How smart management of marketing tech can boost site ROI

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1 How smart management of marketing tech can boost site ROI By Cindy Waxer October 30, 2014 This report is underwritten by Ghostery.

2 TABLE OF CONTENTS Executive summary... 3 Site marketing tech complexity... 5 Reaping ROI from a managed cloud Recommendations for maximizing ROI Key takeaways Appendix: survey methodology About Cindy Waxer About Gigaom Research How smart management of marketing tech can boost site ROI 2

3 Executive summary Today s marketing technology landscape is a highly complex labyrinth of platforms, applications, and application programming interfaces (APIs). But how effectively are technology decision-makers managing this ecosystem of interoperable technologies, from site analytics and recommendations engines to data management tools and listening platforms? Gigaom Research addressed this question by surveying 300 U.S. IT and site operations decision-makers to understand how they are juggling the risks, costs, and rewards of this marketing cloud. Our survey suggests that IT executives expect to increase their investment in marketing technologies such as e-commerce, site analytics, social media, and data management. They re aware of some of the potential risks and costs from these technologies, but there appear to be some blind spots. They re conscious of potential security breaches and delivering a poor customer experience but may underestimate the competitive impact of data leakage. While only 13 percent of respondents say they manage these technologies very effectively, three-fourths (72 percent) rate improved marketing technology management as important. And more than half (67 percent) of IT leaders think they could improve ROI by more than 10 percent if they had a better handle on their e-commerce, marketing, and analytics technologies. Our survey analysis revealed some key process and governance failures standing in the way of IT and marketing teams reaping greater ROI from their marketing technology mix. These include: IT types like CIOs, IT managers, and chief digital officers spearhead the approval, selection, and management of marketing technologies with near-negligent input from marketers. In fact, only 52 percent of marketers and 28 percent of advertising representatives receive regular data reports, compared to 84 percent of IT leaders; that s less than both product managers and customer service reps. Seventy-six percent of IT decision-makers told us that IT manages the day-to-day usage of these technologies. Yet a mere 9 percent of respondents noted marketers contributions to this important process. IT s toolbox for managing marketing technologies consists of a hodgepodge of tools, from age-old spreadsheets to site analytics solutions. In fact, when we asked IT leaders to check off which tools they use to manage marketing technology, nearly 52 percent of respondents identified How smart management of marketing tech can boost site ROI 3

4 spreadsheets as an instrument for performing cost-benefit analyses. Only 18 percent are taking advantage of more innovative tools such as application performance management (APM) software. Effectively managing e-commerce, marketing, and analytics technologies presents a prime opportunity for technology decision-makers to safeguard their site operations while producing significant gains in ROI. Reaping these financial rewards, however, requires adopting best practices for greater monitoring, collaboration, data integration, and testing of a site s e-commerce, marketing, and analytics technology mix. How smart management of marketing tech can boost site ROI 4

5 Site marketing tech complexity This year marks the 20th anniversary of the very first ad to appear online. Since those early days, marketers have graduated from relying on basic web banners to a whole host of innovative technologies for measuring, managing, and monetizing an organization s most valuable piece of real estate its website. From site analytics and recommendations engines to data management tools and listening platforms, IT decision-makers are now responsible for overseeing an ever-expanding ecosystem of interoperable commerce, marketing, and advertising technologies. In fact, the top thousand most-visited sites in the U.S. have an average of 75 technologies in their marketing cloud, many of which are redundant or hail indirectly and often clandestinely from third-parties. No wonder controlling the efficiency of on-site technologies is growing increasingly more difficult as single-solution marketing strategies give way to dense marketing clouds highly complex and multilayered technology stacks of monitoring, measuring, and optimizing solutions. In fact, if you were to chart today s network of marketing tools, it would probably look a lot like Tokyo s subway route system and be just as difficult to navigate. However, the dangers of mismanaging marketing technologies are multiplying fast. For starters, many of today s most popular websites feature non-secure marketing solutions layered on top of secure areas. The problem is that the more non-secure code that is on a site the more vulnerable it is to hacking, data leakage, and other security breaches. In addition to security blind spots, poorly managed marketing technologies and third-party content can result in page and tag latencies as well as tag errors. More than simply an IT nuisance, painfully slow page loads can lead to a frustrating browser experience, abandoned baskets, and permanent brand damage. And without comprehensive knowledge of the technologies affecting site performance both directly and indirectly, IT teams are left in the dark, unaware of how a site might be at risk of violating global privacy standards. To explore the trade-offs of using e-commerce, marketing, and analytics tools, Gigaom Research surveyed 300 U.S. IT decision-makers. Our goal was to better understand IT teams use of these popular tools and their impact on ROI and site operations. We also asked respondents to discuss the respective roles IT and marketing should play in juggling the risks, costs, and rewards of a marketing cloud. How smart management of marketing tech can boost site ROI 5

