Let’s Talk About Chatbots

AUTHOR NOTE

We sent our summer intern, Rebecca Shaevitz, to her first MadTech event. She returned with fresh insight on the role Chatbots are beginning to play in the ecosystem… Well worth a five minute read.
– The Industry Index Team

Knowing almost nothing about Chatbots prior to attending “Chatbots: More Than Hype” presented by ROKO Labs, I figured I’d walk away with an understanding of what Chatbots do and how they are relevant in the MadTech space. To be honest, the ins and outs of chatbots are still a bit unclear to me – the Chatbot ecosystem spans many different platforms, user demographics, and designs.

Despite my confusion, I did pick up a few key takeaways:

  1. Chatbots can be implemented into almost any platform. Why is this important?
  • Companies do not have to create an entirely new technology to take advantage of their benefits. A platform that may be struggling with user navigation or the specific operations of a user interface can implement a Chatbot. If done correctly Chatbots can work… almost like magic.
  • Chatbots can be continually updated to stay relevant to users’ needs and interests.
  1. Chatbots can be powerful tools for platforms to engage users, smooth-over confusing steps in technologies, or simply entertain. However, design and function must be highly intentional to ensure intended purposes are achieved.
  • Failures are largely due to language processing issues, outdated designs, inappropriate tone, and poor visual cues.
  • Chatbots without clear intentions (or those which are poorly implemented) may do more harm than good, alienating or confusing users.
  1. User involvement should be viewed as an important aspect in the creation and design process.
  • Users can indicate which Chatbots/Chatbot features will be most useful during the selection and testing processes.
  • Users may spread the word about new Chatbots, providing a first line of promotion for these new technologies.

I’m still unsure of a good deal of the Chatbot ecosystem. Maybe that’s because Chatbots are constantly evolving; maybe it’s because their potential is only just being discovered. I do know that the next time I interact with a Chatbot I’ll have a better understanding of how to assess its efficacy, as well as a greater appreciation for its development and complexity.

Content Roundup: Wind Beneath Twitter’s Wings? — There Will be blood Data — Amazonian AdTech

Here’s some of our fav MadTech news from the last two weeks — Who’s down with OTT? Time to break up Big Data? Social media soars? Marketing automation, and more…  Plus, this coming week, we’ll go deep on our blog about Amazon’s next move in digital media space..

Anything juicy we missed? Tell us on Twitter, Facebook… or button it up on LinkedIn.

 

The World’s Most Valuable Resource Is No Longer Oil. It’s Data. The Economist,  May 6, 2017
The attention economy demands a new approach to antitrust rules as Google, Facebook, et. al., become
the new Standard Oil…
#finance #bigData #monopoly

YouTube Is Adding 40 Original Programs With Celebrities and Creators Adweek,  May 5, 2017
YouTube is going after traditional television ad dollars with exclusive new programs, and the brands who cut them off weeks ago are coming back…
#video #ott #youtube

Twitter Makes The Case For Live at Its Inaugural NewFronts AdExchanger, May 2, 2017m
Twitter added 9 million new users in Q1 after several quarters of disappointing earnings. Is it getting its wings back, thanks to livestreaming?
#social #emerging #twitter

Amazon Confirms Advertising Will Become A ‘Meaningful’ Part Of Its Business The Drum, Apr. 28, 2017
Bezos and co. prodded other parts of adTech with the launch of its cloud-based header bidding product in December…
#finance #amazon

5X More Marketing Automation Vendors Added Than Removed MarTech Conference  Apr. 26, 2017
If you bet on consolidation over the past six years, it’s time to pay your bookie…
#marketingAutomation #crowded

 

UPCOMING INDUSTRY EVENTS

May 15 – 17  /  TechCrunch Disrupt, New York, NY

May 19 – 22 / International Conference on Virtual Reality, Hong Kong

May 24  / Roundtable: OTT & Audience Targeting for Video, New York, NY

May 31 – June 2  / Digiday Programmatic Marketing Summit, Scottsdale, AZ

 

It’s 2017… Tear Down These Walled Gardens!

AdTech has manifested into a two-tiered ecosystem: independent publishers and “walled gardens.” The latter are the cool kids on the playground – you can play with them… just as long as you play by their rules.

