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MARKETING TECHNOLOGY The Six Developments That Matter the Most in 2016 MARCH 2016 Bryan Yeager Contributors: Rebecca Chadwick, Lauren Fisher, Maria Minsker Read this on eMarketer for iPad

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MARKETING TECHNOLOGYThe Six Developments That Matter the Most in 2016

MARCH 2016

Bryan Yeager

Contributors: Rebecca Chadwick, Lauren Fisher, Maria Minsker

Read this on eMarketer for iPad

MARKETING TECHNOLOGY: THE SIX DEVELOPMENTS THAT MATTER THE MOST IN 2016 ©2016 EMARKETER INC. ALL RIGHTS RESERVED 2

CONTENTS2 Marketing Technology

3 As the C-Suite Focuses on Data and Analytics, Marketing Technology Steps into the Spotlight

6 The Expansion of the Marketing Tech Landscape Continues to Outpace Consolidation

9 Marketing Technology Strategy Matures, But with Room for Staying Agile

11 The Nebulous Task of ‘Integration’ Becomes Clearer and Easier to Accomplish

13 Marketing Technology and Advertising Technology Come Together

15 Tech- and Data-Focused Agencies Are in High Demand

17 eMarketer Interviews

18 Related eMarketer Reports

MARKETING TECHNOLOGY: THE SIX DEVELOPMENTS THAT MATTER THE MOST IN 2016

CEOs are talking about it, as its size and scope continues to grow. Marketers are getting ever-savvier at dealing with

it, especially as the dots become easier to connect. And agencies have no choice but to embrace it. It’s marketing

technology—the underlying software and services that power modern marketing operations.

■ Data-driven marketing executives are increasingly being tapped by their CEOs to lead companywide digital transformation efforts, bringing marketing technology into the spotlight to help solve new problems across their organization.

■ Innovation in marketing technology continues to outpace consolidation in the space as the media universe continues to expand, resulting in a steady influx of new players. But economic headwinds could put the brakes on the rapid growth seen over the past five years.

■ In the face of relentless change, marketers have solidified their technology strategy, with built-in flexibility to ensure they can keep up with the times.

■ One way marketers are staying flexible is by getting a handle on the frequently vague task of “integration,” with dedicated in-house teams and strides from tech vendors in making their tools work well with others.

■ Because consumer behavior cuts across owned, earned and paid media, marketers trying to get a more holistic grasp on those behaviors are working to get data from all those channels under one roof. As a result, marketing technology and advertising technology are merging.

■ Agencies and other third-party marketing service providers realize they need to be experts on data and technology to meet the demands of their clients, and through various investments they are working to stay ahead of the curve.

WHAT’S IN THIS REPORT? This report details the six marketing technology developments eMarketer believes will matter the most to brands and agencies in 2016.

% of respondents

Change in Data-Driven Ad/Marketing SpendingAccording to Ad/Marketing Professionals Worldwide,2015 & 2016

5—increased significantly20.1%

28.3%

436.2%

40.3%

3—no change33.0%

24.0%

26.3%

4.6%

1—decreased significantly4.4%

2.2%

2015 2016

Note: numbers may not add up to 100% due to roundingSource: Global Alliance of Data-Driven Marketing Associations (GDMA) andWinterberry Group, "The Global Review of Data-Driven Marketing andAdvertising 2015" with the support of MediaMath, Dec 10, 2015202325 www.eMarketer.com

KEY STAT: Spending on data-driven marketing and advertising continues to grow worldwide. As a result, marketing technology investments will follow.

MARKETING TECHNOLOGY: THE SIX DEVELOPMENTS THAT MATTER THE MOST IN 2016 ©2016 EMARKETER INC. ALL RIGHTS RESERVED 3

AS THE C-SUITE FOCUSES ON DATA AND ANALYTICS, MARKETING TECHNOLOGY STEPS INTO THE SPOTLIGHT

CEOs today are anxious to harness the power of

digital platforms and the data they generate to stay

competitive and drive future growth. As a result,

marketers that have embraced a data- and tech-driven

approach are being tasked to spearhead digital

initiatives that cut across the organization, helping

raise the awareness and underscore the strategic

importance of marketing technology in the process.

September 2015 data from consultancy PricewaterhouseCoopers (PwC) underscored the top benefit that C-level executives worldwide see by investing in a more digital enterprise: revenue growth. While it’s true that creating a better customer experience is also an important benefit, it’s apparent that business leaders want to ensure those enhancements are ultimately tied back to key business objectives.

% of respondents

Primary Benefit that C-Level Executives WorldwideExpect to See from Their Digital EnterpriseInvestments, Sep 2015

Grow revenues45%

Create better customer experiences25%

Increase profits12%

Innovate our products5%

Achieve cost savings4%

Improve talent retention and recruitment2%

Enhance brand and reputation2%

Improve decision-making through better data analytics2%

Disrupt our own or other industries1%

Combat new industry entrants1%

Other1%

Note: n=1,988Source: PricewaterhouseCoopers (PwC), "2015 Global Digital IQ Survey,"Sep 30, 2015197679 www.eMarketer.com

Though business and technology managers find that CEOs are the most effective at working to integrate and align their organization’s technology department to meet new business demands (like being more digital- and customer-centric, for example), marketing executives are not far behind. July 2015 research from think tank Business Performance Innovation (BPI) Network found that chief sales, marketing or customer experience officers are more effective than even chief technology officers (CTOs) at merging tech and business goals, at least in the view of business/technology managers worldwide who were queried.

MARKETING TECHNOLOGY: THE SIX DEVELOPMENTS THAT MATTER THE MOST IN 2016 ©2016 EMARKETER INC. ALL RIGHTS RESERVED 4

% of respondents

Roles that Are Working Most Effectively toIntegrate/Align the CIO and IT Organization with NewBusiness Demands* According toBusiness/Technology Managers Worldwide, July 2015

CEO42%

Chief sales, marketing or customer experience officer37%

Chief technology officer34%

Line or business leaders28%

CFO21%

Head of strategic planning19%

COO16%

Head of product development15%

Chief digital officer9%

Head of compliance and governance9%

Chief security officer5%

General counsel2%

Other7%

Note: *demands, dynamics, requirements and risksSource: Business Performance Innovation (BPI) Network, "AcceleratingBusiness Transformation Through IT Innovation: Getting the BusinessLeader Take on the IT Change Mandate" sponsored by Dimension Data, Aug10, 2015194779 www.eMarketer.com

“C-suite expectations from their CMOs have skyrocketed,” said Kashyap Kompella, research director for independent research and consulting firm Real Story Group. “In addition to their day jobs orchestrating bread-and-butter marketing, CMOs are expected to be chief experience architects, chief digital officers [CDOs] and be the board’s consiglieres in the company’s digital charge.”

