Automation ready to replace the Mad Men style of marketing
Tom Davenport, the President’s Distinguished Professor of Information Technology and Management at Babson College, a Fellow of the MIT Center for Digital Business, and an independent senior advisor to Deloitte Analytics, shares his thoughts on why marketing will likely become highly automated by 2025.
If I had to place bets on which business function would have the fewest humans and most automated systems by 2025, I’d pick marketing. This is ironic, of course, since marketing has long been known for its creative and artistic orientation. If Mad Men’s fictional character, Don Draper, were alive in 2025, he would probably have wished he had never seen such extensive use of analytics and automation in his beloved function.
While marketing will continue to be responsible for promoting products and services and generating interested buyers for them, the function, by 2025, may become much more automated. This is based on simple extrapolation of the marketing automation activity happening today. There could be substantially fewer people in the marketing team of the future, who will still be responsible for ensuring that the campaigns and promotions they oversee are creative and tied to value-creating business outcomes, but the team will also likely oversee a large number of automated systems. These automated systems could reduce the need for human intervention in marketing processes.
Even today, marketing is highly quantitative, targeted, personalized, and tied to business outcomes. Ads, campaigns, and promotions are increasingly customized to individual consumers in real time. Companies employ multiple channels to get to customers, but many increasingly employ completely digital content. They still work with agencies, many of which have developed analytical capabilities of their own. Data come from a company’s own systems, agencies, third-party syndicators, and many other sources—and certainly comprise “big data” in the aggregate. About 25 percent of today’s marketing budgets are devoted to digital channels, and 79 percent of marketing organizations make capital expenditures—typically hardware and software—according to a recent Gartner survey. 1
Instead of making a few major decisions each year about brand and investment strategy, companies or their agencies make literally thousands of real-time decisions a day about which digital ads to run on which sites, which search terms to buy, which version of a website content to adopt, and so forth. Automation is critical in these domains because there are too many marketing decisions involving too many complex variables and too much data for humans to make effectively without aid. Marketing activities and decisions are increasing far more rapidly than marketing budgets or the numbers and capabilities of human marketers. As a result, marketers are under substantial pressure to do more with less.
Marketing automation is a straightforward extension of marketing analytics, proceeding through some combination of large amounts of customer data with software incorporating data mining, statistical algorithms, business rules, or some other form of artificial intelligence. For real-time response to be effective, the analytical and decision-making capabilities must be embedded in some form of production system. In many cases, systems will need to be interfaced or integrated with a company’s transactional systems involving customers, such as customer relationship management (CRM) systems, products, and real-time human behaviors.
Marketers are typically trying to define and target specific customers or customer segments, and if there are thousands or millions of customers, automation is needed to get to the required level of detail and granularity. Companies are also trying to customize the customer experience, and that also requires automation-driven detailed data to support it. Automation also helps to deliver value across omni-channel customer relationships and to support consistent communications at all customer touchpoints, thereby orchestrating a marketer’s capabilities to bridge online and offline.
Automated marketing activities today
In case you’re skeptical about my bet on marketing’s future, think of how far automation has already progressed. Digital advertising is already highly automated today. So-called “programmatic buying” matches a company’s digital ads with publishers while determining the price to be paid for the ad (often with an auction) and some degree of targeting to the viewer. As this decision is typically made within a few milliseconds, it would not be possible for a human to make it. Increasing numbers of companies are moving to doing all digital ad buying programmatically.
Website operation and optimization are increasingly automated, and include several different types of activities. Search engine optimization (SEO) tools evaluate and recommend links, search terms, site structure, and other attributes to improve search rankings without human intervention. A/B and multivariate testing compares different versions of digital experience to optimize clickthroughs, conversions, and other metrics, and is largely automated among more sophisticated practitioners. Some companies even use narrative generation engines to produce automated reports about website and search engine activity. The reports can describe weekly and monthly results in written English, and also provide some possible explanations for changes in activity and performance.
What many people mean by the term “marketing automation” is a specific type of software to automate a variety of activities other than digital advertising or website management. They include targeted email marketing, automated creation of landing pages, customer segmentation, lead filtering and scoring, and some social marketing. Marketing automation in this context is a well-understood software category, with a variety of vendors in the space who typically cater to automating internally focused marketing activities.
There are a variety of other marketing activities, often externally focused, that are increasingly automated. Television advertising—the mainstay of large companies’ marketing activities for many years—is moving toward a programmatic buying model. Some TV networks (not just streaming video, but traditional cable networks as well) already allow programmatic buying of ad space, using some of the same software and auction networks that digital ads employ. While it may be unlikely that a major sports event ad will be purchased programmatically anytime soon, the future of TV ads seems increasingly automated so that ad buyers could use similar approaches across channels. In the future, automated television advertising could appeal to small audiences, including even one-to-one personalization of ads to individuals based on their preferences and past viewing habits.
Marketing activities that are not currently automated are moving in that direction, in that they are performed with software, carried out more frequently, and involve data and analytics. Creative brand development activities, for example, are still largely done by humans, but the decisions about which images and copy will be adopted are now sometimes made through automated testing. This trend is especially true for “conversion optimization” in digital experiences. As one insurer’s chief marketing officer described in an interview:
Marketers still need creative skills without the aid of analytics or automation, but you can use those tools to test the creative after it’s been developed. A/B testing in digital marketing helps you determine the details around the creative—where it goes on the web page, and small decisions like color and so forth.
High-level decisions about marketing mix and resource allocation are still ultimately made by marketing executives, but they are usually done with software and are often performed more frequently than annually. By 2025, it seems likely that such tasks as selecting agency partners and making employee hiring decisions will be made using software, analytics, and data science models.
Implications for marketers
Of course, this could mean dramatic change in marketing organizations. There will likely be new processes and systems, and new roles to oversee them. In addition to these new roles, there will be substantial changes for human marketing employees as automation continues to advance. Marketers with jobs today may be less likely to lose them to automation if they learn the needed skills in technology and analytics. However, automation is highly likely to reduce the demand for new hires in traditional roles. Fewer roles as media buyer and media planner, SEO specialist, website usability and conversion optimization specialists, email marketing specialists, and several others may be required in the future. The overall number of marketers required for the level of marketing activity, particularly in digital marketing, has already been substantially reduced.
Undoubtedly, marketing automation can lead to better and more reliable decisions about how to spend scarce marketing resources, and can lead to closer customer relationships that can build brand equity and improve financial outcomes. For those marketers who can embrace the technology and the changes it brings, it could also lead to some exciting careers.
Published on June 28, 2016.
Learn about the author, Tom Davenport.