Let’s start with some clarity: Facebook and Google are the poster children for the lot which includes Amazon, Snapchat, Yahoo, AOL, Microsoft, LinkedIn and Twitter… the walled gardens, AKA the “easy button.”  PRINTADTECH notes that all require the use of their own systems, dashboards and metrics. With that, these walled gardens retain significantly more of each dollar into their respective ecosystems.

Compare them to independent publishers, and the indies’ data doesn’t measure up. The walled gardens are able to reach a much larger audiences with deeper targeting power. At our last Roundtable it was noted that Facebook and NewsCorp (an independent publisher) hold different apparent value in the marketplace, and that is reflected clearly in a recent Yahoo Finance post, “The two tech giants [Facebook and Google] accounted for 103% of the growth in the digital ad industry, while everyone else shrunk 3%.”

Big buts, though. If your company makes its money by selling online ads, or you are an ad agency… your warm-fuzzies have vaporized. For you, easy-button companies have a different name: Frenemy. Industry professionals including Sir Martin Sorrell, CEO of WPP, the world’s largest advertising agency, have argued that the industry must take action, and In a recent Huffington Post article, Mark Haviland, EVP at Rakuten Marketing Europe stated, “In order to combat walled gardens and earn the trust of advertisers, the digital world needs to be increasingly transparent.” Note the language here. “Combat.”

Put another way – AdTech as an industry cannot continue to allow the players to be the referees. DIGIDAY notes that Facebook and Google are restricting third party AdTech companies from operating on their networks, stating, “It raises questions about whether Facebook and Google’s AdTech products can be trusted to function objectively, or if they’re merely being used to funnel ad spend through their respective media networks.”

Forrester took a deeper look at the sacrifices made in customer intelligence when working with walled gardens, recognizing that the value coming back over the wall isn’t necessarily equal. Of the research, Media Post summarized, “The short-term benefits are the ability to leverage unique user identification for targeting the measurement. However, the strategic and operational downside of closed ecosystem is that they increase cost and prevent brands from reaching consumers across channels. They leave marketers with a dangerous blind spot, losing ownership of key data pertaining to their consumer over time and coming to depend on walled gardens for customer intelligence.”

Facebook admitted to its third measurement blunder, and advertisers are calling for more accountability. Procter & Gamble announced they would be cutting their investment in targeted Facebook advertising, and Sorrell notes on the Huffington Tech article, “it could even result in budgets being switched to focus more on traditional channels, such as TV.”

Substitution is not a remedy, however. If we are going to continue enjoying the fruits of the walled gardens – and they are juicy – a checks-and-balances initiative has to be implemented now.

Who’s to Blame for the Current Ad Tech Trust Gap?

Recently, PluggedBD held an executive-level roundtable titled “Transparency, Measurement and Viewability in the Digital Age,” which began with a discussion about what Procter & Gamble Chief Brand Officer Marc Pritchard meant when he called for “… new [transparency] rules for agencies and ad tech to get paid.”

Not one of the panelists, representing every aspect of ad tech, could exactly answer the question, which prompted moderator Jonathon Shaevitz, CEO of Industry Index, to ask a second question: “Who’s to blame for the ‘trust’ mess we’re in?” That’s when the conversation got really interesting because solving marketing biggest “whodunit” is how we start down the road to redemption.

Who’s really to blame?

The angst in the room was palpable as the group struggled to solve this “whodunit,” with panelists assigning blame in equal measure to agencies, publishers and CMOs — all the while acknowledging they weren’t really sure whom to blame.

But to me, the culprit is clear. Without hesitation, I’d have raised an accusing finger at the one group not in the room: venture capitalists (VCs).

What’s the evidence?

The case against VCs starts with the basic fact most VCs tinkered in an industry they knew little about. As a result, they applied their typical investing formula — 1) “cool team”; 2) “cool tech”; and 3) “cool SaaS Model” — indiscriminatingly to marketing, with unfortunate consequences:

  1. “Cool team”: VCs overwhelmingly favored engineer CEOs (often young) who often lacked any understanding what their marketing customers really needed.
  2. “Cool tech”: Ad tech is now a fragmented, dysfunctional ecosystem because of VCs predilection for “cool” tech (versus useful tech), which heavily burdened the industry with so many similar startups that advertisers struggle to distinguish one from another. The knock-on effect is that most advertiser attempts at frictionless marketing management are doomed to end in failure. A most unhealthy outcome all around.
  3. “Cool, SaaS business model”: This is possibly the most damaging ingredient in the VC formula because it created a misaligned incentive structure that rewarded low quality digital deliveries instead of high quality audience interactions.

