The Future of Marketing and How Brands Must Adapt to Deal With It

At the end of September we held Percolate’s annual Transition Conference in New York City. The theme was digital transformation and I opened the day talking about the future of marketing. As I joked at the beginning, I didn’t assign myself that title and I always get a little squeamish when asked to play soothsayer. But I also didn’t want to back down from the challenge, as I think we have a pretty unique point of view on the future of the marketing industry and how brands must adapt to best take advantage of our digital present and future.

Rather than rattle off a list of things I think might happen, I offered up a framework for thinking about the future. It broke down something like this:

1. The Drivers of Change in Marketing
2. A Framework for Understanding the Future of Technology
3. How Technology Drives Cultural Change
4. Implications for the Marketing Industry

The Drivers of Change in Marketing

If you’re trying to answer the question “what does the future of marketing look like?” you can’t really start with marketing. Marketing, after all, is a discipline entirely dependent on the world around it. The future of marketing is ultimately controlled by the changes that happen in technology and culture. In fact, I’d say that marketing exists at the end of a chain of change that looks something like this: Technology > Culture > Consumer Behavior > Marketing. The question, then, is what will the future of technology, culture, and consumer behavior look like, and how will that affect the marketing industry and organizations.

A Framework for Understanding the Future of Technology

If you buy that four step model, than the obvious question is can we accurately predict the changes in technology (and, in turn, culture) which drive the changes in consumer behavior to which marketing organizations are constantly responding? The short answer is “yes,” to some degree, we can.

Technology tends to be the initial driver of change in society. Steam engines kicked off the age of steam and railways, steel plants kicked off the age of steel, electricity, and heavy engineering, Henry Ford’s Model T kicked off the age of the automobile and mass production, and, of course, the microchip kicked off our modern age of computing. In each of these moments a technology (or set of technologies) start this cascade of change that ends up reshaping the economy and the world.

In thinking about technology and how it will evolve in the future, I think it’s helpful to start with two big buckets: Macro and micro. The macro represents the long term cycles that technology goes through and the micro represents how individual pieces of technology will evolve in the future.

Let’s start with the macro.

I think the best framework for thinking about technological waves comes from Venezuelan economist Carlota Perez (we’ve talked about her at Transition before).

Her great surge theory postulates that technology moves in ~70 year surges that are kicked off by a new technology (or set of new technologies). Each wave starts with an “installation” phase, where the technology is refined and distributed, is followed by a large crash where the market expectations outpace the ability of the new technology, and ends with a “deployment” phase where the investment made during the installation phase is reaped as the new technology’s promise is distributed and realized.

According to Perez we’re in the deployment phase of the fifth great surge, which started around 1970 with the introduction of the microchip.

In thinking about macro changes in technology there are two main questions to answer:

1. What fundamentally new technology will kick off the next great wave?
2. During a deployment phase, such as the one we’re in now, what technologies will be further distributed?

While it’s appealing to focus on the first question, and there are lots of candidates for the answer (AI and nanotech probably representing two current favorites), it’s the second that will have a much bigger impact on your business over the next five, ten, fifteen years. As computing technology and internet connectivity continue to spread out to the rest of the planet how will the world change? (More on that in a bit.)

Now to the micro side.

There’s lots of technology out there, how will any individual piece of technology evolve? Here my favorite model comes from a “complexity economist” named W Brian Arthur.

Arthur who wrote a book on exactly this subject called The Nature of Technology. In it he outlines a six-step non-Darwinian evolutionary process for technology.

Read the book if you want all the gory detail, but the gist is something like this: New technology gets invented, sometimes it replaces old technology, then we figure out new things to do with the new technology, then it gets smaller (and cheaper) and can become a component in other technologies.

This, then, raises two micro questions for us to ask ourselves as we think about the future of technology:

1. What uncommercialized (partly or fully) inventions will be commercialized over the coming years?
2. What will happen as our current technology shrinks, cheapens, and becomes components of other technology?

Again, the first one here is a bit of a red herring. While those untapped technologies are obviously a source of great possibility, it probably will not have a short term effect.

Question two, on the other hand, is much more interesting for thinking about our immediate future. Take a recent example: The iPhone X. You know that notch on the top? You know what’s in there? A Kinect. In 2009 Microsoft introduced the Kinect as a way to play the Xbox with your body. While it’s widely regarded as a flop for gaming, it still became the fastest selling consumer electronics device of all time because it made motion tracking technology widely available and cheap at $149. Eight years later Apple has taken all that tech and effectively bundled it into a 2 inch by .5 inch tab on the front of the phone. At our Transition conference we heard from both GE and Johnson Controls, industrial companies whose business is fundamentally changing because of the rapid decrease in cost of sensors and internet connectivity.