6 High-traffic commercial sites rely on an ever-widening array of e-commerce and analytics technologies. As shown in the following graphic, 82 percent of respondents use content management systems, 80 percent rely on log files and other server analytics, and 75 percent report heavy use of both payments and site analytics solutions. Half of the respondents told us they d be increasing their investment in site analytics and e-commerce, and a good portion tabbed payments (42 percent) and content management systems (38 percent) for more spending. Advertising and marketing technologies also rank high in adoption among IT decision-makers. Not surprisingly, marketing earned top billing with 72 percent of respondents highlighting its usage as an advertising and marketing technology. Social media login/promotions came in a close second with 70 How smart management of marketing tech can boost site ROI 6

7 percent of the vote, and data management tools (55 percent) also topped the list. More than a third of respondents told us they would increase spending on social media (42 percent) or data management (34 percent). On average, the companies we surveyed said they used 5.8 different types of commerce and analytics and 5.3 different types of advertising and marketing technologies in support of their sites. Almost 30 percent used more than 15 different types of site tech. Their clouds of marketing tech suppliers are likely even foggier. Marketing tech-management supplier Ghostery Enterprise tracks 4,000 or so tags from thirdparty technologies, including analytics, personalization, ad networks, affiliate linking, etc. Ghostery s How smart management of marketing tech can boost site ROI 7

8 trackers show that top commerce sites have code on them that makes calls to several hundred different tools and suppliers. Ad and affiliate networks bring dozens of third-parties into these clouds. On a positive note, our survey reveals a keen awareness among technology decision-makers of the wide spectrum of marketing technologies currently being offered by established vendors and startups alike. Moreover, IT decision-makers demonstrate a comfort in navigating today s crowded marketing technology landscape as evidenced by the widespread use of both traditional marketing tools and more advanced analytics technologies. Less encouraging, however, are signs that IT leaders are struggling to get a handle on this expanding ecosystem. In fact, a mere 13 percent of respondents say they re very effective at managing e-commerce, marketing, and analytics technologies. Equally as concerning is the apparent gap between intention and action as nearly three-fourths of IT decision-makers rate marketing technology management as important yet continue to struggle to gain control of the chaos. Without a well-defined roadmap for marketing cloud management, IT leaders face significant risks, including security breaches, poor site performance, privacy violations, and data leakages. How smart management of marketing tech can boost site ROI 8

9 One of the survey s most revealing findings is the widely held belief that better managing a site s complex mix of e-commerce, marketing, and analytics technologies can actually boost ROI. Case in point: A staggering 67 percent of respondents believe improving marketing technology management would result in at least a 10-percent improvement in ROI, and a quarter think they could increase ROI by a whopping 25 percent or more. That netted out to a weighted average of an expected 20-percent ROI improvement. For a large enterprise, that could spell millions of dollars in increased revenue. Just as a back-of-theenvelope exercise, let s say that marketing technologies are indirectly responsible for 5 percent of site revenue. If our respondents who averaged more than $250 million in site revenue could improve that by 20 percent, they would increase their revenue by more than $2.5 million per year. How smart management of marketing tech can boost site ROI 9

10 The following section explores the risks and costs separating companies from untapped ROI and the rewards they stand to reap from improved marketing cloud management. How smart management of marketing tech can boost site ROI 10