The real crime

It’s clear in hindsight that a lot of damage was done by the VC investment formula because it steamrolled marketing’s own, albeit “uncool,” formula that is equal parts art, science and execution. This fundamental mismatch directly led to ad tech becoming a toxic, adversarial brew that undermined long-term and trusted relationships across the marketing ecosystem:

  • Advertisers were pitted against publishers in a zero-sum game where advertisers “win” by getting the best inventory as cheaply as possible, and publishers “win” by selling the worst inventory possible at the highest price possible. No wonder everyone is twitchy.
  • Agencies and ad networks fight to deliver profitable media buys because too many people have their hand in the arbitrage cookie jar.
  • Everyone is playing a perverse metric, hot potato game whereby SaaS businesses are quick to pass the metric buck to anyone, ad networks blame other platforms, and everyone blames agencies for whatever they can get away with. Everyone loses.

The road to redemption

Blame is useful to help us to adapt a new attitude that gives us the fortitude for the long and arduous journey ahead. The place to start is for advertisers and agencies to fully appreciate that every dollar spent in advertising doubles as an investment for ad tech ventures. The VC model was not kind to marketer-led ventures, which is part of why there is such a lack of transparent, process-driven ventures. With this new consciousness, though, advertisers can wrestle control from VCs to determine which ventures thrive with these “investment” guiding principles:

  • Funnel marketing dollars to ventures that deliver a system level solution that integrates the art, science and execution of great marketing versus narrow point or SaaS solutions.
  • Reward platforms that develop pre-campaign proformas with business-centric KPI’s like Cost Per Visitor (CPV) to create transparency and trust.
  • Rethink the scale equation with a new sensitivity towards the realities of quality digital scarcity. Move away from tonnage metrics towards smaller and meaningful metrics that can be traced to revenue-generating activities.
  • Go the extra mile to hear new ideas in ad tech, especially from marketer CEOs. The effort has profound implications in reshaping the ad tech landscape of tomorrow.

It’s taken marketers over five years to get smart enough to challenge the black boxes that ad tech packaged itself in. The next five years will look quite different, as marketers create ad tech where trust is the norm, not the exception.

What I Learned at IAB Leadership

If your goal is to meet with senior people in the industry, the IAB Leadership Conference  is among the best of the year.  The conference draws mainly senior people, has fairly good content (high praise for MadTech conferences), and everyone is under one roof (unlike CES, Mobile World Congress, SXSW, etc.)

It does suffer from a common problem, however: There are more vendors than buyers. But ratios are better and the people who attend – including publishers, agencies, and brands – are senior and engaged.

Takeaways:

  • MadTech is capable of solving the #FakeNews problem. We helped create it, therefore we have to own our portion of the solution.
  • Transparency is the new watchword for 2017:
    • Procter & Gamble have thrown the gauntlet down, calling on the digital media industry to become transparent in the face of “crappy advertising accompanied by even crappier viewing experiences.”
  • Mobile continues to grow and is making life more complicated and evermore “real time.”
  • Storytelling still matters (organizers could recycle this talk every year — it will not change).
  • Measurement and attribution are going to be top industry focuses in 2017.
  • Google, our personal misgivings aside, continues to push ideas, tools, and commitments to an “open web.”
  • Data is getting smarter and performing better. It is also consolidating quickly, creating new challenges, particularly if everyone is using the same targeting data.
  • Content is still king, but the good publishers have valued short term revenue over their readers and viewers, and have let Facebook and other walled gardens dis-intermediate them from their community.
  • Consumers have the all the power to select which content they choose.

 

Observations from outside of the formal conference presentations:

  • Around 1,000 people paid to attend; another 200 showed up to hang out in the bar.
  • Attendees are getting older – far fewer people are staying out until 4AM.
  • I still had to get on an airplane to meet with people who work within just a few miles of me.
  • It remains a male-dominated industry, but the signs of change are definitely clear. This change needs to move along a little faster.
  • Diversity. Why is #IABSoWhite ? And it doesn’t stop there.
  • This industry is still driven by geeks, nerds, and misfits (thank goodness)!