CMOs, chief information officers (CIOs) and the increasingly common CDOs all look at what digital means for their business in slightly different ways, per PwC’s survey. While all three agreed that “technology innovation-related activities” were an important aspect in defining digital for their company, CMOs ranked customer-facing tech activities higher and viewed digital as less synonymous with IT than did CIOs and CDOs.

% of respondents

Ways in Which Their Company Defines DigitalAccording to CDOs, CIOs and CMOs Worldwide, Sep 2015

CMOs CIOs CDOs

Technology innovation-related activities 62% 50% 46%

Customer-facing technology activities 49% 33% 37%

Synonymous with IT 29% 41% 41%

Technology investments in all parts of business 25% 41% 45%

Data and analytics activities 11% 14% 13%

Source: PricewaterhouseCoopers (PwC), "2015 Global Digital IQ Survey,"Sep 30, 2015197678 www.eMarketer.com

Ashu Garg, general partner at early-stage venture capital firm Foundation Capital, says that this may be because “the biggest priorities for digital transformation are marketing-related issues: transforming the customer experience, commerce and marketing communication.” As a result, Garg believes that as the world becomes more digitally inclined, marketing “will play an increasing role in driving the technology agenda.”

August 2015 data from the Association of National Advertisers (ANA) supports Garg’s thinking. It showed that US marketing organizations—the groups that have to execute these digital initiatives—now have a diverse array of roles to support more digitally adept companies. More than half of marketers polled said they previously had existing roles dealing with social media (76%), marketing operations (65%) and customer experience (56%); nearly half also had staff dedicated to marketing technology.

Additionally, top functions created in 2015 included content strategy (30%), marketing/digital transformation (21%) and mobile (18%). And the top roles planned for creation in 2016 were data science, customer experience and mobile.

Even so, to be a true change agent across an organization, “CMOs need to forge tighter partnerships with the CIOs and several other functions within the organization,” Kompella said. While marketing can certainly help the business understand customers better, delivering superior customer experiences extends beyond the marketing department, he added. Instead, “you need a strategy for the overall digital transformation for the organization.”

Many organizations are still at the early stages of digital transformation, though, according to an April 2015 Economist Intelligence Unit (EIU) survey. Just 7% of executives polled worldwide had transformed up to half of their business practices, while three in 10 were just starting to develop their digital transformation strategy.

MARKETING TECHNOLOGY: THE SIX DEVELOPMENTS THAT MATTER THE MOST IN 2016 ©2016 EMARKETER INC. ALL RIGHTS RESERVED 5

% of respondents

Extent to Which Their Organization Has UndergoneDigital Transformation According to ExecutivesWorldwide, April 2015

Transformed more than half of our business practices8%

Transformed up to half of our business practices7%

Starting to implement our digital transformation26%

Developed our high-level digital transformation strategy buthave not started implementing yet

27%

Developing/starting to develop our digital transformationstrategy

31%

Note: numbers may not add up to 100% due to roundingSource: The Economist Intelligence Unit (EIU), "Digital Evolution: Learningfrom the Leaders in Digital Transformation" sponsored by Accenture andPegasystems, Oct 14, 2015198700 www.eMarketer.com

The same EIU study found that the leading digital transformation goals of respondents included improving customer satisfaction, loyalty and retention, at 53%, followed by improving operational efficiency (52%) and maintaining or achieving market leadership within their industry (48%).

Some of these digital transformation objectives are at odds with the customary goals of certain types of marketing practitioners, many of whom have been more focused on customer acquisition than post-sales experience and engagement.

For US email marketers, there is a strong focus on customer acquisition, based on November 2015 research conducted by email marketing services provider Campaigner. Close to three-quarters of respondents said attracting new customers was their top marketing goal for 2016, with just four in 10 focused on customer retention.

% of respondents

Leading Marketing Goals for 2016 According to USEmail Marketers

Attracting new customers 74.0%

Customer retention 40.1%

Increased brand awareness 39.3%

Increased ecommerce activity29.0%

Brand loyalty 18.5%

Note: respondents selected their top 2Source: Campaigner, "2016 Insights Survey," Jan 20, 2016203347 www.eMarketer.com

Among the US marketers and service providers polled in July 2015 by the Direct Marketing Association (DMA) and marketing consultancy Winterberry Group, customer acquisition (61.4%) and customer retention (60.6%) were on more equal footing in terms of key priorities. Evaluating the utilization of existing marketing technology, along with integrating and activating new data sources, were also cited as important goals.

% of respondents

Initiatives that Are Likely to Be a Priority* for TheirCompany According to US Marketing Professionals,Q1-Q3 2015

Expanding focus on customer acquisition

Expanding focus on retention, loyalty and CRM

Evaluating utilization of marketing technologies

Integrating/activating new data sources

Evaluating new/emergent marketing technologies

Training existing marketing staff

Revisiting/updating data governance policies/processes

Hiring additional marketing staff

Pursuing deeper involvement in industry trade organizations

Insourcing marketing functions previously outsourced

Outsourcing marketing functions previously managed internally

Q12015

71.6%

69.9%

56.7%

59.9%

53.8%

54.8%

41.7%

40.5%

23.7%

31.0%

22.2%

Q22015

61.4%

60.6%

51.3%

50.8%

48.3%

42.2%

29.8%

36.1%

25.0%

31.0%

27.8%

Q32015

72.2%

67.5%

58.7%

57.0%

55.0%

47.5%

38.7%

37.7%

30.7%

28.2%

22.2%

Note: over the coming year; *and focal point for attention/resourcesSource: Direct Marketing Association (DMA) and Winterberry Group,"Quarterly Business Review Q3 2015," Dec 3, 2015198867 www.eMarketer.com

Still, the potential to have a wider-scale impact on a company is an exciting prospect to client-side marketers and agency professionals alike. Per December 2015 research by Econsultancy, optimizing the customer experience topped out as the most exciting opportunity in 2016 among these two constituencies, followed by creating compelling content to power these digital experiences and creating data-driven marketing that focuses on the individual.

