Chief Marketing Technologist by Scott Brinker

Marketing in the cloud

Marketers should have their heads in the cloud.

If you haven't read The Big Switch by Nicholas Carr yet, you need to add it to your list. Cloud computing — that is, computing infrastructure that is based somewhere out on the Internet, rather than installed on hardware locked in your company's IT center — is becoming real. Fast.

Combined with the maturity of web-based software-as-a-service offerings, the strong gravitational pull of social media sites where marketers now work beyond the borders of their company's sandbox, and the widespread proliferation of web services and mash-up APIs, the cloud has become marketing's new IT platform.

For marketers, this is a terrific opportunity (a) to re-calibrate the relationship between marketing and technology and (b) to expand your capabilities in the "new marketing" environment, where the pace of innovation in online marketing channels and methods continues to accelerate.

I think of "computing in the cloud" for marketing in fairly broad terms — more broadly than the technical definition of cloud computing — and divide it into four buckets:

1. Web sites where you are a participant or sponsor, particularly social media communities. These are sites such as Facebook, Twitter, LinkedIn, Xing, MySpace, Yahoo! Groups, Digg, del.icio.us, Twine, etc. This isn't what most tech people think of when they talk about cloud computing, but from a marketer's perspective, these are important services out on the Internet that you must plug into to do your job. Your audience is in the cloud, and you have to go in there after them. The IT aspects, however, reside outside of your control.

2. Software-as-a-Service (SaaS) applications. These are applications that you access through your web browser, are hosted on a server farm by a third-party, for which you have zero operational involvement. Some are free, such as Google Analytics, but many are provided on a subscription basis, such as Salesforce.com. Pay only for as much as you need for as long as you need. There are a plethora of SaaS applications for marketers available today, with more coming online every month — if you have a favorite that I've missed in my "for instance" below, please add it in the comments:

• customer relationship management (ex: Salesforce.com);
• landing page management (ex: LiveBall — disclaimer, my firm);
• surveys and questionnaires (ex: SurveyMonkey);
• email marketing management (ex: ExactTarget);
• web site analytics (ex: Google Analytics);
• marketing resource management (ex: MarketingCentral);
• blogging platforms (ex: Typepad);
• lead nurturing (ex: Marketo);
• digital asset management (ex: Celum Imagine);
• search marketing management (ex: SearchIgnite);
• project management (ex: AtTask);
• web conferencing and webinars (ex: WebEx);

3. Web services and on-demand IT infrastructure. If there are specialized applications that you still want or need to build yourself — including online applications that are built into the ecosystem of your product offerings — you can take advantage of components, services, and infrastructure layers out in the cloud. Your programmers will develop your app, which will nominally live inside your IT environment, but certain components or layers of it will be dynamically accessed in the cloud. These include:

• data storage services (ex: Amazon S3);
• semantic processing (ex: Reuters Calais);
• mapping and geotargeting (ex: Google Maps);
• APIs for Twitter, Facebook;
• payment processing services;
• feed aggregators (ex: Yahoo! Pipes);

4. Platform-as-a-Service (PaaS). The furthest down the continuum, platform-as-a-service means that you develop your own custom applications, but they live entirely in the cloud. Salesforce.com was one of the pioneers of this idea, by opening up their platform — force.com — to let any developer create application on their infrastructure. Google recently announced their Google App Engine with a similar vision.

The value proposition for developing on a cloud-based platform is that you get all the scalability, reliability, and high-speed performance of these environments without having to build up all that infrastructure yourself. Put in terms that marketing can appreciate: you can create a custom app on the web without necessarily having to engage the overhead or ongoing involvement of your IT department or corporate data center.

Advantages of cloud computing and SaaS/PaaS in general:

• you can try a new idea with less up-front investment, which facilitates and encourages a more experimental culture — this is a great way to quickly engage the leading edge of new marketing channels and methods;
• if you end up with an overnight sensation, you have "instant elasticity" for matching capacity as demand requires it;
• economies of scale, since cloud providers are aggregating infrastructure for a certain type of service across hundreds or thousands of firms;
• time from concept-to-launch of a new application is shortened, since you're not reinventing the wheel or waiting on physical installations;
• more direct relationship between expense and benefit, as cloud computing is usually a variable cost;
• direct IT maintenance overhead is almost completely eliminated;
• for SaaS applications, new features come online automatically without having to engage in the delay, cost, or frustration of "upgrades";

There are, however, objections, caveats, and trade-offs as well:

• you end up with dependencies on third parties for these applications, rather than having the safety (or the illusion of safety) of being self-reliant for uptime, availability, continuity, etc.;
• your data can become fractured in many different silos by working with many different providers in the cloud;
• security and privacy risks: what happens if someone breaks into your account or hacks the provider's database?
• business continuation risk: what happens if the provider in the cloud goes out of business?
• terms of service risk: what if the rules of how you can use the service change unexpectedly?
• price change risk: what happens if usage costs rise unexpectedly?

