Part 2: Modern Marketing in a Nutshell
Image source: https://www.theguardian.com/tv-and-radio/2010/apr/10/charlie-brooker-mad-men-screenburn
Modern marketing is a new approach to solving traditional marketing problems that has emerged in response to three changes in the global environment—privacy regulations, cloud computing and generative AI. In this post, I will explain why I’ve chosen to use the term “modern” and describe how this approach departs from the established best practices of the prior 20 years.
This is the second post in my series on modern marketing. If you would like to learn more about the two forces disrupting marketing best practices, see my previous post, “A Modern Approach to Solving Traditional Marketing Problems.”
What Netflix Can Teach Us about Modernization
The first TV show I streamed online was Lost, and I will never forget how terrible the user experience was. It was 2007, and every week my wife and I would gather around my computer in our rental house (despite the constant distraction of unstable connections and buffering) to try and figure out if the island was purgatory.
That same year, Netflix launched their streaming service (source). The technology required to stream video over the Internet was in its infancy, and it was a massive undertaking to assemble the IT infrastructure required to support it. Netflix followed the accepted best practice of the time— building its own data centers.
Unfortunately (or fortunately?), Netflix was acquiring new users at lightning speed. It only took about a year before management realized that the data centers they had built could not scale as quickly as the business was growing. If Netflix was going to meet the growing demand for computing and storage, it would need to migrate to a cloud provider (source).
The Netflix story is textbook “modernization.” In 2007, Netflix was experiencing a new type of problem, and the benefits of cloud computing were poorly understood. To solve this problem, the company would need to abandon established best practices and replace its data centers with new tools more effective at solving current challenges.
In the information technology sector, this race to migrate to the cloud became known as infrastructure modernization.
The Concept of IT “Infrastructure Modernization” is Born
When the big cloud providers use the terms “modern” and “modernize,” they are speaking of a universally applicable Netflix story: moving away from owning IT infrastructure to renting it.
The use of the term “modernization” implies that some change has occurred, and a new approach is needed under the current conditions. At the same time, identifying an old best practice as not modern implies that it is ineffective or outdated.
As I explored in the previous article of this series, this IT infrastructure modernization process caused new environmental shifts in other business domains (such as marketing, finance and operations).
When a business chooses to rent IT infrastructure from a cloud provider, the barriers to experimenting with this technology are reduced throughout all domains in the organization. This is because every part of the business can instantly deploy cloud resources without capital expenditure and test these new capabilities with a small budget.
This means that the ability to manage data at scale is suddenly within reach of the marketing, finance, and operations teams, who have not historically seen it as an option. Those teams can choose to respond in one of two ways:
Ignore the new capabilities that are available, continue business as usual, and go home to set the VCR to record reruns of I Love Lucy.
Or… scramble to understand how to apply the new capabilities to add value in your business domain.
Teams who choose option two have created an opportunity in the market for entrepreneurs. The term “modern data stack” was coined to describe the products that have sprung up to bring cloud capabilities to business domains that have not historically had access to robust IT infrastructure.
The Concept of “The Modern Data Stack” is Born
The central idea of the modern data stack is that all business domains should manage their data in a cloud environment. This approach puts enormous power in the hands of business teams who previously relied on large and expensive products to manage data on their behalf.
The modern data stack allows a business to access data, blend it with other sources, analyze it and run experiments with flexibility that is virtually unlimited. Products that claim to help you build a modern data stack must run on top of your cloud environment (rather than their own) and make it easier to complete these functions. Each tool in the modern data stack must be compatible with the others so that they can be composed in a modular fashion.
The term “modern” is appropriate for the modern data stack because the approach relies on the modern IT infrastructure we described above (the cloud).
In my previous post I argued that “modernization” did not begin in the marketing domain until about 2020.
Applying the Term “Modern” to the Marketing Domain
So far I’ve focused on how “modernization” applies to the IT domain, and although the cloud is a key driver of modern marketing, it’s not the only driver.
As the Netflix story revealed, modernization is about adapting to a change in the environment by abandoning established best practices in favor of new tools that are more effective in the current context.
Modern marketing describes a similar process that is occurring now in the marketing domain. Although cloud computing was a key driver for change in both information technology and marketing, this process doesn’t look the same for marketers today as it did for IT workers 15 years ago. Also, the cloud is only one of three environmental changes that modern marketers are adapting to.
The Three Forces Shaking Up the Way Traditional Marketing Problems are Solved
Anyone working in marketing for the past 15 years or so will remember that in the time of “digital transformation” (2000-2020), marketing teams collected an unprecedented amount of data about their customers and prospects. The established best practice was to track everything, keep the data forever, and figure out how to use it later.
Our collective aspiration at the time (myself included) was to create a “360-degree view of the customer,” where all data regarding an individual customer is integrated into a single-source-of-truth reporting system. This integrated data would allow the marketing team to understand each customer individually, craft personalized messages to influence behavior, and measure the return the business is getting in exchange for every investment made.
This aspiration began to crumble around 2020 as marketers experienced disruption brought about from three forces: cloud computing, generative AI, and privacy. These forces have created two key challenges for marketing teams:
The decreasing barriers to cloud computing and advances in generative AI are introducing new and unfamiliar capabilities.
