MarTech and the Decade of the CMO
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1 MarTech and the Decade of the CMO THE 6th Key By Ashu Garg General Partner, Foundation
2 Introducing the 6th Key to the Decade of the CMO Technology has transformed marketing into a technical discipline as much as a creative one. The number of marketing technology startups has increased from 150 in 2011 to nearly 4,000 in early And we expect technology spend by CMOs to increase 10x in 10 years, from $12 billion to $120 billion. It s an amazing time to be a marketer. But with the landscape changing as quickly and dramatically as it has, it s also a challenging moment. Which is why, one year ago, we published MarTech and the Decade of the CMO, a whitepaper that was written with the aim of helping marketers to navigate the complex terrain that is marketing today. 6 Keys To Unlocking The Decade of The CMO Key 1: All Hail King ROI Key 2: Hire Math Men, Not Mad Men Key 3: Publish or Perish Key 4: Mass Personalization is Not an Oxymoron Key 5: Close the Deal Key 6: The Revolution Will Not Be Televised In the paper, we enumerated the 5 Keys to the Decade of the CMO organizing principles to help marketers identify the technology that will be paramount to solving their business objectives. I stand by each of those 5 keys; but, had I written that framework today, I would have added a 6th key: video. Because today it s the digital video revolution that will be the next defining moment in the decade of the CMO. 4,000 Today s MarTech Explosion # of Marketing Technology Start-Ups 2,000 Source: chiefmartech.com 1, foundationcapital.com/decadeofthecmo 2
3 The Revolution Will Not Be Televised It will be streamed, snapped, tweeted, and projected in virtual reality. : The 6th Key 3
4 The revolution will not be televised. It will be streamed, snapped, tweeted, and projected in virtual reality. The rapid proliferation of Netflix, Hulu, Periscope, YouTube, Snapchat, Facebook Live, Twitch, Amazon, Vive, Vessel, The Screening Room the list of new video platforms goes on and on. TV isn t dead yet, but as people increasingly turn their eyes to other screens and modalities, video will engage a new generation of consumers. For today s teenagers, watching video on their mobile phones is the norm. Nielsen reports that the amount of time Americans 18- to 24-years old watch traditional TV has gone down by 38% in the past five years. And in the case of Generation Z (those born in 1995 or later), 70% prefer streaming over broadcast or cable. It s no wonder that emarketer predicts that by 2020, digital will account for almost 40% of total video consumption in the US. Not that anyone should be surprised; this overnight trend has been 15 years in the making, getting its start when DVR popularized the time shifting of programs. And today s revolution is moving so quickly, you can expect Generation Z to adopt VR as ubiquitously as millennials took to their mobile devices. Over the next 10 years, VR headsets will be as widespread as smartphones are today, further blurring the line between our physical and digital worlds. video platforms including the emergence of virtual reality means that brands have a host of new, more engaging ways to connect with their customers. But it also means that marketing is going to get exponentially more complex and that there is a huge opportunity for startups to write the rules of this new world order. Of course, it s no longer just a question of when viewers watch but also how and where. The rapid proliferation of video platforms including the emergence of virtual reality means that brands have a host of new, more engaging ways to connect with their customers. But it also means that marketing is going to get exponentially more complex and that there is a huge opportunity for startups to write the rules of this new world order. Choice is Exploding VCR Cable AOL DBS Satellite Yahoo Google Broadband HDTV VOD Apple TV Smartphone Roku Amazon Prime Instant Video DVR HD DVD & Blu-Ray Satellite Radio Time - Shifted Viewing Facebook 7 th Gen Game Console Twitter YouTube Netflix Streaming Hulu+ 8 th Gen Game Console Chromecast HBO Now Ad-FreeHulu Samsung Gear VR Google Daydream VR Smart TV Tablet Streaming Radio Google Cardboard Apple TV4 th Gen Oculus Rift HTC Vive PlayStation VR Instagram 4
5 Over The Top Digital Video Revenue Doubles by 2020 US Digital Video as % of Total Video Consumption (Billion Hours) 70.0 $62b 60.0 transaction subscription 11% Traditional TV Total Streaming Streaming % of Total 50.0 ad supported % $28b 18% 28% 54% 40% 49% % 35% 30% 25% 20% 15% 10% 5% Source: informa, marketsandmarkets.com Source: emarketer and Wall Street Research 5
6 Generation Z and The New Definition of Tuning In Generation Z shows a love for video and a growing indifference to the big box and remote. In an era of emoji and six-second Vine videos, we tell our advertising partners that if they don t communicate in five words and a big picture, they will not reach this generation [Z]. Dan Schawbel, Millennial Branding as seen in New York Times 90% Watch YouTube daily. Generation Z as Culture Consumers (Gen Z = those born in 1995 or later) 80% 70% 77% Are on social media daily. Prefer streaming over broadcast or cable. Are multi-tasking while watching. Source: Wildness! Weekly TV Usage by Generation All gains in live and timeshifted linear TV viewing in Q were among those over 50-yrs old Source: Nielsen, nscreenmedia.com Gen Z Millennials Gen X Boomers Source: US data, VisionCritical 6