While these are legitimate concerns that should be weighed when adopting any cloud application, the reality is that many of these risks already exist with your internal IT operations. Uptime, security, privacy, sustainability, data integrity, etc., are all issues that plague IT departments.

This is the "fear of flying" phenomenon. The odds of a fatal car accident far exceed the odds of dying in a plane crash. However, many people who are afraid of flying aren't afraid of driving because in a car their hands are on the wheel. This is a false sense of security. (Sorry, hope I didn't spoil your commute.)

Failures of major cloud computing applications and platforms get a lot of attention, but the number of internal IT "crashes" are actually much higher, the far majority of which receive little or no publicity outside a company's four walls. (And sometimes not even that.) Because cloud computing providers are under such intense scrutiny for their performance — their reputation, and hence their business, is on the line — they often take far more precautions and invest in heavier and more redundant infrastructure than IT departments hosting the same application for their own firm.

The other concerns can be mitigated by taking a few proactive steps and common sense precautions:

• have a technical gatekeeper in marketing who vets cloud applications (e.g., a chief marketing technologist or some such role);
• define and defend "core data" structures, while being open and flexible with more ancillary data feeds;
• understand the service level agreements (SLA) and track record of the provider;
• read the fine print of the agreement for terms of service;
• how much control do you have to customize via configuration and/or APIs?
• determine how easy is it to get your data out;
• think through "switching costs": if your concept works, but this provider doesn't, how easy is will it be to migrate to a different solution?
• follow security best practices with your cloud applications: good passwords, changed frequently, not distributed across multiple users, always used over secure connections, etc.;
• keep tabs on your provider, an ear to the ground on their business, more closely than you would a software vendor whose product you've installed internally;

Overall, working in the cloud enables marketing departments to react much faster to new ideas and new opportunities, without necessarily having to drag along IT. But, as has been said, "with great power comes great responsibility".

As marketing becomes more in control of its technological destiny, it must absorb technical leadership into its management and ranks. The future of the chief marketing technologist awaits in the cloud above.

A new S curve for search engine ads?

Are we on the verge of a new S curve for search engine advertising?

S curves are a phenomenon of technology adoption. They begin where a particular technology — in this case, ads on search engine results pages (SERPs) — arrive on the scene with chaotic, slow growth while early adopters figure it out. Then a dominant model emerges — e.g., Google AdWords text ads — where the winning approach and the benefits to the market become obvious, powering mainstream adoption at an exponential rate. But eventually growth levels off, adoption saturates, and incremental improvements and benefits plateau.

At this point, new technologies, approaches, and business models vie in the same space to be the "the next new thing" — to trigger a new S curve that will overtake the old one.

The beginning of this new S curve is again chaotic and slow: lots of ideas, many of which will fail, many of which are initially not as effective as the dominant winner in the old S curve. There's usually resistance from people on the old S curve, who have mastered that game and are reluctant to have the rules change. When you're used to something, especially something on which your livelihood is based, it can be hard to imagine something different.

But the forces of entrepreneurial ferment and early adopter incentives conspire to push past that skepticism and uncover the winners of the new S curve. Once they crystallize, and the new value proposition comes into focus for everyone else, people jump from the old curve to the new curve, and the new dominant model takes off at exponential speed.

And the cycle of disruptive innovation continues.

Recent events make me wonder if a new S curve is soon to emerge for search engine ads:

1. Growth in US online ad spending is slowing. A recent eMarketer article reported that, in particular, "comScore data shows a second straight month of slower growth in paid clicks for Google's main ad-serving business." Now growth is still growth, and given the talk of recession, a slowing of search ad budgets may be a temporary blip. But it's also consistent with the hypothesis that search engine ads are nearing the top of their S curve. Since "paid click measurement is critical for Google" financially, they have strong motivation to find the next catalyst of growth.