MARKETING TECHNOLOGY: THE SIX DEVELOPMENTS THAT MATTER THE MOST IN 2016 ©2016 EMARKETER INC. ALL RIGHTS RESERVED 6

% of respondents

Most Exciting Opportunity for Their Company* in 2016According to Client-Side Marketers vs. AgencyProfessionals Worldwide

Optimizing the customer experience

Creating compelling content for digital experiences

Data-driven marketing that focuses on the individual

Using marketing automation to increase efficiency and yield

Cross-channel marketing

Internet of things/connected devices

Social marketing

Video to increase brand engagement

Reaching and understanding mobile customers

Location-based services that add place and time to the customer relationship

None of these

Client-sidemarketers

22%

16%

16%

9%

8%

6%

6%

6%

4%

3%

4%

Agencyprofessionals

19%

17%

16%

7%

8%

7%

7%

7%

5%

3%

4%

Note: n=3,013 client-side marketers; n=2,653 agency professionals; *or fortheir clientsSource: Econsultancy, "Quarterly Digital Intelligence Briefing: 2016 DigitalTrends" in association with Adobe, Jan 22, 2016204105 www.eMarketer.com

Tip Rose, vice president of enterprise digital marketing at healthcare services firm Cardinal Health, said that his team focuses on its sales funnel and how marketing technology can support goals like improving the velocity of prospects turning into customers. But as a result, they “sometimes forget about the fact that we can also use a lot of these same tools to enhance the overall customer experience for our existing customers.” As marketers continue to expand their scope, the underlying technology on which they’ve come to rely on can also be used to help solve new problems.

THE EXPANSION OF THE MARKETING TECH LANDSCAPE CONTINUES TO OUTPACE CONSOLIDATION

Spending on marketing technology continues to

grow, and so do the number of vendors vying to

capture their share of those bulging budgets. Though

some consolidation is expected in legacy categories,

it will be outpaced by the expansion brought about

by new channels and innovations.

One key marketing technology growth driver is an anticipated increase in spending on data-driven marketing and advertising. Polling from the Global Alliance of Data-Driven Marketing Associations (GDMA) and Winterberry Group indicated that ad and marketing professionals worldwide planned bigger spending increases on data-driven activities in 2016 than in 2015. Specifically, more than one-quarter of respondents expected significant increases for the year ahead.

% of respondents

Change in Data-Driven Ad/Marketing SpendingAccording to Ad/Marketing Professionals Worldwide,2015 & 2016

5—increased significantly20.1%

28.3%

436.2%

40.3%

3—no change33.0%

24.0%

26.3%

4.6%

1—decreased significantly4.4%

2.2%

2015 2016

Note: numbers may not add up to 100% due to roundingSource: Global Alliance of Data-Driven Marketing Associations (GDMA) andWinterberry Group, "The Global Review of Data-Driven Marketing andAdvertising 2015" with the support of MediaMath, Dec 10, 2015202325 www.eMarketer.com

MARKETING TECHNOLOGY: THE SIX DEVELOPMENTS THAT MATTER THE MOST IN 2016 ©2016 EMARKETER INC. ALL RIGHTS RESERVED 7

And in April 2015 research conducted by Forbes Insights in association with predictive analytics tech provider Lattice, eight in 10 marketing execs polled in North America expected some type of increase in marketing technology purchases over the next year, with the most common increases ranging from 1% to 10%.

% of respondents

Planned Change in Marketing Technology PurchasesAccording to Marketing Executives in North America,April 2015

<1% increase3%

1%-5% increase28%

6%-10% increase27%

11%-20% increase16%

21%-25% increase5%

26%+ increase5%

No change10%

Decrease2%

Don't know5%

Note: over the next year; numbers may not add up to 100% due toroundingSource: Forbes Insights, "The Predictive Journey: 2015 Survey on PredictiveMarketing Strategies" in association with Lattice, Oct 27, 2015199349 www.eMarketer.com

The practitioners who spoke with eMarketer for this report overwhelmingly said that they have increased their marketing tech budgets as well, though not all of them take a line-item approach. Chris Curtin, Visa’s chief brand and innovation marketing officer, works with the brand’s CIO to define needs and determine what’s going to be added to the portfolio throughout the year. “That will represent an increase in our marketing technology spend, but it’s not because we’ve got to meet a quota of a 10% year-over-year increase,” he said.

Some marketing technology categories like web analytics, ecommerce and web content management have been around for well over a decade. But there are still new companies developing products that they think can compete and potentially displace incumbents, according to Scott Brinker, editor of the Chief Marketing Technologist blog and co-founder and CTO for ion interactive, an interactive content software provider.

“There is certainly consolidation happening, but the pace of innovation does not seem to have slowed,” Brinker explained. Though he believes the size of the marketing technology landscape is no longer doubling each year like it used to, “you’re still talking about thousands of companies that are trying to innovate in the space.”

Many companies in this marketing technology universe are startups, and marketers are increasingly interested in working with these emerging firms to help meet objectives while also staying ahead of the tech curve. A September 2015 survey conducted by the ANA and the Consumer Technology Association (CTA) found that 36% of US client-side marketers had worked with startups for marketing or advertising purposes within the past year.

The top areas or tactics where those marketers worked with startups included social media, content development and management, and research and analytics.

% of respondents

Areas/Tactics for Which Their Company Works withStartups According to US Client-Side Marketers, Sep 2015

Social media 53%

Content development and management 49%

Research and analytics 45%

Mobile advertising 43%

Marketing automation 39%

Promotions 37%

Programmatic buying 35%

Data management 33%

Web/app development 31%

Campaign management16%

Other 14%

Note: n=51 whose company works with startupsSource: Association of National Advertisers (ANA) and ConsumerTechnology Association (CTA) (formerly Consumer Electronics Association(CEA)), "Brands Working with Startups," Feb 2, 2016204862 www.eMarketer.com

Duane Schulz, the chief marketing technologist at Xerox, said that even though many of the major pieces of his company’s marketing stack are in place, he nonetheless takes several “carefully curated cold calls from potential vendors” per week to stay abreast of new capabilities that might fit a future need.

