The War of Algorithms – A Race to Arms
Chris Pitt — March 7, 2017 Follow @Pitty_C— March 7, 2017
During the next few years, marketing is going to experience severe disruption that will result in greater market share for larger companies, leaving SMBs to fight for a decreasing share of highly niche verticals.
This disruption will force all businesses to drastically rethink how they approach marketing, but the effect won’t be limited to in-house teams. Marketing agencies will be forced to adapt too, or risk closure, unable to provide their clients the kind of service necessary to succeed in the changed environment. And the disruptor? Algorithms.
The robots are coming are getting smarter
It has been hard to miss the recent volume of reports about the imminent arrival of robots. Seemingly started by Erik Brynjolfsson and Andrew McAfee’s book The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies; media outlets have reported that the robot arrival is imminent and that society faces mass unemployment.
There is a delicious kind of irony in reading these reports. No doubt written on a computer, disseminated across the internet, read on phones or tablets and shared on social media, all of which are forms of robots; these reports fail to recognise that the robots arrived a long time ago, they just weren’t that smart. But they are now.
Let’s be clear. When we talk about robots, we’re really talking about algorithms. Chains of events that when triggered produce an outcome. If A=B then C. The concept of a robot is a package of hundreds, thousands, even millions of algorithms firing at the same time to produce an outcome. It is the same process by which our brain controls our body. And when we talk about robots getting smarter, we really mean that the algorithms have moved on from being unintelligent reactions to being proactive, intelligent machines. No longer simply ‘If A=B then C’, algorithms can learn , producing complex outcomes based on previous outcomes. The perceived threat comes from how fast they are able to do this – faster than people.
Algorithm creep
In the book ‘Automate this’, written by Christopher Steiner, there is a story about Thomas Petterfy, a little-known multi-billionaire stock trader who disrupted Wall Street and stock trading on a global scale. He did this by using algorithms to buy and sell stocks faster and more efficiently than human traders. Wall Street trading companies initially fought Petterfy and tried to squeeze him out, but he persisted and became a dominating force. Petterfy’s competitors were faced with either embracing change or losing any chance of success.
Examples of this kind of technological disruption can be seen across every industry in the world. Wearable technology that monitors our heartbeat and records medical information. Online retailers that analyse our buying behaviour and suggest our next purchase. Cloud computing infrastructures that manage and run whole businesses, yet have no real tangible existence outside of being a box containing ‘ones’ and ‘zeros’. In every case, the introduction of algorithms has forced the industry to change and adapt.
And we have been quite happy to accept these algorithms creeping in. They enhance our lives, performing mundane, labour-intensive tasks that we previously had to do, freeing us up to do more of the things we want to do.
Marketing by numbers
If ever there was an industry that has embraced innovation through the years, it is marketing. The advertising industry’s attention-grabbing straplines, viral stunts such as Branson’s round the world air balloon trips, and present day technical innovations like search and digital, are all examples of the marketing industry utilising the diffusion of innovation and technology in order to get in front as many of the right people as fast as possible.
In most recent years, marketing automation has been central to any good marketing strategy. Involving algorithmic triggers, automation responds to individual behaviour – if John clicks this, send him that. It is a fantastic way of providing people with a unique experience that will encourage them to become a customer. But even this kind of marketing is old news. What marketers need to understand is that algorithms have gone past the point of being only a reactive technology. Algorithms can now be the insightful partner that enables us to be better at marketing. Take search optimisation, for example.
Of all the marketing tactics, search optimisation is probably the most labour intensive. With little to no clues revealed as to what makes a site perform well in search; and with much of the immediately useful information now hidden from search marketers, succeeding in search requires colossal amounts of analysis. Data from multiple sources needs to be analysed, collated and correlated before any action is taken. The success of that action depends on two fallible human factors:
- Did the person have the stamina to perform the analysis thoroughly enough?
- Did the person draw unbiased insights from that analysis?
And the nature of search optimisation is that at any one time, there are multiple actions required to achieve success. Nonetheless, the opportunity search optimisation provides businesses hasn’t diminished, but the speed of success has, simply because there is such a breadth and depth of analysis required that it takes longer to reach the appropriate actions. But algorithms are fast changing that, and are able to quickly and efficiently perform the analysis (or the heavy lifting) and provide the unbiased insights to the search marketer, who can then get the actual job done.
A race to arms
This article starts by saying that in the coming years, the marketing industry will undergo significant change and that marketing agencies face closure. I stand by that assertion and here is why. People have an unlimited capacity for knowledge. There is no outcome a robot can come up with that a person could not. But people are limited by their processing power. We can only work as fast as our brains will allow us. Robots, algorithms, don’t have this limitation. Their processing power is restricted only by the confines of their hardware, and that’s a simple problem to solve: add more hardware. People don’t currently have that option.
This is the problem that the marketing teams face. Continue relying on human labour and get there maybe, or embrace intelligent algorithms and get there now. But that choice may not be theirs to make. Businesses are going to demand the speed and efficiency that only algorithmic analysis can provide. Marketing teams and agencies need to adapt or risk being unable to provide the service that their businesses and clients require.
It’s not a simple task. You can’t just decide tomorrow to use algorithms. It takes years to build a foundational platform that algorithms sit upon, and just as much time for people to accept and integrate them into their workflow. Tomorrow’s marketing landscape will belong to the early adopters, those businesses and agencies who have embraced algorithmic enhancement. They will dominate the market, able to respond with a speed and thoroughness that competitors cannot.
Consider this: how many accountants remain that use only pen and paper – and would you want to employ them?
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