7 In Nirvana: In this new environment, CMOs will be responsible for the development of cross-platform, data-driven video strategies that blur the line between content and advertising. Scalable, personalized video content will be ever present. Imagine video and VR content (instead of ads) that is so sleekly produced viewers will want to stop and watch; when they do, they ll find the content nearly as engaging as the programming they love. And robust ad buying platforms will make it possible for brands to distribute this marketing content across a fragmented and siloed landscape.! 59 million adults in the US watched original digital video at least once a month in Source: 2015 IAB Original Digital Video Study Brands will also have a comprehensive understanding of their customer behaviors both online and offline, fueled by data from sources such as payment platforms, wearables, mobile, and Internet of Things devices. Imagine video and VR content (instead of ads) that is so sleekly produced viewers will want to stop and watch; when they do, they ll find the content nearly as engaging as the programming they love. And robust ad buying platforms will make it possible for brands to distribute this marketing content across a fragmented and siloed landscape. 7
8 Challenges on the Path to Nirvana: Consumers have an array of platforms to choose from, with more and more sure to emerge in the coming years. Many of these outlets are already on-demand, subscription driven, and ad free which creates the necessity for new, innovative brand marketing solutions. New Models of Content Creation As the number of platforms customers engage with (social, digital, VR, etc.) continues to increase, brands will need new models of content creation. Unfortunately, the scale of content required is immense, and there are not enough people with the skills to make it possible. Just as marketing has become a technical discipline, a new breed of technical content creators will soon emerge. Tomorrow s content creator will have a skillset that blends digital design, filmmaking, game development (for VR), and data science to enable the rapid creation and optimization of interactive branded video and VR content across multiple platforms. In addition, the cost of creating video content is enormous and the cost of creating VR content even more so. Before brands can fully commit to a unified video content strategy, they will need new tools and talent that allow them to create personalized content at scale across a wide range of devices. And today this feels like a long ways off, as perfecting every aspect of content creation from engaging mobile experiences to captivating Instagram photography and clever Snapchat streams, requires expertise across completely unique creative pursuits all at once.! If Netflix were a Nielsen-rated TV network, it would attain a larger 24-hour audience than each of the major broadcast networks within a year. Source: Verizon Millennials & Entertainment Report 2014 > 8
9 Challenges on the Path to Nirvana: Seamless, Centralized Distribution Required Once the content challenge is solved, marketers will also require easy ways of distributing that content to reach customers at every step of their individual paths to purchase. Today, each platform is a silo. There is no easy way for a brand to approach NBC and purchase ad space for The Voice across linear TV, NBC.com, Facebook, Instagram, Twitter, and YouTube at the same time. As of now, the process must be done manually, making it both expensive and inefficient. To ensure brands are reaching customers in different ways and continually reinforcing their brand message, solutions are needed to enable programmatic ad buying at a level of scale and real-time optimization that is not possible today. Tracking the Path to Purchase Over the course of a one-minute video, it s almost impossible to know what may have triggered a customer purchase. Was it an impactful image? A line in the script? Or maybe a viewer saw something that triggered a fond memory and created a positive association with a product. In order to hone their video/vr content strategy, brands will need attribution solutions that help them better understand this customer behavior. For attribution to be actionable, brands need comprehensive, cross-channel profiles of their customers. Today, this profile is largely incomplete because online consumer behavior isn t always accessible to marketers, and offline activity isn t tied to a unified, accurate profile of a customer. As brands aim to increase the amount of data about their customers they capture and utilize, in order to avoid the Orwellian moniker, it will become crucial that they communicate and address user concerns over privacy and data security every step of the way. The struggle for today s marketers is real. Planning, buying and measuring advertising effectively across the developing silos of video content and tying together linear, digital, OTT and social platforms is an immensely complex challenge, and will be so for at least the next 3 5 years. The MarTech industry needs to rise to this challenge and help marketers realize their cross-screen dream. Brett Wilson, CEO/Founder TubeMogul! For millennials, none of the 4 major broadcast networks are amongst their top 10 brands. Source: Verizon Millennials & Entertainment Report
10 Today s MarTech Video Landscape Aside from traditional TV commercials, video-focused marketing is still too new to be referred to as established. The entire industry is still emerging. In the future, we expect to see new technologies that support video marketers in the following ways: content creation, distribution (including programmatic ad buying), and optimization. Linear TV is dying. Long live video. And for those companies willing to take the lead, the coming era offers dazzling opportunity. Distribution Advertising Analytics Influencers Buy Exchange Sell Linear TV Over the Top Social Creation Infrastructure Marketing Consumer Non-Comprehensive 10
11 MarTech and the Decade of the CMO
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