MARKETING TECHNOLOGY: THE SIX DEVELOPMENTS THAT MATTER THE MOST IN 2016 ©2016 EMARKETER INC. ALL RIGHTS RESERVED 8

In truth, though, some marketers could do a better job of utilizing their existing tech assets, since it’s already common for them to work with several tech providers to support their practice. Skyword’s July 2015 research found that just 9% of US marketers used one technology provider, while more than a quarter used between four and 10 providers. Another 21% claimed that they worked with 11 or more.

% of respondents

Number of Technology Providers with Which USMarketers Work for Marketing Purposes, July 2015

1 9%

2 22%

3 21%

4-10 27%

11+ 21%

None1%

Note: n=190; numbers may not add up to 100% due to roundingSource: Skyword, "A Study in Brand Transformation: Are EnterpriseMarketers Transforming Their Organizations for Sustained Storytelling?"conducted by Researchscape, Jan 12, 2016203462 www.eMarketer.com

It’s well within the realm of possibility that marketers need to use a broad swath of tools and providers to accomplish their objectives. But there is also concern that existing technologies might not be getting used to their fullest potential, especially as it becomes easier to bring in software-as-a-service (SaaS) solutions to solve immediate problems.

At business software firm CA Technologies, vice president of marketing technology and demand analytics Cynthia Gumbert says that her group is constantly reevaluating its stack just to make sure they’re not paying twice for the same thing. “It’s a constantly moving universe of capabilities,” she said. “What we bought yesterday isn’t going to be the same thing as what we have in place tomorrow.”

And Jason Heller, the global lead of digital marketing operations for consulting firm McKinsey & Company, believes the aspiration to overcome those types of challenges will be the focus of the next wave of marketing technology innovation. “I believe the pendulum will swing the other way from where it has been the past few years, where there are a lot of point solutions that have evolved for specific use cases.” Instead, Heller expects to see more “metasystems,” which have customer data management and analytics at their core to maximize the existing technology infrastructure.

Numerous sources have pointed to the robust investment activity that took place in this area in 2015. Investment bank Petsky Prunier reported 979 marketing technology deals (one more than in 2014). It valued them at more than $26 billion (up 38.4% over the year prior). And researcher VB Insight estimated that more than $11 billion in venture capital funding went to 323 marketing technology startups in 2015.

But a softening economy could lead to tighter capital markets, in which newer startups might find it harder to get early-stage venture funding, and more mature companies could be pressured by investors to sell— both leading to consolidation. Some segments, like advertising technology, have already witnessed a funding pullback, according to January 2016 data from investment bank Coady Diemar Partners. Between 2014 and 2015, the firm found that transactions in the “ad tech and services” category contracted by 25.3%, and deal value decreased 7.4%.

MARKETING TECHNOLOGY: THE SIX DEVELOPMENTS THAT MATTER THE MOST IN 2016 ©2016 EMARKETER INC. ALL RIGHTS RESERVED 9

MARKETING TECHNOLOGY STRATEGY MATURES, BUT WITH ROOM FOR STAYING AGILE

As marketers become ever more reliant on using

technology to manage and measure their efforts,

they are turning into more seasoned strategists in

building, maintaining and deploying their marketing

technology stacks. But in reaction to the relentless

pace of change in a digital world, they’re also

building in ways to ensure that stack can evolve with

the times.

One thing is certain: Marketers have to make more tech-related decisions than ever before. Skyword’s July 2015 survey of US marketers found that adoption of new technologies was the top change made within the respondents’ companies in the year prior. Other prominent changes included the increased use of social networks, the expanded use of content marketing, reorganization of the marketing department and the addition of new marketing channels.

In the face of these changes, companies are “becoming much more realistic about deploying marketing technologies,” according to Scott Vaughan, CMO of Integrate, which provides services for improving demand generation programs and their underlying systems. Specifically, Vaughan believes marketers are getting better at avoiding the “shiny new toy syndrome” aspect of technology and instead more effectively aligning tech investments with business objectives.

Brinker of ion interactive said that marketers are now “trying to rationalize their marketing stacks and cutting down from just having random stuff from all over the landscape.” He added that “a lot of them have decided that what they want is a best-of-breed collection,” including a mix of base products and a collection of more specialized capabilities.

“When it comes to picking new tools, a ‘best-of-breed’ approach prevails,” Real Story Group’s Kompella added. He believes that approach is born out of necessity, “as the scope and variety of marketing use cases is quite large” and continues to grow.

Marketers are also becoming more comfortable with the tools they already own, enabling more prescriptive and efficient use. Xerox’s Schulz said that through 2015 and into 2016, his company “moved from the stage of getting our arms around the tools to how they align with the ambitions we have in marketing and sales.”

Cardinal Health’s Rose echoed Schulz’s focus on tying technology to business goals as an important aspect of marketing tech strategy. “If you don’t have a good strategy and strong alignment with sales, you’re not going to deliver the results that you would like, in spite of all the accolades that the software may receive.”

Rishi Dave, CMO of business information provider Dun & Bradstreet, also stressed the importance of cross-functional teams—including specialists in marketing technology, data, content and creative—to work together and help drive results. “Marketing technology experts cannot work in a vacuum,” he said. “They need a set of processes, content and strategy to work with them to help drive the return on investment [ROI] from that technology.”

And marketing technology is indeed driving results for companies that are using it effectively. Personal Capital, which provides digital wealth management technology and services to consumers, uses its mobile app as a key channel to acquire users, convince them to use their financial advisory services and have advisors communicate with them about their portfolio.

“Our stack has had to evolve quite substantially” to be able to support a cross-channel conversion and engagement strategy, according to Mark Goines, the firm’s CMO. By being strategic but also nimble with its approach to marketing technology, Goines detailed that Personal Capital can now convert users into customers “three times faster than we did three years ago … it’s really improved our efficiency as a business.” He added: “We’re just starting. There’s so much opportunity there.”

Research shows that marketers also believe there’s still plenty of room for improvement when it comes to marketing technology. In July 2015 findings from Walker Sands, 58% of US marketers were in agreement that their company’s marketing tech was up to date and sufficient for helping them do their job more effectively, though just half believed they were making the right amount of investments.

