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Sustaining Value When the Tide Goes Out

by: Ted Flanagan
Blog Sustaining Value When Tide Goes Out

This is a post about value, so I’m going to kick it off with a quote from the legendary value investor, Warren Buffett:

That aphorism is just as true in the world of technology as it is in finance. And, when it comes to digital marketing and advertising technologies, in particular, the tide has been on its way out for some time now.

Regulatory and technology changes were already leaving more than a few swimmers exposed, and then the economic disruption triggered by COVID-19 became the full moon, king tide, and storm surge that is going to wash away everything that doesn’t have a rock solid foundation of value.

How to evaluate SaaS marketing technologies: An equation

For the last few years, I’ve been responsible for the renewal of SaaS marketing technologies, and it almost always comes down to this simple equation:

What is the value that the technology is creating for a customer relative to the investment that they are making, both in terms of the cost of the license and the time and personnel to operate the tech?

In the current climate, technology needs to map to clear sources of business value, or it will be deservedly swept aside. But, that analysis is more nuanced that it sounds, and it needs to be considered along three dimensions:

Analytics technology: Three dimensions to consider

1. Value proposition

Foundational technologies should map to multiple sources of value, while a point-solution might only have one. In either case, the question is what is the unique value-add that this piece of technology brings to a brand’s marketing activity. Unique is the operative, but often overlooked, word here.

Facebook and Google are eating the internet for a reason … their capabilities are robust, and largely free to advertisers. Any independent piece of technology must clearly articulate what exactly it delivers that is incremental to the toolkits offered by the walled gardens.

2. Value realization

When there is a compelling value proposition that fails to materialize, it is often due to an issue on the People or the Process side. When technologies require people or processes to change in order to realize value, usually it’s the technology that loses.

Technologies that successfully deliver on their value proposition are designed around the core skill sets of their end customers -- no advanced degrees required -- and integrate seamlessly into existing marketing processes.

Now, true innovation is not possible without learning new skills or testing out new ways of working, but the approach must be measured, and the payoff needs to be in line with the investment.

3. Value sustainability

If markets were static and technologies never changed, then a source of value, once realized, would be like an annuity: it would deliver a perpetual rate of return to the business. But, strategies change, markets shift, consumers alter their habits, and technologies evolve.

It’s critical to constantly reassess the value proposition of technology as the sands shift, and project whether the value is stable, declining, or (hooray) increasing.

Tactics that once drove significant value, like retargeting or multi-touch attribution, are trending steeply down today and, like sports GM’s in the salary cap era, brands can’t be caught paying for past performance.

Does the new data technology bring you value?

So, how can brands ride the wave instead of finding themselves stranded on the beach with no trunks?

  • Start by defining the sources of value that underpin each of your marketing technology investments.
  • Then, apply that additional qualification by asking: what is truly unique and differentiated about the contribution of this particular piece of technology?
  • If the value prop is there, crunch the numbers with your operators and practitioners to make sure that it is actually being realized. If not, ask yourself if the value justifies making changes on the people or process front, or if it’s the tech that needs to change instead.
  • Finally, find time to step out of the day-to-day to evaluate mid-to-long term trends that impact your business, your consumers, and the respective market and technology landscapes.

    Is your value proposition sustainable in the face of those trends? If not, the next question is whether there are changes that can make it so, or whether you must discover new and alternative ways to replace the value that’s being lost. In fast moving markets, your innovation budget is actually your insurance.

As we build out new solutions here at Habu, these are the questions that we are constantly asking ourselves:

  • Are we delivering a unique and compelling value proposition?
  • Are we making it easy for brands to capture that value, from a people and process standpoint?
  • Finally, are we looking out to the horizon, past the crest of the next wave, so that every design decision anticipates future conditions and creates sustainable sources of value for our customers?

And we've constantly worked to validate the technology with our early customers, pathing the way for value for more businesses ahead.