The increasing demand for user privacy is removing old capabilities that we are comfortable with.
The Landslide of New Challenges
These three forces have created a landslide of new challenges for marketers to overcome. As a result, the small number of marketing teams who have built capabilities for managing data in the cloud are quickly gaining a competitive advantage, while the vast majority of marketing teams are watching from a distance, wondering where to begin.
At the same time, the surging demand for user privacy has created confusion, fear, and uncertainty. Restrictions on cookies and other technology for collecting user data make it difficult for marketers to analyze behavior, set goals, and measure results. This problem is complicated by regional differences in privacy laws, and by the inconsistent restrictions applied by browsers to prevent tracking tools from collecting data.
The result is a barrier between marketers and their customers that the established best practices from the prior 20 years cannot overcome. These new challenges complicate every aspect of marketing (the 4 P’s).
| Product Challenges | How can we get the customer feedback needed to define a product strategy without violating privacy regulations that are inconsistent and changing frequently? |
|---|---|
| Place Challenges | How do we get our message in front of prospective customers without relying on audience attributes that were built on third-party cookies? |
| Price Challenges | How can we test various pricing models if we cannot rely on cookies to create clean test and control groups? |
| Promotion Challenges | How can we know if our advertising efforts are working without relying on multitouch attribution and the cookies that power it? |
A few years ago, I found these challenges to be insurmountable. But over time, I have been inspired by a small group of creative and thoughtful marketers who are working to create a new vision for marketing in the Modern Era.
The Four Principles of Modern Marketing
In January 2023 I flew to Hungary for the annual Superweek conference, where I listened to leaders from around the world discuss these challenges—how they are changing our work, what they mean for the future of our industry, and how marketing teams can adapt to respond to them.
At night, in my hotel room, I began distilling the insights that I was hearing into a set of common principles. These principles are not my own, but they are a common set of ideas that are shared by many of the marketers I know who are effectively responding to the new challenges facing modern marketers. I continued to refine these initial thoughts over the next three or four months until I landed on the following four principles of modern marketing.
The next four posts in this series will be devoted to fully exploring each of the four principles, but before we dive that deep, I will share a quick description of each and a few of the key dimensions where they depart from the best practices of the past 20 years.
Principle #1: Outcome Based Measurement Strategy
Modern marketers abandon the single source of truth in favor of clear goals set by business domain owners. They take a disciplined approach to measuring the impact that marketing activities drive for the business. They believe that creative, strategic-thinking people are more valuable at driving business outcomes than expensive software.
| Modern Measurement Strategy Is... | Modern Measurement Strategy Is NOT... |
|---|---|
| Modern marketing teams begin by clearly defining what they are trying to do. They are focused on driving high impact to the business with the most efficient investments. Modern marketers apply a wide variety of measurement techniques, including incrementality (ex. A/B testing), machine learning (ex. sentiment analysis), and cookie-based attribution. They study their data and think creatively about how to put it to meaningful use. |
Modern marketers do not depend on a distant data team who is unfamiliar with marketing strategy to refresh a dashboard to find out if they are successful. |
Principle #2: Iterative Decision Making
Modern marketers progress the business through validated learning. They actively keep a record of the things that they know (based on experimentation), and the things that they believe (based on experience). They are familiar with their data and the methods available to test new ideas without reliance on the personal data of individual customers.
| Modern Decision Making Is... | Modern Decision Making Is NOT... |
|---|---|
| Modern marketing teams state what they believe and proactively gather evidence to challenge those beliefs. They take small steps, evaluate results, and learn from their mistakes. They are unafraid to fail, and drive outcomes by building on small wins. | Modern marketers do not submit to the highest paid person’s opinion, and they do not cover up or punish failure. |
Principle #3: Authentic Privacy Strategy
Modern marketers establish a legal and ethical foundation for managing customer data. They are strategic about how customer data is used by the business, and they earn the trust of their customers through transparency.
| Modern Privacy Strategy Is... | Modern Privacy Strategy Is NOT... |
|---|---|
| Modern marketers know their data, how it is used to make decisions, and the lawful grounds for collecting or processing this data. They are clear with their customers about what data is collected, and how the data is used by the business. | Modern marketers do not collect everything about a customer and keep it forever, and they do not hide their data strategy from customers and regulators. |
Principle #4: Data as a Product
Modern marketers apply product management principles to create trusted data products that are managed by teams with domain expertise. They are T-shaped technology generalists with a deep expertise in marketing and broad familiarity with data engineering tools. They are focused on driving outcomes within their domain with minimal reliance on a centralized data team.
| Modern Data Strategy Is... | Modern Data Strategy Is NOT... |
|---|---|
| Modern marketers collaborate with internal stakeholders to understand marketing strategy, and then they apply product thinking to design and maintain the data solutions required to support this strategy. | Modern marketers do not trust data unless it has a clear owner taking responsibility to ensure that the data is accurate, up to date, and valuable. |
This is Modern Marketing
Modern marketing is about adapting to a change in the environment. It’s about being true to the four principles, even if that means abandoning established best practices. And it’s about searching for new tools that are more effective in the current context.
If I must boil it down to one sentence, modern marketing is an approach to solving traditional marketing problems that applies incrementality techniques and cloud computing resources in ways that respect user privacy.