MARKETING TECHNOLOGY: THE SIX DEVELOPMENTS THAT MATTER THE MOST IN 2016 ©2016 EMARKETER INC. ALL RIGHTS RESERVED 10

Our marketing tech isup to date and

sufficient for helping medo my job more effectively

My company investsthe right amount in

marketing technology

% of respondents

Attitudes Toward Marketing Technology at TheirCompany Among US Marketers, July 2015

Note: numbers may not add up to 100% due to roundingSource: Walker Sands, "State of Marketing Technology 2016: Understandingthe New Martech Buyer Journey," Oct 14, 2015198730 www.eMarketer.com

Strongly agree12%

Disagree30%

Stronglydisagree12%

Agree46%

Strongly agree9%

Disagree42%

Stronglydisagree9%

Agree41%

One area on the technology front that marketers find particularly deficient is related to data. Close to half of marketers in North America told Winterberry Group in a September 2015 survey that better data technology (for processing, matching, segmentation and more) would be the key resource that would help them achieve a data-driven competitive advantage. More first-party data (information a company owns) and the development of more standardized metrics for benchmarking data’s contribution to the business rounded out the top three most-desired resources.

% of respondents

Resources that Would Advance Their Efforts toAchieve Competitive Advantage Through the Use ofData* According to Marketers in North America, Sep 2015

Better data technology (enabling faster/higher-volumeprocessing, matching, segmentation, etc.)

47.9%

More first-party data41.7%

Development of standardized metrics and KPIs for benchmarkingdata's contribution

39.6%

More experienced talent/internal resources with relevant skills39.6%

Better analytics models and methodologies39.6%

Better general understanding of evolving best practices31.3%

Better quality first- or second-party data29.2%

More/better training for our existing staff27.1%

Deeper integration of advertising/marketing technology withother enterprise systems

27.1%

More support from our vendors or solutions providers18.8%

Larger allocated budgets18.8%

More third-party data16.7%

More/more deeply specialized technology or solutions providers14.6%

More second-party/affiliate provider data6.3%

Note: respondents chose their top 5; *in support of marketing, advertisingor mediaSource: Winterberry Group, "Data as Competitive Advantage" in partnershipwith Interactive Advertising Bureau (IAB) and with the support of AccordantMedia, AddThis, Dun & Bradstreet and Oracle Marketing Cloud, Oct 28, 2015200151 www.eMarketer.com

Technology likely isn’t the only barrier to squeezing more value out of data for marketing. In September 2015 research from Forbes Insights in association with digital marketing technology provider Turn, one-third of US marketing executives characterized their company’s approach to data-driven marketing as a mix of technologies available to various lines of business with little coordination. Conversely, just 14% said they had a well-established portfolio of tools that enable data-driven analysis and planning, with the rest reporting still-emergent data capabilities.

MARKETING TECHNOLOGY: THE SIX DEVELOPMENTS THAT MATTER THE MOST IN 2016 ©2016 EMARKETER INC. ALL RIGHTS RESERVED 11

% of respondents

Extent to Which Their Company Takes a Data-DrivenApproach to Marketing According to US MarketingExecutives, Sep 2015

A portfolio of tools that enable analysis and planning is wellestablished and fully supported by a single platform and bestpractices

14%

In addition to tools, a single platform is emerging to supportdata-driven marketing initiatives

24%

A common set of tools is emerging to support data gathering,analytics, insights, programmatic advertising and planning

29%

A mix of technologies is available to various lines of business,with little coordination

33%

Source: Forbes Insights, "Data Driven and Customer Centric: MarketersTurning Insights Into Impact" in association with Turn, Nov 3, 2015201170 www.eMarketer.com

Going forward, it’s clear that closing both the organizational and technological data gaps will be major marketing tech priorities.

THE NEBULOUS TASK OF ‘INTEGRATION’ BECOMES CLEARER AND EASIER TO ACCOMPLISH

“Integration” is often cited as a top marketing

technology challenge, with most such issues

boiling down to accessing data and assets from

common sources and ensuring communication and

coordination across the systems in operation. As the

market matures, integration is becoming easier to

define and accomplish.

July 2015 research from Econsultancy sums up marketers’ integration hurdles. More than half of digital marketers and ecommerce professionals worldwide cited nonintegrated tech platforms as the leading obstacle to having consistently integrated marketing activities. “Disparate data sources” and organizational structure issues followed.

% of respondents

Leading Obstacles to Consistently IntegratingMarketing Activities According to DigitalMarketers/Ecommerce Professionals Worldwide, July 2015

Nonintegrated tech platforms 56%

Disparate data sources 47%

Organizational structure 40%

Complexity of customer journey 39%

Lack of budget 38%

Company culture 33%

Lack of marketing skills 25%

Lack of senior-level buy-in20%

Note: n=749Source: Econsultancy, "Quarterly Digital Intelligence Briefing: TheMultichannel Reality" in association with Adobe, Sep 3, 2015196389 www.eMarketer.com

With marketers increasingly taking a best-of-breed approach to building out their marketing stacks, the requirements for marketing tech vendors to have their product work and share data with other systems have grown in tandem. Schulz said that a key requirement for bringing new products into the fold is that “it has to play well with the other members of our stack,” something that he feels more and more providers are able to accomplish today.

MARKETING TECHNOLOGY: THE SIX DEVELOPMENTS THAT MATTER THE MOST IN 2016 ©2016 EMARKETER INC. ALL RIGHTS RESERVED 12

“Culturally, I think anything that prevents collaboration, open architecture and easy integration defeats the purpose of why you would go with technology in the first place,” Visa’s Curtin said. His sense was also that things are getting better on the integration front.

These days, when vendors are faced with questions surrounding integration, they are more likely to be prepared. As Brinker put it, “They have now invested the research and development efforts and are saying, ‘Yeah, we have a really good answer for that. We plug into their API here, and this is how it works.’”

Even if marketers have a well-connected stack, they may be missing key pieces of data from other parts of the organization—another integration-related impediment. Six in 10 US marketing executives believe this issue is one of the leading challenges in developing data-driven marketing initiatives, per the Forbes Insights/Turn research.