To summarize, the two important questions to consider when thinking about the future of technology:

1. During a deployment phase, such as the one we’re in now, what technologies will be further distributed?
2. What will happen as our current technology shrinks, cheapens, and becomes components of other technology?

How Technology Change Drives Cultural Change

As media theorist John M. Culkin famously wrote, “We shape our tools and thereafter our tools shape us.”

The question is “how”?

Here I turn to my favorite thinker on the effects of media and technology on society, Marshall McLuhan.

In his book Understanding Media, McLuhan lays out a simple framework for thinking about how technology changes culture: “The ‘message’ of any medium or technology is the change of scale or pace or pattern that it introduces into human affairs.”

He goes on to illustrate:

“The railway did not introduce movement or transportation or wheel or road into human society, but it accelerated and enlarged the scale of previous human functions, creating totally new kinds of cities and new kinds of work and leisure. This happened whether the railway functioned in a tropical or a northern environment, and is quite independent of the freight or content of the railway medium.”

All this new technology can be measured in its effects on the scale (size and shape), pace (speed and rate), and pattern (ways of interacting) of culture. From there culture’s direct impact on consumer behavior is pretty easy to plot.

Let’s put it all together then: Technology evolves (in both macro and micro ways) — which creates changes in the scale, pace, and pattern of culture — which in turn affects consumer behavior (the way people chose to interact with the brands, products, and companies around them) — which marketing organizations must adapt to or risk being outflanked by those who do.

The reason digital transformation is at the top of everyone’s agenda can be plotted along exactly this change continuum: Digital technology is introduced and becomes widespread, which in turn makes the world smaller/more connected (scale), much faster as we move from the physical world of atoms to the digital world of bits (pace), and fundamentally alters the ways we interact and communicate (pattern).

Implications for the Marketing Industry

As a result of these cultural changes, consumer behavior evolves in some predictable and not-so-predictable ways. There are endless lists and conversations about the changes and risks the marketing industry faces, so I chose one that seemed no better or worse than any other: The ANA (Association of National Advertisers) list of major threats to marketing:

1. Advertising’s diminishing role in the marketing process
2. The need for accountability in advertising
3. The relative indifference to advertising and advertising claims
4. The growing loss of brand loyalty
5. The implications of private label marketing

Does this resonate with you? It does for me.

You know when they wrote that list? 1965. They’re still probably near the top five threats facing marketing today (although obviously we would reshape them slightly — instead of supermarkets you have Amazon private label, for instance).

Why does it matter so much that the challenges of today are the same as the challenges of fifty years ago? Because it helps illustrate McLuhan’s point. While the technology comes and goes, the ways it affects culture and consumer behavior are fairly reliable. The only thing that’s changed about these challenges is that they have a whole different scale, pace, and pattern.

Asking ourselves what the future of marketing looks like probably should be less of a priority than building an organization that can deal with whatever future ends up arriving. To do that means modeling our organizational objectives on the ways that culture and consumer behavior will most likely adapt. In other words, how do we combat the changes in scale, pace, and pattern that the future holds?

At Percolate we spend a lot of time asking ourselves these questions because we’re hard at work building systems to help organizations deal with the new world they find themselves in today and one they’re sure to face tomorrow.

We believe the scale of the world will at once become both larger and smaller, as brands become larger and more global and the set of channels available to communicate through continues to grow at a breakneck pace.

To deal with this challenge marketing organizations must find ways to become more connected: The more everyone is plugged into the same information, the faster everyone can move and make good decisions.

We believe the pace of the world will continue to grow faster as shifts in technology continue to train people to expect the instantaneous.

To deal with this challenge marketing organizations must find ways to become more agile: The days of six-month planning cycles are obviously behind us. Organizations must be able to shift, adapt, and deliver with ever-increasing speed.

Finally, we believe the pattern of the world will continue to evolve as we invent, discover, and codify new ways to interact with both one another and the brands we buy.

To deal with this challenge marketing organizations must find ways to become more intelligent: For forty years the industry was reliant on a single channel and all of a sudden new vehicles for communications were being invented daily. Intelligence is the other side of agility, we can only move fast if we can also learn fast. Our goal as organizations is to find ways to constantly shrink the size of this loop of learning so that we can react even faster to changing market dynamics.

Each of these challenges has real implications for how we’re thinking about our product roadmap at Percolate. Delivering on connectedness, agility, and intelligence is critical to building a marketing organization that can survive the shakes and shocks of the future.

Originally published at blog.percolate.com.