Analysts from two of the tech sector’s most respected research companies Gartner and Forrester have both tracked the development and the convergence of the advertising and marketing technology sectors for several years. However, faced with the same data points they have arrived at different conclusions.
Of the two, Forrester is the more positive on both the likelihood of the merger and the advantages to marketers.
Gartner, on the other hand, via analyst Martin Kihn, expressed an early skepticism and although the company has shifted its position slightly in the intervening two years Kihn, in particular still identifies both technical and financial impediments that stand in the way.
Back in January 2015, he said there was a lot more talk than action around convergence, and at that stage, he said many analysts had jumped ahead of the market.
The reason for his skepticism, not unreasonably, was that everyone was ignoring the scale of change. “I think we’re a lot further away from convergence than we think.”
“Big software companies are just not comfortable with the ad business. They don’t like it. They don’t want any part of it, and they aren’t sure they should. It’s not what they’re saying, of course. But it is how they’re acting.”
At the time, he noted the marketing cloud company he said that seemed least worried was Adobe, which two years later acquired TubeMogul, integrating it as Adobe Advertising Cloud.
Kihn later reprised his assessment of the merger of the two disciplines and in early 2017 identified seven impediments the industry needed to account for. Yet, he still maintained his skepticism, “there are a number of compelling reasons to believe that martech and adtech will not converge into mad-tech” but by May 2017 he added an important caveat “ — at least, not in any simple way.”
Among the roadblocks he identified; They served a different set of buyers and a different set of customers; Marketing tech values quality of data whereas adtech values freshness; the skillsets required are different (and presumably not all found in the typical marketing department).
There’s more, which you can read at your leisure here.
Forrester Research, on the other hand, takes the view that the merger is actually already happening – however, their qualification is that these are still early days.
The Forrester analysts argue there are five phases the industries will pass through as they draw converge.
According to Mary Pilecki and Melissa Parrish, in a paper called “Why the convergence of Adtech and March Matters,” they write, “The union of these two tech worlds is part of an emerging broader marketing mindset shift that focuses on quality rather than scale. Today’s customers demand experiences that are engaging and relevant, and the right technologies will help companies deliver just that.”
Pilecki and Parrish identify the primacy of the customer experience and the need to create seamless experiences across the whole journey as a key driver.
The bottom line they say is that “Convergence will enable firms to purchase less — but more effective — technology.”
Forrester’s five phases of adtech and martech convergence are;
- Phase 1: Audience data and insights converge: Martech vendors will help drive this as they acquire and consolidate adtech capabilities.
- Phase 2: Marketing orchestration bifurcates: Convergence will result in two main application categories: continuous engagement and delivery endpoints.
- Phase 3: Specialty vendors mind the gaps: There will be an explosion of niche vendors seeking out specialised markets, meaning the landscape will get more complicated before it gets simpler.
- Phase 4: Buy-side consolidation: This will begin with partnerships and mergers, then will escalate into full acquisitions.
- Phase 5: Parallel platforms: Some martech platforms will dabble in sell-side tech, while others will go into “back office” tech. These will ultimately sit next to media and social platforms.
There is a third view, helped by Scott Brinker the founder of ChiefMartech and the man behind the famous marketing technology Lumascapes.
He told Which-50 earlier this year that in his mind adtech is, and always has been simply a subset of marketing technology.
At the time he said, “More and more brands are moving audience data and advertising bidding systems into their own operations.”
Cost was part of the reasons but it really comes down to the idea that data is becoming a critical infrastructure asset.
“The bigger opportunity is to seamlessly connect the different pieces of the adtech and martech stack together at a data level for personalisation and analytics.”
According to the ChiefMartech Editor, “We still have a lot of marketing systems and data repositories isolated in these different channels. If you want a connected and cohesive brand experience, you’ve got to invest in fixing that. It’s a lot of work. But in a digital world, it’s either that or obsolescence.”
He also stressed the importance of looking beyond the technology platform. “To truly take advantage of integrated adtech and martech capabilities, brands will need to develop new organisational capital that manages advertising and the rest of marketing in a more cohesive fashion.”
About the Which-50 Digital Intelligence Unit
Andrew Birmingham id the director of the Which-50 Digital Intelligence Unit. Adobe is a corporate member of the Which-50 Digital Intelligence Unit. Members provide their insights and analysis for the benefit of our readers. Membership fees apply.