% of respondents

Leading Challenges of Developing Data-DrivenMarketing Initiatives According to US MarketingExecutives, Sep 2015

Breaking down the silos of data between departments to ensurethe successful flow of information

61%

Gathering and parsing data56%

Defining audience and customer segments56%

Focusing on complex technical solutions54%

Telling the story of your brand and products51%

Creating a single view of the customer38%

Source: Forbes Insights, "Data Driven and Customer Centric: MarketersTurning Insights Into Impact" in association with Turn, Nov 3, 2015201171 www.eMarketer.com

Personal Capital’s Goines noted that his company developed its stack to avoid such gaps along the customer journey by defining and monitoring a dozen conversion events across multiple channels, such as app installs and registrations. “We use multiple technologies so that we can then integrate all that data into a single view of the user’s journey and then try and do attribution from that.”

Integration efforts can also be time-consuming. Skyword’s July 2015 study found that it took most of the US marketers it surveyed four to six months to fully integrate new technologies into their efforts. Though a greater proportion reported shorter spans than longer, one in five faced a window of seven to 12 months for integration, underscoring the bottleneck such phases can cause.

% of respondents

Length of Time It Takes for US Marketers to FullyIntegrate New Technologies into Their MarketingEfforts, July 2015

1 month 12%

2-3 months 26%

4-6 months 29%

7-12 months 21%

1-2 years 7%

3+ years1%

Don't know4%

Note: n=189Source: Skyword, "A Study in Brand Transformation: Are EnterpriseMarketers Transforming Their Organizations for Sustained Storytelling?"conducted by Researchscape, Jan 12, 2016203464 www.eMarketer.com

MARKETING TECHNOLOGY: THE SIX DEVELOPMENTS THAT MATTER THE MOST IN 2016 ©2016 EMARKETER INC. ALL RIGHTS RESERVED 13

MARKETING TECHNOLOGY AND ADVERTISING TECHNOLOGY COME TOGETHER

The terms “marketing technology” and “advertising

technology” have traditionally had firm boundaries,

with the former concerned with owned media and

the latter with paid. But from start to finish, from data

through delivery, these two realms are in the process

of converging.

According to McKinsey’s Heller, the main reason for this phenomenon is because “we live in a world of addressability where consumers have multiple devices,” where prospects are being reached in the same channels as customers. As a result, the only way for marketers to account for interactions across every touchpoint is “when our marketing technologies and advertising technologies are at least integrated,” he said.

The primary basis of this collision is data. Dun & Bradstreet’s Dave emphasized that to get the most out of digital marketing and advertising data, marketers need a data management strategy. “It’s common in the industry to mix up your data and analytics strategy with your technology strategy and seeing the two as the same,” he said. After data is collected and analyzed, it should be “used in all my different marketing technologies to drive an outcome.”

Winterberry Group’s September 2015 research details the adoption level of various types of data leveraged for marketing, advertising and media efforts for marketers and publishers in North America. First-party data—specifically the most personal, insightful and often valuable kind of this data—was the most popular, followed by anonymous, third-party online behavioral data.

% of respondents

Types of Data Leveraged by Their Company* toSupport Marketing/Advertising/Media EffortsAccording to Marketers and Publishers in NorthAmerica, Sep 2015

First-party/anonymous/digital (e.g., web analytics/site traffic)70.4%

First-party/known/digital (e.g., site registrations/transactionrecords)

66.7%

Third-party/anonymous/digital (e.g., online behavioral/intenders)63.0%

First-party/known/traditional (e.g., CRM records, customersurvey response)

48.1%

Third-party/known/digital (e.g., qualified online "leads")38.9%

Second-party/anonymous/digital (e.g., business affiliate webanalytics/site traffic)

35.2%

Third-party/known/traditional (e.g., licenseddemographic/psychographic mailing lists)

33.3%

Third-party/anonymous/traditional (e.g.,syndicated market research)

29.6%

First-party/anonymous/traditional (e.g.,commissioned market research)

24.1%

Second-party/known/digital (e.g., business affiliate-provided siteregistration/transaction records)

20.4%

Second-party/known/traditional (e.g., business affiliateCRM/loyalty records)

16.7%

Second-party/anonymous/traditional (e.g., market researchcommissioned by business affiliate)

14.8%

None—my organization/clients do not use any data in support oftheir marketing, advertising and/or media efforts

1.9%

Note: *or their clientsSource: Winterberry Group, "Data as Competitive Advantage" in partnershipwith Interactive Advertising Bureau (IAB) and with the support of AccordantMedia, AddThis, Dun & Bradstreet and Oracle Marketing Cloud, Oct 28, 2015200148 www.eMarketer.com

Marketers are actively exploring ways to more effectively link first- and third-party data. September 2015 findings from The CMO Club showed that 37% of the 80 CMOs surveyed worldwide were using digital advertising data to better understand the audiences within their customer relationship management (CRM) database. And another 40% were planning to launch into this practice within the 12 months following the study.

MARKETING TECHNOLOGY: THE SIX DEVELOPMENTS THAT MATTER THE MOST IN 2016 ©2016 EMARKETER INC. ALL RIGHTS RESERVED 14

% of respondents

CMOs Worldwide Who Use Digital Advertising toBetter Understand Audiences in Their CRM Database,Sep 2015

Yes37%

No, but planning to in the next 12 months40%

No, and notplanning to in the

next 12 months23%

Note: n=80Source: The CMO Club, "Digital Advertising Insights: A Treasure Chest forCMOs to Open" in partnership with SocialCode, Dec 3, 2015202750 www.eMarketer.com

Andrew Daley, vice president of marketing for car-sharing service Zipcar, characterized this trend as moving “from audience-based marketing to more of a user-centric focus.” Daley said one way his company is adapting is by “starting to look more at each member’s reservation patterns across platforms like the app and website rather than looking at reservation data in these standalone groups.”

A growing number of marketers are looking to tie data management platforms (DMPs)—a technology category that originated in the world of digital display advertising and anonymous cookie data—in with their existing marketing technology stack. Four in 10 marketers worldwide told Econsultancy in a May 2015 survey that their DMP was “very integrated” with other marketing technologies. Another 51% characterized their current state as “somewhat integrated.”

In the same study, 22% were in strong agreement about using first-party data to enhance their ad campaigns. And one in five also strongly agreed about using first-party data to improve their cross-channel marketing performance. Marketers also reported major benefits like centralized control and standardization of existing first-party data, along with improving data utilization for personalization.

