.

The significant increase in online activity by prospective buyers has led to a corresponding increase in the amount of prospect-related digital data. If appropriately analyzed, a prospect's Digital Body Language provides marketing and sales professionals with valuable information about a prospect's progress through the sales funnel. We believe enterprises are increasingly realizing that effective sales execution is dependent upon leveraging the vast quantities of available data to enable the delivery of a precise, targeted and timely message that caters to a prospective buyer’s unique concerns and desires at each stage of the buying process.

Marketing executives are increasingly confronted with managing complex constituencies, including internal and outsourced marketing groups, direct and indirect sales channels and traditional and online prospective buyers. At the same time, marketing and sales teams are being asked to demonstrate their direct impact on revenue generation to justify the value of marketing and sales expenditures. In many cases, marketing and sales teams continue to compete within organizations for resources and recognition, resulting in a lack of coordination between the two departments. Businesses are increasingly recognizing that this divide is counterproductive and that a company’s marketing and sales functions need to be tightly coordinated and aligned around the same goal of growing revenue.

On revenue...

We derive most of our revenue from subscriptions to our on-demand software and related subscription-based services. Subscription and support revenue accounted for 86.6%, 91.7%, 93.0% and 91.1% of our total revenue during the years ended December 31, 2008, 2009 and 2010 and the six months ended June 30, 2011, respectively. Subscription and support revenue is driven primarily by the number of customers we have, the number of prospective buyer profiles our customers manage with the Eloqua Platform, and the levels of service for which they contract.

Professional services revenue accounted for 13.4%, 8.3%, 7.0% and 8.9% of our total revenue during the years ended December 31, 2008, 2009 and 2010 and the six months ended June 30, 2011, respectively. We derive our professional services revenue primarily from services provided in connection with the onboarding of new customers onto the Eloqua Platform, including implementation and integration with our customers' sales automation and other marketing systems, as well as educating the customer on optimal use of our solutions.

On competition...

The services we provide are also offered by others and in the future may be offered by an increasing number of parties. The market for marketing automation and RPM software is evolving, highly competitive and significantly fragmented, and we expect competition to continue to increase in the future. With the introduction of new technologies and the influx of new entrants to the market, we expect competition to persist and intensify in the future, which could harm our ability to increase sales and maintain our prices. We face intense competition from software companies that develop marketing technologies and from marketing services companies that provide interactive marketing services.

Our competitors vary with each challenge that our solutions address, but some of these providers include:

• plan and spend management software vendors, such as Oracle Corporation and SAP AG;
• workflow, project management and brand management vendors, such as marketing agencies who develop custom systems for their clients;
• email marketing software vendors, including Responsys, Inc., ExactTarget, Inc., Constant Contact, Inc. and numerous other email marketing companies;
• campaign management software vendors, such as Oracle Corporation, SAS Institute Inc., Aprimo, Inc. (a division of Teradata Corporation), and Unica Corporation (a division of International Business Machines Corporation, or IBM); and
• lead management software vendors, such as Oracle Corporation, Genius.com, Incorporated, Marketo, Inc., Neolane Inc., Pardot LLC, SilverPop Systems, Inc., and smartFOCUS Group plc.

We expect to face additional competition with the continued development and expansion of the RPM and marketing automation software markets. We also expect competition to increase as a result of software industry consolidation, including through possible mergers or partnerships of two or more of our competitors or the acquisition of our competitors by larger and better-funded companies. For instance, in December 2010, Teradata completed its acquisition of Aprimo and in October 2010, IBM completed its acquisition of Unica.

Why Software Is Eating Marketing

Marc Andreessen had a great essay in The Wall Street Journal yesterday, Why Software Is Eating the World. Remarking on the news from last week that Hewlett-Packard is looking to jettison its struggling PC business in favor of investing more heavily in software, he makes the case this isn't a tech bubble — this is the new normal:

My own theory is that we are in the middle of a dramatic and broad technological and economic shift in which software companies are poised to take over large swathes of the economy.

More and more major businesses and industries are being run on software and delivered as online services—from movies to agriculture to national defense. Many of the winners are Silicon Valley-style entrepreneurial technology companies that are invading and overturning established industry structures. Over the next 10 years, I expect many more industries to be disrupted by software, with new world-beating Silicon Valley companies doing the disruption in more cases than not.

There are two forces driving this, the first being near complete saturation on online connectivity. Andreessen expects that within the next 10 years, effectively everyone on the planet will own a smartphone, "giving everyone instant access to the full power of the Internet, every moment of every day."

The second is the capability for entrepreneurs to develop applications for that audience with unprecedented ease:

On the back end, software programming tools and Internet-based services make it easy to launch new global software-powered start-ups in many industries—without the need to invest in new infrastructure and train new employees. In 2000, when my partner Ben Horowitz was CEO of the first cloud computing company, Loudcloud, the cost of a customer running a basic Internet application was approximately $150,000 a month. Running that same application today in Amazon's cloud costs about $1,500 a month.

With lower start-up costs and a vastly expanded market for online services, the result is a global economy that for the first time will be fully digitally wired—the dream of every cyber-visionary of the early 1990s, finally delivered, a full generation later.

He goes on to give a bevy of examples of software powering industry domination:

• Amazon, the world's largest bookstore, has software as its core capability
• Netflix, an online service, as today's largest video service by subscribers
• Apple's iTunes, Spotify, and Pandora as the world's dominant music companies
• Pixar, a software company, as the best new movie production company in many decades
• online social game-maker Zynga as the fastest growing videogame company in the world
• Wal-Mart using software to power logistics and distribution capabilities
• Oil and gas companies using supercomputing and data visualization

Including, of course:

Today's largest direct marketing platform is a software company—Google. Now it's been joined by Groupon, Living Social, Foursquare and others, which are using software to eat the retail marketing industry. Groupon generated over $700 million in revenue in 2010, after being in business for only two years.

How is your company doing in adapting to his new digitally-dominated landscape? How is your marketing department doing in leading the way?

Amazing graphic of customer experience touchpoints

I'm detecting an exciting shift in the marketing technology landscape — less of an emphasis on back-office analytics, and more of a focus on delivering compelling customer experiences in the front-office. To be sure, analytics support that mission; but they don't dominate it. I think this is a really important step forward.

Earlier this month, Brian Walker of Forrester released a report on The Emergence of Customer Experience Management Solutions that discusses some of the dynamics of this shift.

What struck me most from the report, however, was this terrific graphic that does a beautiful job of visualizing the different touchpoints throughout the customer lifecycle, along with some of the communications vehicles that play a role at each point:

Forrester defines a customer experience management (CXM) solution this way:

"CXM solutions are the technology solutions that allow businesses to manage and optimize the customer experience through content management, customer targeting, analytics, personalization, and optimization capabilities across customer touchpoints — online, through mobile devices, through Internet-connected interfaces, and through digitally support customer interactions such as contact centers and in-store or branch interfaces."

I'm slightly skeptical on the breadth of the category for labeling a specific set of software solutions — many, many categories of marketing technology feed into this — but as a management approach, I couldn't agree more with an emphasis on customer experience.

It does, however, let us say things like: the CMO wants ROI from our SaaS CXM, especially SEO and PPC initiatives driving to our LPO programs. That's kind of fun.