EMERGING TRENDS & TECHNOLOGY
Digital Disrupts Digital: Adapt or Die?
In the past 20 years we have seen digital technologies disrupt every facet of the economy. We have watched Napster and Spotify revolutionize music consumption, Netflix challenge film and TV production, and dominant companies like Kodak and Nokia disappear in under a decade.
As leaders of digital agencies we have always been the beneficiaries of this disruption—from designing and building websites to developing products and applications, we have helped our clients navigate a new digital economy. However, in 2015 as I set about to prepare my annual ‘Noise Vision’ presentation, I was struggling to find a core theme that I could communicate to my team—what were the new technologies or platforms that we would need to master? In past years, I pronounced the ‘year of mobile’, ‘the year of social’, or the ‘year of data’ and so on. Staring at my screen for hours only increased my anxiety over what I knew was coming… Digital is disrupting digital.
After 20 years of consulting with our clients I knew that there was one immutable truth, digital is the great invisible hand of disintermediation. If our clients were in retail, manufacturing or CPG, we advocated the value of transforming around a direct to consumer model—a digital experience predicated upon a personalized data driven strategy. “Know your data, know your customer,” we preached. Now it was our turn, I could see the signs and I knew we would need to design a new business model to succeed in a world of production commoditization, shrinking margins and intense competition. We all know the agency model is changing. Big or small, we are all reacting to fractured customer behavior, the death of brand advertising as we have known it, massive disruption in retail and a persistent deflationary economic environment. I knew that adding new services or hiring a few data scientists would not be enough to stave off being disrupted. Noise needed to transform the way in which we created value, not only for our clients but to ensure our business survived.
We have seen economic value shifting from pure monetary denomination (profits) towards ‘owning’ the relationship with consumers through data. A Sybase study by the University of Texas “Measuring the Business Impacts of Effective Data” found that a 10% increase in actionable data for a typical Fortune 1000 company resulted in a $2 Billion increase in revenue. Amazon and other platform companies have built their entire businesses on this premise. For an agency like Noise, we needed a new value proposition that leveraged our customers first party data and delivered personalized experiences at scale. Faced with these current realities, I decided to pull off the proverbial band-aid and re-build Noise with a new agency vision—Agency as Platform (AAP).
This vision was based on Noise’s experience utilizing algorithmic data platforms like DSPs and DMPs that allowed our media and analytics teams to leverage data for buying media. Using data as our connective tissue we separated the platform from the consulting business, allowing us to shift from a linear ‘pipeline’ to an exponential organizational framework—we needed to achieve scale without the traditional overhead increase.
Noise was re-positioned as a marketing consulting company that leverages technology to help our clients achieve digital transformation using their own data. In parallel, we launched our new company: Fastloop, a marketing platform that helps translate data acquisition into customer acquisition. Fastloop integrates paid media and owned data with sophisticated attribution and analytics models to surface performance and marketing insights allowing our customers to make impactful business decisions. The launch of Fastloop is perfectly timed in a marketplace where CMOs are increasing spending on in-house capabilities like programmatic media buying as well as increasing investment in measurement and analytics capabilities.
So, how is this a platform and what do I mean by an exponential framework? I’ll borrow a quote from Bill Gates to explain what I mean “A platform is when the economic value of everybody that uses it, exceeds the value of the company that creates it.” This is the philosophy Fastloop was born from, as we add more data to the Fastloop platform our customers derive exponentially more value from the platform without incurring incremental cost—the more data we generate the less cost we spend on leveraging it. Our revenue model has also shifted to include both a managed service offering as well as a self-service one that will allow for clients to transition key data and media buying functions to in-house teams.
The collection, processing and use of first party data will become the critical competitive advantage for modern enterprises. From my perspective, data has replaced brand as the key metric for success for all marketing endeavors. As the cost of data processing and technology continues to decrease, the cost of entry will only become easier for small start-ups who can design, deploy and sell a product in a matter of months. This paradigm shift will continue to become a significant challenge for large CPG companies who are handcuffed by complex product development and retail logistics. Noise was able to transform our traditional digital agency model by developing a new ‘agency as a platform’ model that is feature built for a new ‘exponential era’. An era where data becomes the true measure of economic value and influence. This era is forcing us all to adapt or die. What will you do?