% of respondents

Extent to Which Select Factors Are Benefits of Usinga Data Management Platform (DMP) According toMarketers Worldwide, May 2015

Centralized control and standardization of existingfirst-party data

53% 42% 5%

Developing rich and actionable data sets across first-, second- and third-party data sources

46% 43% 11%

More effective display advertising (e.g., retargeting, lookalikes)46% 37% 17%

Ability to develop attribution models for inventory andchannel sources and understand what is working

44% 50% 6%

Improve cross-channel marketing effectiveness byusing insights gained from the DMP

44% 51% 5%

Extracting more value from inventory andlearning what is working/not working

40% 44% 16%

Ability to integrate and match digital and offlinedata sets for more targeted advertising

40% 47% 13%

Providing access to third-party audience datamarketplaces otherwise not available to us

32% 45% 23%

Major benefit Minor benefit Not a benefit

Note: n=114Source: Econsultancy, "The Role of DMPs in the Era of Data-DrivenAdvertising" in association with Oracle Marketing Cloud, July 16, 2015193704 www.eMarketer.com

Using the data we already have for better email, web,social and content personalization

51% 46% 3%

“The outcomes have changed,” according to Glen Hartman, global managing director of digital transformation at digital agency Accenture Interactive. “Programmatic advertising used to be about getting more for your media buying dollar and maybe targeting better with less inventory.” Hartman now sees programmatic playing more of a role in driving action and engagement from existing customers.

But cross-channel measurement remains a challenge. The GDMA/Winterberry Group study showed that while more than half of US ad and marketing professionals considered themselves sophisticated practitioners on maintaining databases full of customer and prospect information, just 39.1% felt the same level of expertise in measuring campaign results across multiple marketing channels.

MARKETING TECHNOLOGY: THE SIX DEVELOPMENTS THAT MATTER THE MOST IN 2016 ©2016 EMARKETER INC. ALL RIGHTS RESERVED 15

TECH- AND DATA-FOCUSED AGENCIES ARE IN HIGH DEMAND

Though they still find creative capabilities valuable,

client-side marketers are now demanding that

agencies and other third-party providers also come

armed with proficient technology and data skills.

December 2015 research from business development services provider RSW/US found that senior marketers in North America placed a significant level of importance on the data and analytics capabilities of their agencies. A plurality said such capabilities would be one of several key factors in selecting or retaining an agency, while three in 10 said it would be a leading determinant.

% of respondents

Importance of Their Agency Providing MarketingData/Analytic Capabilities in 2016 According to SeniorMarketers in North America

Highly important—it will be a leading determinant of agencyselection/retention

30.1%

Important—it will be one of several key factors inselection/retention

43.4%

Not sufficiently important to be a deciding factor18.6%

Not important8.0%

Note: numbers may not add up to 100% due to roundingSource: RSW/US, "2016 RSW/US New Year Outlook Report: Agency andMarketer Perspective on the Business of Advertising & Marketing," Jan 6,2016203228 www.eMarketer.com

Numerous data points back up marketers’ heightened expectations that their agency partners beef up their tech and data aptitude to meet the demands of a digital world:

■ US marketing executives surveyed in April 2015 by market research firm The Relevancy Group said analytical services to develop measurement and attribution models were the most useful or valuable marketing services, followed by strategic services to help optimize their programs.

■ Among digital experience decision-makers worldwide surveyed by Forrester Consulting on behalf of Accenture in June 2015, performance and analytics reporting was the top area where third-party vendors were used.

■ DMA/Winterberry Group polling from October 2015 showed that four in 10 US marketing professionals wanted their agency partners to increase their focus on data and related functions like predictive modeling and segmentation. More than one-third also wanted heightened attention to digital marketing execution, and a similar percentage wanted their agencies to become more sophisticated users of marketing technology to be able to guide its utilization within their company.

That last takeaway is particularly relevant to Rose of Cardinal Health. “We use partners who have deeper subject expertise within specific platforms to really help augment that team,” to become more efficient over time. And this need is increasingly being filled by large consulting companies and marketing technology specialist agencies.

Foundation Capital’s Garg asserted that “the role of an agency is undergoing fundamental change. I think there are agencies that will become more like technology companies.” He cited agency holding company Publicis’s acquisition of tech consultancy Sapient in February 2015 as one example.

Another instance of this evolution includes Group- and WPP-owned media agency Maxus Worldwide launching its own technology consulting arm in February 2016 to capture more digital opportunities tied to software.

And coming from the tech side, Interactive Experience (iX), a digital agency operated by IBM, bought three smaller creative and digital firms at the beginning of 2016. Per a February 2016 Digiday article, AdAge Datacenter pegs iX’s 2015 revenues at $1.9 billion.

Christopher Penn, vice president of marketing technology at public relations agency Shift Communications, said he believes both the industry and his firm are leveling up when it comes to data and analytics. “We’re not just accepting what comes ‘out of the box’ from all of these different marketing tools, but actually using other third-party analytics software and systems” to deliver the most value to clients.

Research confirms that some agencies are indeed trying to stay one step ahead of their clients when it comes to data and technology. In Econsultancy’s July 2015 survey of 350 senior ad agency professionals worldwide, 37% of respondents had some type of innovation lab at their firm, and another 28% were in the process of planning one.

MARKETING TECHNOLOGY: THE SIX DEVELOPMENTS THAT MATTER THE MOST IN 2016 ©2016 EMARKETER INC. ALL RIGHTS RESERVED 16

The study also showed that agency professionals planned to make large investment increases in areas like digital analytics, content marketing, DMPs and mobile marketing.