2. The Google Operating System and Digital Inspiration blogs recently captured screen shots of tests Google is running to include video ads alongside select search results. The interface is cautious about maintaining Google's minimalist design standards: ads with accompanying videos have a small button with a plus sign that can be expanded to watch a commercial or testimonial.

Although this isn't a huge surprise — Google had previously announced its intention to try this, with commentary from Danny Sullivan's SearchEngineLand and the Mashable blog back in February — it sets the stage for a major shift in the concept of search engine marketing. There's a big difference between 130 characters of stand-alone plain text and 130 characters of plain text as an introduction to a 30-second video spot.

Whether this particular ad format takes hold or not, it signals Google's intention to experiment with new advertising ideas in their previously sacrosanct SERP interface. Marissa Mayer of Google told the New York Times that the company would explore adding small thumbnail photos to the video ads as well as considering other formats that may include ads with images. That's a momentous shift.

3. Yahoo's plan to render structured semantic web information in its organic search results. This will no doubt have a major impact on search engine optimization (SEO) practices, a movement I describe as SEO + Semantic Web = SEO++. However, once you set the example for how organic search results with a structured interface are more attractive and useful than plain old text summary results, it's not too much of a stretch to visualize the same for paid search ads.

4. Google's completed acquisition of DoubleClick. As a story on BetaNews pointed out, up until now, Yahoo! and Microsoft have left Google in the dust with regard to display advertising. Now, with DoubleClick officially in the fold, analysts expect Google's display ad sales to be going up exponentially. That's going to put pressure on them to grow display ad opportunities — as well as to find synergies between their businesses that extend beyond being complementors in independent areas.

5. At last month's SES NY show — a gathering of professional search engine marketers — I was struck by how much mileage search marketers have squeezed out of a 25 character headline, two 35 character lines of text, and one 35 character display URL. People are running whole careers based around a canvas of 130 characters of plain text. Yet while I was impressed by how much nuance they've extracted from so little, it also seemed that the curve of innovation with text ads is nearing its upper bound. After listening to a panel of senior executives debate the use of the word "free" versus "complimentary" for 20 minutes, it's hard not to conclude that the bottom of the barrel is near.

6. Recognition of the value of brand marketing — including exposing an audience to your brand before they're ready for a direct interaction — is on the rise (again). Although search marketers and brand advertisers have come up with novel ways to engage brand development in search engine text ads, it's like trying to cut a steak with a spoon. Brand marketing may still represent a huge market of "non-consumption" for search engine advertising as it exists today. Incorporating images and video in search ads could be the catalyst for a flood of brand spending in this channel.

7. Entrepreneurial creativity continues to push the boundaries of alternate search engines. Under the shadow of the Google, Yahoo!, and Microsoft search mountains, a plethora of new search sites continue to blossom. Take a look at Alt Search Engines and their Top 100 list. Vertical specialization, social search, and new visual interfaces distinguish these upstarts. But innovation in the search experience also opens the door for innovation in search advertising. This is a Petri dish from which new search ad formats may likely evolve — and eventually be adopted by the giants.

Add these pieces together:

• the search engine text ad S curve starting to level off;
• strong financial incentives for unleashing the next S curve;
• a cauldron of new search ad formats beginning to bubble;

...and it sure seems that conditions are right for a new S curve.

The implication for marketers — and marketing technologists in particular &mdash is to be ready, alert, and open-minded. When a new S curve surfaces in an industry, reaction speed and flexibility are competitive advantages. As the environment changes, it can be a valuable edge to experiment, learn, and adapt before your competitors do. This is what it means to view marketing as a science.

If image-based ads and/or video are predictably an integral part of this next wave, you can take a few steps to prepare that are either low-cost or valuable in their own right:

• put your digital asset management house in order;
• shore up your internal or external design resources;
• start to talk with new vendors in the micro-video space;
• don't let your search marketing processes get too rigid;
• if purchasing or building search management software, make sure that you have contingency options in case significant changes are required quickly — or if even an alternate solution may need to be substituted over the next 12-24 months.

This will certainly offer a new round of upheaval for software vendors and agencies in the search marketing space. New entrepreneurs: take heed. And to the degree that this next S curve has more visual canvas than plain text ads, it may offer one more chance for traditional (or "tradigital") advertising agencies to play a leading role in the search marketing space.

S curves do look a little like roller coasters, don't they? Should be fun.