Welcome to the Jungle

The evolution of the digital marketing channel.
October 17, 2022
min read
In this article, you'll find: 

Personal data, its value and its uses, has become one of the great cultural tensions of our time.

Nick Clegg has argued that the ‘open internet is a guarantee of prosperity and freedom of thought’ – and that data- driven businesses (like his employer Meta) are central to this.

For others, we are in a data crisis. Shoshana Zuboff’s The Age of Surveillance Capitalism is a rallying cry for autonomy in the face of tech giants with one core purpose: to commoditise and monetise personal data.

This is a view in which Sheryl Sandberg is not the inspiring female leader of Lean In, but the ‘Typhoid Mary’ who brought surveillance capitalism from Google to Facebook.

Companies create surveillance-friendly default settings, using choice architecture to take advantage of a user’s lack of time and attention. The website Deceptive Designs is a rogue’s gallery of tech- enabled behavioural science tricks. The most complained about companies? Google, Facebook, Amazon and LinkedIn.

Google and Facebook have a common business model. Both are fantastic free- to-consumer technology services, paid for by the retail sector. They account for around a quarter of global digital ad spend each.

The reason for that is a combination of scale, and precision – they dominate the global market because they’re very good at what they do.

It’s their remit to create profiles using different data sources.

But we’ve ended up in a world of opacity, mission creep, and alleged abuses.

Many people don't particularly like the idea of being tracked all over the internet, but continue to use Google and Facebook.

The legislative and technical environment is a battleground.

Regulators are more involved (GDPR phasing out cookies), Apple and Android are pushing on user privacy, and there is a growing backlash against centralised corporate power (eg DeFi, and Tim Berners-Lee’s SOLID).

Guerrilla plug-ins like gener8 explicitly flag up the value of our online behavioural data to us, and let people choose either to earn from it, or conceal it from advertisers.

The biggest news in digital marketing is that third party cookies, which track users’ activity as they browse the internet, are being phased out by 2023.

By then they will be blocked by all major browsers.

The ‘programmatic pipes’, the global infrastructure where digital ad slots are instantaneously bought and sold, remain - in the words of Donald McKenzie -‘economically opaque’.

PwC, working with 15 UK businesses with a total annual UK digital ad spend in excess of £100m, found that 49% of this money went to intermediaries, and one third of that 49% (or £15m) was completely untraceable.

A further complication is blocklists: keywords associated with content alongside which ads must not appear.

Bad news (like pandemics and wars) or politically contentious topics aren’t good ‘context’ for consumer marketing.

According to McKenzie, Vice reported their advertising revenues for coverage of the Black Lives Matter protests as less than half the expected amount.

Where does all this leave the beleaguered CMO?

In hock to the tech behemoths, wondering how much of their digital spend is being skimmed on the way to the publisher, and about to lose the ability to get an aggregated picture of the customer’s behaviour online.

How do you negotiate all that and still manage to attract, engage, and retain customers?

According to the 28th edition of The CMO Survey based on 320 US-based senior marketing execs, marketing spend grew by 10.3% over the 12 months to February 2022.

That’s the fastest increase in a decade, returning marketing spend to pre- pandemic level of 11.8% of company budgets.

The challenge is how to spend it.

More than two-thirds of those surveyed say they continually test and iterate digital marketing, and a similar number expect to increase the use of first-party data over the next two years.

58.3% say their companies are taking steps to create stronger privacy strategies, and only 30.5% expect to increase their use of third-party data.

Yet fewer than 40% of marketers believe they have the systems in place to track integrated customer data.

One recent trend has been an explosion of single-retailer loyalty schemes.

Most people are much more comfortable sharing personal data with retailers directly in exchange for rewards, and Tesco Club Card leads the way here (you have to be in the Club to get the discounts).

However, this creates a proliferation of key personal information - from contact details to payment cards - across databases at multiple retailers, all of whom are being trusted not to lose or abuse it.

Customers experience the ‘digital fatigue’ of multiple retailer loyalty apps each with their own log-in. It’s not a great model either, though it attracts far less scrutiny than so-called surveillance capitalism.

There is space for a hub model – similar to that adopted by PayPal in the online payments space.

One which reduces the consumer’s digital footprint, mutualises the costs of storing and protecting data and facilitates a positive value exchange between marketers and consumers.

Several different players are already trying to do this.

In an ideal world, what would a hub model offer?

  • Actively give control over data to consumers – consumers should decide how to receive messages and offers from specific retailers;
  • Be transparent about what it is doing – it shouldn’t follow consumers around the web (they don’t like it) and it shouldn’t use third party data to try to figure out who they are (also a bit creepy)
  • Be contextually relevant – consumers are more receptive to marketing messages when they are thinking about shopping; less so when they are working on something else;
  • Be friction-free, convenient and easy to redeem rewards – mental and physical availability works better for both parties;
  • Offer marketers the ability to target their messages, receive clean metrics and see the full attribution of outcomes – without compromising consumer preferences and control;
  • Complement a retailer's own first party data - again, without compromising consumer preferences and control;
  • Be a trusted intermediary that brings together consumers and retailers as part of a very large network. After all, consumers like choice and marketers like big audiences.

All these ideas informed how we developed HyperJar.

We have developed a fantastic, free-to-consumer product – an award-winning combination of digital wallet, smart card and household budgeting app.

It is also what we hope is a modern evolution of the digital marketing channel.

Our revenue comes from selling marketing and customer engagement services to our merchant partners, who can offer discounts, gift cards and vouchers, and other incentives, such as time-linked growth on committed funds.

Cardholders don’t need to fumble in their wallet to redeem rewards: they simply use our card to pay and any rewards are processed automatically.

A merchant partner can, at the most basic, use HyperJar as a high-touch channel to push out promotional offers it is surfacing elsewhere.

However, they can also use our rewards engine to tailor offers to different audiences, and structure incentives for different commercial objectives. Like acquisition, share of wallet, or loyalty.

We also have unique intent data. Cash- collateralised insight into future behaviour based on cardholder balances, budgeting for a given category (e.g. 'Groceries') or merchant (e.g. 'TUI'). 

Because we are a payments channel, we tie each campaign directly to key outcomes.

That might be new customers, incremental sales or basket size.

Clean, hard metrics.

Everything works across both online and bricks-and-mortar transactions...because we’re a payments channel.

All of the insight we share with our merchant partners is based on aggregated data.

We hold ourselves to the same standards of data security as the financial services industry, with bank-grade access management and encryption.

These are our operating principles: transparency; contextual relevance; clean metrics; shared value; new forms of data based on openly declared intent.

A hub model based on mutualising merchant costs and consumer time.

We believe the vast, sprawling digital marketing landscape will increasingly find definition and structure along these lines.

Get in touch: partnerships@hyperjar.com


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