Marketing clouds are beginning to look like rough weather for ad agencies and like silver linings for a host of others.
Salesforce is pouring cash into tech, including AI, in pursuit of category leader Adobe, and says its own four-year-old Marketing Cloud is on track to top $1 billion in revenue for the first time this year. An alliance of sorts is emerging between martech companies offering services in "the cloud" and the consultancies already gunning for agencies' clients. And tech is emboldening big marketers to see how far they can go without others' help.
Some agencies are responding by signing on to use the same cloud-based tech tools or, in some cases, by offering related consulting services themselves. Whichever faction best gives marketers what they want will hold the keys to the next stage in marketing.
"Agencies bring the context the CMO needs and have the potential to be the best orchestrator to help the CMO get the most out of a marketing cloud," said Martin Coady, executive director of marketing technology at digital agency VML. "However, most agencies don't currently have the depth in these technologies that the vendors and other partners have, nor the experience scaling operations that consultancies have."
Half of marketers aren't satisfied with their lead agency, according to a newly released report by Forrester, and 60% are open to working with consultancies like Deloitte and Accenture. At the same time, 21% of marketing budgets are already being sent to martech providers including Adobe, Oracle and Salesforce.
"If you look at a large legacy brand, the transformation doesn't happen if you just slap a piece of technology into it," said Suresh Vittal, VP-platforms and products at Adobe Marketing Cloud, which reported $1.6 billion in revenue last year. "You need to transform the business model and the skill set of the organization and how you think about the products you are building out, as well as the culture within the organization and what gets measured."
"Those things require more than technology," he added. "They require somebody who understands your industry and business process to be the change agent."
The core issue for marketers seeking a so-called digital transformation is getting a one-to-one, holistic view of their current and potential customers, without multiple layers of intermediaries. Audience segments and ho-hum targeting aren't enough for them. And forget embracing the digital duopoly of Google and Facebook, whose tight grip on data runs counter to marketers' surging demands for transparency.
"The impact on an agency, as brands wrap their heads around all of this, is the nature of their services is going to change," said Mark Singer, digital marketing agency lead at Deloitte Digital. The consultancy worked with Anheuser-Busch InBev on a digital transformation push that spanned 10 countries and 12 brands, using Salesforce Marketing Cloud and Service Cloud products to do it.
"Brands are developing more direct relationships with consumers, and the nature of what agencies are doing is going to shift and match that model to take more of a direct role," Singer said.
That means agencies will need a greater variety of skill sets that include technical, operational, business and strategy arenas, according to Singer, who argued that those are precisely the areas where consultancies have an advantage.
Agencies are facing frantic activity by martech powers, as well. Salesforce is striving to close the gap with Adobe by going after clients that sell consumer products, not just business-to-business marketers.
Salesforce in 2015 invested in a relatively unknown agency, Overland Park, Kansas-based DEG Digital, whose clients include Walmart, Purina and AMC Theaters. Since receiving Salesforce backing, DEG has nearly doubled its revenue from $26.7 million to a projected $50 million this year.
Last summer, Salesforce spent $2.8 billion on DemandWare, a cloud-based e-commerce provider, to anchor a new Commerce Cloud. Last fall, it paid $700 million to snag data management platform Krux for its Marketing Cloud proper. The CRM powerhouse in March also bought its first agency, user experience company Sequence, whose clients include Apple, Best Buy and Chipotle.
"What fuels our growth is the breadth of our platform: sales, service, marketing, commerce and then our complimentary products like our analytics and IoT Cloud," said Eric Stahl, senior VP-product marketing at Salesforce. "What makes us different is we are integrating in one platform, one common identity, one customer experience as you transcend from marketing to sales to service."
Although agency holding companies like WPP and Publicis all use marketing cloud technology, they don't get to hold the data. And one could argue that whoever controls the data, controls the client or brand. Major tech powers like Salesforce are offering more and more pieces of the "stack" that marketers need to build, maintain and manage contact with consumers.
"With Krux, Salesforce can compete on a more equal footing with the other players and with the programmatic ecosystem, providing a bridge from its roots in CRM," said Mike Sands, CEO of the customer ID entity provider Signal. "The question for agencies will be whether Salesforce, Adobe and Oracle are friends or foes, as brands now have options, from planning to execution, from stack players that put them increasingly into a principal role within the media ecosystem."
Nestlé Waters North America Chief Marketing Officer Antonio Sciuto might tempt agencies to place tech in the "foe" category. He's using Salesforce's Marketing Cloud, partly at a "lab" housed in Salesforce's New York office where at least two Nestlé Waters employees work every day to collaborate with Salesforce staff, to pursue digital transformation. "The technology allows us to do more things in-house and rely way less on agencies," Sciuto said. "To win in this reality, you need to always start from the consumer understanding. Beyond that, you will need technology. It is the key to really make things happen."
Sciuto said signing up for Salesforce's Marketing Cloud has eliminated his need to work with agencies that provide social media, community management and consumer market research services.
Few major brands are trying to do what Nestlé Waters is, which might have something to do with the complexity and investment required to pull it off. "It is very difficult, and I will say the job is not done," Sciuto said of integrating the marketer's data with Salesforce's Marketing Cloud. "We didn't think about why our data was dispersed with our creative agency, with our media agency and our social listening agency."
Although he declined to disclose more specific numbers, Sciuto said digital sales had increased 50% since Nestlé Waters began sending employees to the lab at Salesforce last July. It has been using Salesforce's Marketing Cloud since 2012.
In his case, Sciuto credits good technology, not consultancies, with the results he's seen so far. "The strength of good consultancies comes from deeper understanding of the business," he said. "In today's digital reality, the interdependencies between business opportunity and technology is so strong that it has become more difficult for consultants to add value."
VML, for its part, is busily making tech its friend. The agency uses Salesforce for its email marketing and is trying to give the company's Sales Cloud a more central role in managing new business and overall client engagement. It also provides its own level of consulting to CMOs. "We've taken the view this trend presents an opportunity to better serve our clients and the payoff is a better platform for us to engage with their customers," said Coady, the martech executive at VML.
"At a minimum, agencies need to either understand how to leverage this data to inform their consumer strategy and creative approaches or find a partner that fills that gap for them," he added.