11 Reaping ROI from a managed cloud The risks: security breaches, data leakages, and latency headaches It would be easy to assume that overlapping analytics tools and multiple ad networks are what s keeping IT leaders up at night. But while they re definitely causes for concern, nearly half (49 percent) of survey respondents cite security threats, such as hacking or phishing, as one of the top potential risks and costs of managing multiple site technologies. And for good reason: According to Ponemon Institute s 2014 Cost of Data Breach Study: Global Analysis (sponsored by IBM), the average price tag of a single data breach for a company is $3.5 million. Unfortunately, site security can feel like a losing battle even for the most encryption-conscious IT leader. On the one hand, our survey revealed high security standards among IT decision-makers with 42 percent of respondents reporting that their sites are between 76- to 100-percent secured using SSL and HTTPS protocols. However, the most heavily encrypted website can fall victim to a security breach if non-secure code is placed indirectly onto it by third-parties such as advertisers. After all, a site is only as secure as its weakest webpage a scary proposition for IT decision-makers taxed with juggling multiple site technologies. How smart management of marketing tech can boost site ROI 11

12 Coming in at a close second to security blind spots is customer experience. In fact, 45 percent of survey respondents cite a poor customer experience as a potential risk and cost of site technologies. Many of today s most popular marketing tools are adept at capturing detailed information about site visitors behavior, from how many visits they pay in a given time interval to which country they reside in. Armed with this information, marketers can better target customers with tailored promotions and increase conversions. But the more embedded objects on a site, the greater the impact on a visitor s browsing experience. For example, third-party content can easily slow down a site and cause significant latency issues. In fact, a recent study indicates that, for every new tag added to a page, a website slows down by 5 percent. How smart management of marketing tech can boost site ROI 12

13 Technology decision-makers are taking steps to combat such latency; 24 percent of our survey respondents use tag management to manage their advertising and marketing technology mix. But for many, it still comes down to having to choose between gathering compelling customer data or providing a positive customer experience. The costs: frustrated customers, competitors, and the bottom line Customer experience is difficult to quantify, but studies indicate that every moment of page latency can cost a company hundreds of thousands of dollars in lost revenue. In fact, according to Aberdeen Group, a one-second delay causes a 7-percent loss in conversions. Another factor contributing to the high costs of mismanaged marketing technologies is data leakage. When asked about potential risks and costs, 34 percent of survey respondents pointed to competitive data leakage. Failing to properly control the technologies accessing a site s digital assets can lead to the loss of precious information to tech-savvy competitors. For example, a third-party advertiser can easily hijack a retailer s initial advertising space using nothing more than cheaper sites and ad networks. Suddenly a customer in the midst of making a purchasing decision can be lured away to a competitor s website for the exact same product. In fact, one recent study indicates that 72 percent of marketing tools used by retail sites overlap with the competition, making it easy for third-parties to capture user data and sales transactions in real time, without a publisher s knowledge or permission. Data leakage also can have a disastrous impact on SEO rankings as search engines such as Google now factor in and reward encryption when ranking webpages. With all these landmines latency, data leakage, and SEO IT leaders may be underestimating the potential risks of advertising technologies used on commercial sites, particularly when they hail from third-parties like ad or affiliate networks. Our survey respondents rated e-commerce a fairly high-risk technology but one that delivered the best ROI among the options. If you compare the perceived risk to ROI ratios for advertising versus e-commerce, the respondents seem to think advertising is far less risky. How smart management of marketing tech can boost site ROI 13

14 The missteps: organization, process, and innovative tools There are enough positive findings in our survey to indicate that technology decision-makers have a vested and growing interest in measuring and optimizing their online performance with e-commerce, marketing, and advertising technologies. Respondents strong handle on site security and attention to customer experience are among the most encouraging indicators. But there are some clear misses as well as our survey uncovers IT teams struggling to establish best practices around managing their marketing cloud. How smart management of marketing tech can boost site ROI 14

