The Blog

Marketing’s Renaissance

At the recent Microsoft Convergence 2013 held in New Orleans in March, the company put a lot of emphasis on marketing.  Microsoft presented sessions on Marketing Pilot, a recently acquired and renovated marketing campaign company, and at the show announced its acquisition of Netbreeze a marketing analytics company.

Also, at the end of last year Oracle bought Eloqua and Salesforce has introduced its third cloud dedicated to, what else? Marketing.  There are other examples too of free standing marketing companies like HubSpot and Marketo or companies like InsideView, a marketing intelligence company, growing like weeds.  So what’s going on?

It would be a natural conclusion to say that marketing had been the final CRM frontier and that companies had reached stable points in their sales and service solution rollouts so they simply embarked on marketing.  But that’s rather simplistic and it violates a cardinal rule of business — spend money to make money or to save it, but don’t spend just to spend.

To appreciate what’s going on you have to step back and take a more nuanced view of the market place and the economy at large.  When the economy tanked nearly five years ago it took with it a lot of jobs and capital, which resulted in slackening demand and that slack is still with us.  Advances in technology are eating up even white collar jobs today and all of this has a depressing effect on demand.

Also, interest rates continue to test the zero lower bound as Paul Krugman might say, in part because corporations are flush with cash and because consumer borrowing is still lackluster.  There isn’t enough demand for capital so rates luff like a sail in a headwind.  Not enough people have jobs and banks, especially today, won’t lend to people who don’t have the means to repay the way they did in, say, 2005.

So, this is a long-winded way of saying that demand is slack, that customers are the rate limiting reactant in the economic formula.  When demand is slack, companies without a clue hire more sales people, savvy companies step up their marketing games to help identify likely customers without spending the expensive resources involved in putting a sales person on the road.  And all of that is a long-winded way of saying that marketing is hitting its stride because demand is slack.

You could argue that in other times and circumstances, for instance when there is no demand such as at the beginning of a new market, a niche or a category, it makes sense to do missionary selling and marketing is a bare bones affair dedicated to generating PR and brochures.  But this is not then.

Today, most markets are not new.  Customers have already bought version one or two and are smart about what the next edition ought to deliver.  They’re also happy to not spend their money if they can’t get the deal they want.  Oh, and by the way, there’s a lot of competition today so forget about those 65% gross margins that version one delivered, that’s not on the table.  Smaller margins have little room for expensive and risky approaches to the market.

For all these reasons, and some others, marketing has become the hottest ticket in town and most of the CRM vendors have demonstrated an understanding of this reality and they are acting accordingly.  Consequently, marketing vendors are having a field day.

This won’t last forever, nothing does, at some point the wheel will turn and there will be whole new fields to conquer with some new idea and the need for the elaborate, scientific and statistically based marketing that we are now constructing, will fade away.  We’ll probably hear some company talk about expensive and over engineered marketing approaches in favor of sleek new ideas about the relative importance of sales over marketing, like they just invented the wheel.

But for now, demand is down, margins are under pressure and competition is tough, tough, tough.  And marketers are getting their day in the sun.