MadTech 2017: chatbots and more

Media We Like: “MadTech 2017: Chatbots & Better Use Of Data”

What will 2017 look like in MarTech and AdTech? Here are some thoughts from others we liked. (See our 2016 recap here.)

Marketers from Virgin, IBM, Facebook and FCB Global share their predictions after an eventful year (The Drum)
“Deciphering unstructured data will be a key differentiator.” Plus, “we’ll see customer service transformed online through the proliferation of chatbots.”

Trends for 2017: AR, Chatbots, Influencers 2.0 and more (Marketing Week)
Marketing Week outlines 12 trends, predictions and issues that will gain pace over the next 12 months. More about dark social, micro-influencers and AR (The Huffington Post)

Programmatic ad-buying in 2017: What marketers should know (Marketing Tech News)
With programmatic projected to increase to $42bn in 2020, here points out 3 key trends in 2017: better use of data, programmatic creative, and bringing ad tech in-house.

The Biggest Trend In Ad Tech We’ll See In 2017: The Pay Per Transaction Model (Forbes)
In the era of Voice Search, Pay Per Impression and Pay Per Click models do not translate well here. Which is why Google are considering Pay Per Transaction, in what would be the biggest shift in advertising in years.

Survival Guide 2017: Ad Tech Turns Digital Duopoly Into Three-Way Brawl (AdAge)
Though the three tech titans have a combined market cap of $1.21 trillion, only Google is firmly entrenched among marketers’ and publishers’ automated ad deals. But the meteoric rise of header bidding has Amazon and Facebook smelling opportunity.

5 charts: Forecasting the 2017 global ad market (Digiday)
Researchers predict that digital ad spend will finally usurp TV ad spend next year. Also, mobile will take up nearly all of the global advertising growth, with social video being the major driver.

10 Digital Media and Marketing Predictions for 2017 (AdWeek)
A panel of digital marketing and technology experts shared their predictions for the future of influencer marketing, digital customer service and more.

Dorian also shared his predictions in our previous headline roundup: “It’s Everyone Against Facebook and Google. Plus, Chatbots and AI.”

(Join in! Tweet us or tell us on LinkedIn of media  you think is worth sharing.)

Image Source: GetApp Lab

Researching Whether Research Works

Maybe it seems circular and just a wee bit self-serving to do research that proves the worth of the research we do.

But have you seen our research paper that shows technology buyers think research-based content works better than all other forms of MadTech marketing?

We gathered our data by surveying 164 advertising and brand marketing experts from our inimitable panel of 45,000 execs in advertising, brand marketing and publishing. A sub-group answered follow-up interview questions.

We were surprised by the conclusions they gave us.

We had expected research to come up relatively high on the list of techniques marketers of MadTech should use to reach and influence prospects and generate leads. After all, if you’ve got data to support your assertions, you’re making a stronger case than just saying how great you are or writing fluff.

Plus, crafted well and distributed deftly, research-based content will attract the right kinds of people just as they need the kinds of help you can give them. If nothing else, you look smart, which can’t hurt (unless you’re in a really mean school cafeteria). Over time, research-based content adds up to more leads, more sales and better customers.

Still, we thought buyers of media, advertising and marketing technologies might prefer the high-touch of trade shows or maybe the expediency of emails. They told us, instead, that vendors should lead with research-based content, and use that content to support the shows, newsletters and other forms of outreach.

We lay out the data, our analysis, and more ways you can exploit research-based content in the paper, which you can download for free here, and then also get the underlying data. We’ll present some of the findings at our upcoming breakfast roundtable with PluggedIn BD, all about marketing and email automation. (Discount code “ii17,” for 30% off.)

Oh, and by the way, one of the illustrious sources we interviewed for the study said that research-based content works even when it IS self-serving. So, there.

BIG DATA–The New Monopoly

mo-nop-o-ly (noun) –the exclusive possession or control of the supply or trade in a commodity or service.

