Marketing Automation – Do you really need it?
This article discusses the current situation and role of online marketing with a focus on Central-Europe and Hungary: how useful is e-commerce data and how to properly use it? What are the problems that marketing automation can solve?
We discuss the operation of marketing automation systems in a separate post.
The 2022 Trap of Online Marketing
The advertising platforms of Google and Facebook have been used as synonyms for paid online marketing for some time, an active presence on these platforms is simply unavoidable for most businesses.
In the English jargon, there are two expressions that capture important characteristics of the two giant ad platforms: ‘black box’ and ‘walled gardens’.
The term black box refers to the fact that these platforms hardly allow insight into their operation: there are fewer and fewer opportunities to optimize campaigns, and learning algorithms completely take control of our money – the magic happens completely hidden from our eyes.
Walled gardens mean that these companies operate in a closed system and can only operate within their own system.
The costs of using these systems are increasing and the reasons are not only related to growing inflation rates. According to Criteo’s research “Future of Commerce – The Rise of Retail Media on the Open Web” published in April (1), it became 27% more expensive to sell products on such channels in the UK in a single year.
The increase in the prices of click-based channels is first noticed by online sellers not on the expenditure side, but on the income side. They have to face the fact that they have to pay for traffic that used to be “free” until now.
Organic reach on Facebook has practically died out even for pages with tens of thousands of followers. Same at the Google result page: with the rise of Google Shopping, online stores can expect drastically less organic traffic from product searches.
There is no need for additional research for the actors to see the rise in advertising costs and they mostly take it as a matter of course. The rising costs are incorporated into the prices of products and services sold.
In doing so, Google and Facebook – and Amazon in the most part of the western world – are carving out an ever-increasing slice of the monetary value of products and services, and while doing so, they allow less and less insight into their operations.
Dependency is growing
Some of the changes can be communicated positively – for example, Google Performance Max makes advertising simpler – it might be true, but in return it further deepens the vulnerability of advertisers.
Effective online marketing is fueled by data which remains entirely at Google, and advertisers – as they lose the capability and also the need to know – understand very little about how data is being used.
In the meantime, their possibility for setting up marketing campaigns is also decreasing and it is simply being accepted as a basic truth that the Internet has unavoidable tax collectors, so no one asks, they just pay as much as they need to.
In 2020, the headline “cookiepocalypse” brought the news that Google would end support for third-party cookies that same year. This deadline was later postponed to the end of 2023, and just recently postponed again to 2024.
Google promises stronger data protection and new business solutions, but it would be naïve to think that this will not be accompanied by a new kind of situation, even more favorable to Google’s monopoly, in which the life for e-commerce players inside the black box will be a few shades darker.
Growing competition in the online space
It is almost impossible to break away from Google and Facebook, but definitely worth reducing dependency – this is what all medium and large players are working on, since giving up control is an important factor that accounts for 15-20% of the margin of a typical online sales company poses a serious risk.
While advertising options are simplified on the surface, the increasing competition gives birth to more and more complex solutions, which often means more work and extra costs.
As competition gets more fierce, questions around efficiency come up front. A more efficient player is able to grow with a smaller margin, so it has more money left over to develop its online operation – for marketing professionals, technologies, advertising, etc. – and scales faster than its competitors.
The situation is clear: the e-commerce field – which is still growing year by year – there are a few “infrastructure providers” in monopolistic positions, and an increasingly competitive situation, where e-commerce players can easily find themselves lost in the increasing risk of marginalization.
You need your own high-quality data
A conscious online business must meet two challenges at the same time: improve efficiency and loosen dependence on giga-platforms.
At the intersection of these two is the right approach: you need to collect, manage and use your own data properly.
The ever-increasing value of data is now a topic repeated to the point of boredom, but it is certainly not a passing fad. Online marketing plays a pioneering role in the use of data, and today the basic functions of modern life are built on it, from research through medicine to transportation. Our online and offline lives are increasingly intertwined.
People appreciate generously when data is put to the service of their convenience: you can think of Spotify’s recommendations, Waze that avoids traffic jams, or Zalando, which offers unique promotions with very accurate product recommendations based on previous browsing and the behavior of people with a data pattern similar to yours.
Where is the boarding point in the field of data collection?
Complex marketing automation systems provide a solution to the three points of data exploitation – collection, management, use – necessary to achieve greater independence associated with increased efficiency.
But what does that mean?
- Data collection –› as a start, you need a place where user data is collected in-house.
The basis of a complex marketing automation system is the data collection center, or Customer Data Platform (CDP).
- Data processing –› most data sets are difficult to interpret on their own due to the large number of data points. You may use it after having them organized and segmented according to well-thought-out systems of criteria.
One essential element of the marketing automation toolkit is that segmentation processes take place automatically on a trigger basis. Segmented data can be used inside or outside the automation system: users can even be addressed in a Google or Social campaign.
Segmentation can be carried out and improved on the company’s own data at any time, for example when creating a new set of campaigns.
- Data usage –› from a business point of view, data starts to pay off when you start using it to a specific advantage. Thanks to your marketing automation efforts your users can have a better experience, they buy more often with a higher average cart value, and the operation of the whole system becomes more efficient.With the help of online marketing automation, processed data can be used in many areas. You can customize certain elements of your website and the entire external communication based on user behavior data and AI predictions. Messages are automatically sent in response to carefully selected triggers on the exact channel and in the exact time so they are most likely to be opened by their recipient, and their content thoroughly personalized – all for higher efficiency and better conversion results.
Marketing automation increases efficiency, brings awareness to many business decisions, makes platforms more user-friendly, offers solutions for connecting online and offline purchases, and last but not least, its return can be planned.
Based on internal research by SALESmanago, in 2021 18% of online stores in the USA uses a marketing automation solution – 22% in the UK, while the EU average is 7.8%.
According to the forecast, the global marketing automation software market will reach $19.7 billion by 2026, from $7 billion in 2020, with an annual growth of 19%, and the CPD market will grow from $2.4 billion to $10,000 by 2025. It will stand at $3 billion (up 34% year-over-year).
It is not a question whether you should have a marketing automation solution or not. The question is: when do you start using one?
By bringing data collection in-house, you gain a serious advantage. The number of solutions also multiply each year, making the technology increasingly accessible to relatively smaller players as well. This opens a new front in the competition of e-commerce companies.
How can HiData help?
Marketing automation solutions provide a powerful and versatile tool to businesses operating in the online space, however, due to their high complexity, their impact on other processes, and cost implications it is important that you preliminary evaluation, and that the technical implementation and setup is carried out professionally.
At HiData, we are accumulating experience and knowledge in the setup and operation of marketing automation systems since 2020.
We’re proud to hold the highest-level “Customer Experience Success Partner” qualification from our partner SALESmanago. We are also partners with User.com and HubSpot, thereby fully covering the needs of companies looking for B2C and B2B marketing automation solutions.