15 First, there is the almost exclusive role IT plays in evaluating the cost and ROI of an organization s marketing technology mix. Forty percent of survey respondents revealed that a CIO or other IT manager plays a part in the selection and managing of marketing tech suppliers. However, only 13 percent of respondents cited the participation of a marketing team member in this important process. On a day-to-day basis, marketing is also being left out of the loop as IT lords over the usage of e- commerce, marketing, and analytics technologies. In fact, a whopping 76 percent of survey respondents said generally managing these tools falls squarely on the shoulders of IT whereas a negligible 9 percent noted marketing s involvement. How smart management of marketing tech can boost site ROI 15

16 E-commerce, marketing, and advertising technologies generate vast amounts of data for parsing. But first, this information needs to find its way into the hands of marketers. Unfortunately, 84 percent of our survey respondents report that IT receives regular marketing technology data reports compared to just 52 percent of marketers. These data silos prevent marketers from accessing the information needed to dig deeper into customer behavior as well as to convert customer interactions into actionable insights. How smart management of marketing tech can boost site ROI 16

17 Another way IT decision-makers are mismanaging marketing technologies is a reliance on age-old tools. A surprising 52 percent of our survey respondents report using spreadsheets to manage their marketing technology mix, and 47 percent still rely on proprietary tools such as homegrown dashboards. It s a mixand-match collection; on average, the respondents used 2.2 different tools while 39 percent used three or more. APM software, on the other hand, only earned 18 percent of the vote. More concerning is tag management s low ranking; less than a quarter (24 percent) of respondents said they rely on this innovative software, highly regarded for its ability to prevent latency and data leakage. How smart management of marketing tech can boost site ROI 17

18 How smart management of marketing tech can boost site ROI 18

19 Recommendations for maximizing ROI With more than half (67 percent) of IT leaders claiming they could improve ROI by more than 10 percent if they had a better handle on their e-commerce, marketing, and analytics technologies, a comprehensive marketing cloud management strategy is no longer wishful thinking; it s a business imperative. It s time for IT leaders and marketers to look beyond security breaches and poor customer experience as key causes for concern. Mismanaging marketing technology not only can lead to shoddy site performance but also, more importantly, to a lost opportunity to reap a significant return on investment. As e- commerce sales in the U.S. surpass the $384-billion mark and digital ad spending tops $140 billion, according to emarketer, the following best practices can ensure IT decision-makers capitalize on this windfall. Create a management process around a common set of business goals When it comes to e-commerce, marketers and technology leaders are often at cross-purposes. Advertisers are focused on driving traffic to the site, marketers are always seeking greater customer lifetime value with targeted campaigns, and IT just wants to minimize costly technical snafus like latency and downtime. Without a common set of key performance indicators (KPIs), effective marketing cloud management is unlikely. However, by establishing the common goal of greater business profitability, departments can begin working together to manage their on-site technologies and perform cost-benefit analyses of e- commerce tools like ad networks and affiliate marketing programs. Consider, for example, a tag that is simultaneously lauded by marketing for its ability to drive traffic to the site and loathed by IT for causing slow page loads. By tracking how the same tools and technologies impact different departments, organizations can get a more accurate read on technology investments and their pay-offs. Select the right tools Like acid-wash jeans and pet rocks, spreadsheets have rightfully earned a place in history s dustbin. Instead, there are plenty of powerful alternatives for measuring a website s activity. For one, APM software lets users measure customer experience at the transaction level to better gauge how e-commerce, marketing, and advertising tools are impacting online activity. How smart management of marketing tech can boost site ROI 19