% of respondents

Anticipated Change in Their Company's TechnologyInvestments According to Senior Ad AgencyProfessionals Worldwide, by Area, July 2015

Digital analytics

Content marketing

Data managementplatforms

Mobile marketing

Social media

CRM or email marketing

Programmatic advertising

App development

SEO (natural search)

Paid search (PPC)

Largeincrease

45%

43%

31%

24%

22%

21%

19%

17%

15%

14%

Smallincrease

42%

42%

48%

42%

47%

41%

32%

39%

41%

37%

Nochange

12%

15%

19%

31%

26%

34%

45%

42%

40%

44%

Smalldecrease

1%

1%

2%

2%

4%

4%

3%

1%

4%

4%

Largedecrease

1%

0%

1%

1%

1%

1%

1%

1%

0%

2%

Note: n=387; over the next year; numbers may not add up to 100% due toroundingSource: Econsultancy, "The Future of Agencies: The Progression of AgencyValue in a Digital World" in association with Adobe, Sep 17, 2015197458 www.eMarketer.com

And these executives see key benefits to getting a better grasp on technology, including maximizing the potential of digital channels (45%), driving competitive advantages for their agency (41%) and delivering better customer experiences on behalf of their clients (38%), Econsultancy found.

Nonetheless, it’s worth noting that client-side marketers still find a great deal of value in the purely creative capabilities that agencies have long exceled at providing, which was also apparent in the DMA/Winterberry study. Creative and design services were listed as the most important assets or capabilities that ad agencies provide. But data analytics and modeling expertise came in a close second place.

% of respondents

Most Important Assets/Capabilities Driving Their Useof Ad Agencies* According to US MarketingProfessionals, Oct 2015

Creative and design services45.6%

Data analytics and modeling expertise/capabilities38.5%

Unique marketing and/or vertical market expertise35.2%

Strategic counsel/insight into industry best practices27.4%

Campaign reporting, measurement and/or attribution solutions25.5%

Understanding of how to source/use third-party technologies23.6%

General bandwidth/capacity (supplementing what's availablein-house)

19.9%

Ability to deliver cost efficiencies (compared to managing workin-house)

18.7%

Flexible resources, allowing us to adjust to changing demands17.5%

Note: respondents selected their top 3; *for their company or their clientsSource: Direct Marketing Association (DMA) and Winterberry Group,"Quarterly Business Review Q3 2015," Dec 3, 2015201506 www.eMarketer.com

The RSW/US study came to similar conclusions, with 55.4% of respondents citing “creative” as the most important services their agency partners will provide in 2016.

MARKETING TECHNOLOGY: THE SIX DEVELOPMENTS THAT MATTER THE MOST IN 2016 ©2016 EMARKETER INC. ALL RIGHTS RESERVED 17

EMARKETER INTERVIEWS

What Marketers Should Know About Today’s Ever-Expanding Technology Landscape

Scott BrinkerCo-Founder and Chief Technology Officer ion interactive Editor Chief Marketing Technologist Blog

Interview conducted on February 1, 2016

For Visa, Marketing Technology Is About Making Data Actionable

Chris Curtin Chief Brand and Innovation Marketing Officer

Visa Interview conducted on February 11, 2016

Zipcar: Mobile Is Driving Marketing Technology Growth

Andrew Daley Vice President, Marketing

Zipcar Interview conducted on February 18, 2016

How Marketing Technology’s Role Evolved at Dun & Bradstreet

Rishi Dave CMO

Dun & Bradstreet Interview conducted on February 9, 2016

How Personal Capital Optimizes User Acquisition, Conversion Across Channels

Mark GoinesCMO

Personal Capital Interview conducted on February 10, 2016

Keeping Up with Marketing Tech’s Rapid Growth Is Tough on Brands

Tip RoseVice President, Enterprise Digital Marketing

Cardinal Health Interview conducted on February 12, 2016

Ashu GargGeneral Partner

Foundation Capital Interview conducted on February 4, 2016

Cynthia Gumbert Vice President, Marketing Technology and Demand Analytics

CA Technologies

Interview conducted on February 11, 2016

Glen HartmanGlobal Managing Director, Digital Transformation

Accenture Interactive Interview conducted on February 10, 2016

Jason HellerGlobal Lead, Digital Marketing Operations

McKinsey & Company Interview conducted on February 11, 2016

Adam HirschGlobal Vice President, Digital

Edelman Interview conducted on February 5, 2016

Kashyap Kompella Research Director

Real Story Group Interview conducted on February 15, 2016

Bastian LehmannCEO and Co-Founder

Postmates Interview conducted on February 16, 2016

Christopher PennVice President, Marketing Technology

Shift Communications Interview conducted on February 3, 2016

Chris PisapiaFounder and Managing Partner

Verndale Interview conducted on January 29, 2016

Mike RothmanCEO

Fatherly Interview conducted on February 9, 2016

Alan SchulmanNational Director, Content Marketing and Creative Experience

Deloitte Digital

Interview conducted on February 5, 2016

MARKETING TECHNOLOGY: THE SIX DEVELOPMENTS THAT MATTER THE MOST IN 2016 ©2016 EMARKETER INC. ALL RIGHTS RESERVED 18

Duane SchulzChief Marketing Technologist

Xerox Interview conducted on January 28, 2016

Scott VaughanCMO

Integrate Interview conducted on February 2, 2016

Ray VelezGlobal CTO

Razorfish Interview conducted on February 3, 2016

RELATED EMARKETER REPORTS

Cross-Device Targeting: First-Party Data, TV and Privacy Are Big Factors for 2016

B2B Content Marketing in the US: Maximizing ROI and Cost-Effectiveness over Time

US Digital Display Advertising Trends: Eight Developments to Watch for in 2016

RELATED LINKS

Accenture

AdAge Datacenter

Association of National Advertisers (ANA)

Business Performance Innovation (BPI) Network

Campaigner

Chief Marketing Technologist Blog

Coady Diemar Partners

Consumer Technology Association (CTA)

Digiday

Direct Marketing Association (DMA)

Economist Intelligence Unit (EIU)

Econsultancy

Forbes Insights

Forrester Consulting

Foundation Capital

Global Alliance of Data-Driven Marketing Associations (GDMA)

Petsky Prunier

PricewaterhouseCoopers (PwC)

Real Story Group

The Relevancy Group

RSW/US

Skyword

Turn

Walker Sands

Winterberry Group

VB Insight

EDITORIAL AND PRODUCTION CONTRIBUTORS

Cliff Annicelli Managing Editor, ReportsMichael Balletti Copy EditorKate Berman Chart EditorJoanne DiCamillo Senior Production ArtistDana Hill Director of ProductionStephanie Meyer Senior Production ArtistKris Oser Deputy Editorial DirectorHeather Price Senior Copy EditorJohn Rambow Executive Editor, ReportsAllie Smith Director of Charts

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