Generally speaking, monopolies are considered bad for the economy and the consumer.  Two of the most easily remembered monopolies are the original AT&T and Standard Oil.  AT&T was given its monopolistic status by the government, whereas Standard Oil, achieved it through business practices. In both cases, the government eventually broke up these monopolies, and innovation, lower prices, and competition thrived.

Data is the new and most leverageable monopoly commodity!  Big Data companies are successfully creating barriers to entry that stifle competition and create a new type of moat around their success.  Unlike traditional analog monopolies, the marginal cost of a new customer is effectively zero.  No new plants to build, no distribution costs, no new staff to hire (yes, there is a real cost to building and running these data centers, but the costs of that technology continues to drop rapidly).

Today, it appears that some of the largest consumer data aggregators — Google, Amazon, Apple, Facebook, etc. — have emerged as near-monopolies in their ability to collect data and insights about consumers.  Facebook, as one example, built its business on an advertising model, but its real value is data targeting.  It has more and better data about most people (at least in the U.S.)  than almost anyone else.  The more users Facebook engages, the lower Facebook’s data acquisition costs and the higher their value. Amazon has a similarly unique data set as the largest online retailer in the U.S., Google as the dominant search engine, video platform (YouTube) mobile OS (Android), and ad platform (DoubleClick). Apple, through iOS. The other two companies that might be thrown in the mix are AT&T Wireless (thanks to Apple, by the way) and Verizon Wireless (along with its acquisitions of AOL and Yahoo), which have the two largest databases of mobile IDs in the country.

However, our governmental institutions today are ill-equipped to respond to the challenges of global companies growing at exponential rates. Traditionally, the value of a company was built on a combination of intellectual property and physical assets (plants, trucks, machines, etc.). The physical assets were often developed and acquired based upon the underlying intellectual property (think patents).  Today, it still takes around three years to get a patent, but companies’ ability to leverage intellectual property can happen in a few years or even months.  As an example, Uber burst on the scene with its founding as Uber Cab in 2009, and reached a valuation at $3.5 billion in 2013. Had they waited for a patent approval, they would have missed the market opportunity.

Does It Matter?

Each of the big data competitors has emerged with a unique opportunity to collect more and better data and then sell that data to advertisers. Does it matter?

The short answer is yes, it matters. These giant data aggregators are already dominating the ability to leverage data to more effectively to target an ad.  But the insidious part is their ability to disaggregate a supplier from a buyer.  Companies like Amazon or Facebook know (or infer) not just who you are but what you are like. They know not only where you are but they can guess where you are going. They don’t just know what you are doing right now — they have a pretty good idea why you are doing it. And they make excellent guesses about what you will do next, guesses that grow more accurate as you go about your daily life while being carefully observed by the data giants. Amazon is already adjusting its pricing algorithm in real time. Amazon can charge one individual a different amount than another. Since the acquisition costs of many products are pre-negotiated, when it chooses to increase a price, the incremental margin remains with Amazon. Additionally, Amazon knows more about the value of a product than the manufacturer.  Therefore, Amazon can negotiate the price for every item and drive down manufacturers’ margin.

They have users’ shopping data, now married to zip code (which tends to indicate income levels) and to family members (if you set up “sub-accounts” on Prime). Amazon acquires age and demographic information, and if they want to, Amazon can purchase your credit score and other available data to provide a fuller view of a consumer. They can successfully charge you more than the next buyer for something they’re confident you want, like that “soon to obsoleted” piece of technology.

In the narrow confines of online advertising and commerce, combining some of these data clearly makes marketing more efficient by improving targeting, and by identifying and eliminating the famed half of the marketing budget that is wasted. As HBR noted:

“Marketers have trained their big-data telescopes at a single point: predicting each customer’s next transaction. In pursuit of this prize marketers strive to paint an ever more detailed portrait of each consumer, memorizing her media preferences, scrutinizing her shopping habits, and cataloging her interests, aspirations and desires. The result is a detailed, high-resolution close-up of each customer that reveals her next move”.

We have reached an inflection point.  Data are ubiquitous, and the marriage of data from multiple sources is commonplace. We are witnessing the transition from from data improving efficiency, to data becoming a strategy, to data becoming a barrier to entry (monopoly)!