20 Powerful site analytics tools are also earning accolades as they collect, measure, and analyze the activities of online visitors. In the past, marketers would have to wait for IT to generate detailed reports before learning about a campaign s success or the cause of a recent surge in traffic. Cloud-based web analytics solutions are changing all that by allowing marketers to access the same data as IT without the technical barriers and request forms. Moreover, many site analytics tools feature easy-to-understand dashboards, which are perfect for getting marketers up to speed without requiring a crash course in computer science. Establish a digital center of excellence Organizations would be wise to end IT s stranglehold on managing e-commerce, marketing, and advertising technologies. Establishing a cross-departmental team dedicated to handling a complex marketing technology mix can help loosen the reins of IT and move marketing into the fold. Consider, for example, creating a digital center of excellence (DCOE) or competency center that pulls together the expertise of marketers, advertisers, programmers, and data analysts. Together, these business line leaders can ensure high-cost marketing technologies are worth the financial risk and investment. And because new and innovative marketing technologies are cropping up all the time, a central governing body like a DCOE can ensure that new strategies and tools are pushed out across all departments and regions simultaneously and consistently. While a chief digital officer is the most obvious choice to lead a DCOE, marketers should take this opportunity to upgrade their analytics skills in order to contribute greater value to the group. In turn, IT leaders could strengthen their contributions by bolstering their business acumen. An interdepartmental team of experts can t be expected to singlehandedly overcome the challenges that accompany a marketing cloud. Security breaches, data leakage, and site performance hiccups will continue to tax IT decision-makers. But for those that take the time to establish best practices around managing e-commerce, marketing, and advertising technologies, the rewards are plentiful. How smart management of marketing tech can boost site ROI 20

21 Key takeaways IT decision-makers are investing heavily in some of today s most innovative marketing tools. Together, these solutions form a tough-to-control cloud of e-commerce, marketing, and advertising technologies. IT is struggling to get a handle on the costs and risks associated with today s marketing cloud. Security breaches and poor customer experience number among their key concerns. Technology decision-makers are confident that improvements in marketing technology management can produce significant gains in ROI, but they lack a well-defined roadmap. Best practices in marketing technology management need to be implemented to gain control of an unwieldy marketing technology mash-up. Strategies include better data sharing for actionable insights, greater collaboration among disparate departments, and replacing age-old tools with innovative alternatives. Appendix: survey methodology Gigaom Research conducted a survey in August 2014 of IT and site operations decision-makers at large, commerce-oriented sites. We surveyed 301 U.S. executives, 99 percent of whom said they worked in their company s IT department. The other 1 percent worked in an e-commerce group. We used incentive-based executive panels from Research Now, which also hosted the survey for us. We screened for high visitor traffic; 50 percent had more than 500,000 monthly visitors. These were large organizations; 60 percent had more than 6,000 employees. The sites generated high revenues; 27 percent generated more than $500 million yearly, either directly or indirectly. We surveyed a mix of transaction-oriented industries: o o o o Tech and consumer electronics 34 percent Financial services 24 percent Consumer goods and services -17 percent Retail 10 percent How smart management of marketing tech can boost site ROI 21

22 About Cindy Waxer Cindy Waxer is an analyst for Gigaom Research and a Toronto-based freelance writer and content strategist who covers small business, technology, finance, and careers for publications including Technology Review, The Economist, TIME, Fortune Small Business, and CNNMoney.com. Unforgettable past interviewees include RIM CEO Jim Balsillie, former policy advisor to George W. Bush Dov Zakheim, billionaire Steve Case and legendary artist Prince. Years of field reporting have taken Waxer from the backstreets of Saigon to the stockyards of Fort Worth. As a content strategist, Waxer s client roster includes Microsoft, Pfizer, Halliburton, IDC Canada, Citigroup, Fujitsu, State Farm, and many more high-profile corporations. About Gigaom Research Gigaom Research gives you insider access to expert industry insights on emerging markets. Focused on delivering highly relevant and timely research to the people who need it most, our analysis, reports, and original research come from the most respected voices in the industry. Whether you re beginning to learn about a new market or are an industry insider, Gigaom Research addresses the need for relevant, illuminating insights into the industry s most dynamic markets. Visit us at: research.gigaom.com Giga Omni Media, Inc. All Rights Reserved. This publication may be used only as expressly permitted by license from Gigaom and may not be accessed, used, copied, distributed, published, sold, publicly displayed, or otherwise exploited without the express prior written permission of Gigaom. For licensing information, please contact us. How smart management of marketing tech can boost site ROI 22

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