Today, data is a strategy, and we need to start thinking about it as one. While scale is always a source of leverage for a supplier, with data the marginal acquisition cost is near zero and the benefit to data aggregators grows exponentially with each incremental data element. Data should adhere to the same competitive standards as other business strategies. Data monopolists’ ability to block competitors from entering the market is not markedly different from that of the oil monopolist Standard Oil or the telecommunications monopolist AT&T.

The real problem is that our institutions are still moving at the speed of analog while our economy is literally moving at the speed of light. The actions and behaviors of these companies is rational and so far seemingly legal, but left unchecked they will become egregious. Data corrupts and absolute data corrupts absolutely.

Our New Study: Research-Based Content Works

Today, we’re releasing our proprietary study that finds that research-based content works best for generating interest in MadTech. Here’s the news:

News Release

Research-Based Content Is The Most Effective Way to Reach Executives

Technology Decision Makers Prefer Data-Driven, Useful Information

January 13, 2017

NEW YORK — Research-based content is the best way to reach and influence advertising and marketing executives considering technology purchases. Data-driven content elicits the highest level of response, they say.

The executives say they want content that’s useful, relevant and tells them something new. Providing that kind of content will get them to look for, find and do business with technology vendors who provide it, they add.

These are some of the findings of an Industry Index survey of leading marketing and advertising executives.

“The conclusion, frankly, was unexpected,” says Industry Index CEO Jonathon Shaevitz. “We knew research-based content was useful but didn’t realize it would come in on top, above trade shows and even press coverage” as a marketing vehicle.

David Berkowitz, founding principal of Serial Marketer and former CMO of digital advertising agency MRY, concurs: “If there’s someone that’s actually trying to help me do my job better in some way, then that goes a really long way.”

Review copies of the survey and data, complete with charts and graphs, as well as a research paper summarizing its findings, are available from Industry Index at this link (PDF download). The full findings, comments and interview transcripts are available upon request.

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About Industry Index

 

* Industry Index has been conducting research in MadTech (AdTech + MarTech) for five years. Customers include PubMatic, Rocket Fuel, Tapad, MarketShare, BrightRoll and many others. We conduct exceptional industry-focused benchmark studies, brand reviews, and create data-driven thought-leadership content. Our research and surveys emerge from the Industry Index, which tracks the entire MadTech landscape via reviews and our proprietary panel.

 

www.IndustryIndex.com

 

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FOR MORE INFORMATION CONTACT:

Name: Melody Terng

Email: Melody@IndustryIndex.com

Phone: 626-247-1318

 

Tension Between Marketing and Editorial Content

The Tension Between Marketing and Editorial Content

Technology companies often want to be seen as authoritative “thought leaders,” believing (correctly) that useful, original content that demonstrates their intelligence accrues to their benefit.

They hope to become a go-to source whose expertise attracts, engages and retains customers impressed by their smarts.

One great way to be seen as smart is for executives to earn bylined placement in leading publications. The best publications want to serve and engage their communities while generating attention. They succeed over time by informing, delighting, amusing, educating, and in the best cases enticing people to share content that further spreads the editorial brand.

The publishers vary in their needs but invariably have editorial standards requiring content submitted for editorial consideration be:

  • New. (Provide real information, data, a fresh perspective.)
  • Interesting. (Be cogent, inviting, intriguing.)
  • Agnostic. (Don’t overtly sell a company’s products or services.)
  • Strong. (Take a position. Make a case. Don’t pull punches.)
  • Controversial. This one isn’t actually required, but eliciting emotion and response can help get a piece accepted.

Those editorial mandates may not align with imperatives of marketers who want to avoid taking risks or causing discomfort. They can have trouble seeing the value of content that doesn’t directly align with messaging they’ve devised for a brand.

A client recently asked me to conceive some op-eds that leading business publications might accept. I based one tempting proposal on ground-breaking posits from one of their executives about how publishers can succeed in a world of automation and social media. The client so far has hesitated to green light the proposal.

The article would show them willing to take a stand for their industry, without surety they’ll generate more sales from the piece. It would demonstrate their willingness to be bold and forward-thinking. It would, in other words, show thought leadership.

Thought leadership requires just that: thoughts and leadership. Being a real leader means being out front and taking risks. As with all risks, there are potential downsides. There is also the potential for big rewards.