Why Madison Avenue is becoming more like Wall Street

Wall Street banks and trading firms are known for hiring the smartest mathematicians and computer scientists in the world.

These geniuses develop complex algorithms and use the most advanced technologies to quickly make investment decisions based on vast amounts of data. Every day, billions of dollars are traded using predictive analytics that enable a high degree of accuracy and results.

This real-time, analytics-intensive model is now moving beyond high finance: It’s the future of marketing.

The marketing landscape itself has grown incredibly complex, with the rise of social networks, apps, and mobile technologies adding to the number of ways marketers need to consider in their efforts to reach target audiences. These new technologies unlock tremendous opportunities for highly personalized and targeted marketing, while driving the need for more advanced algorithms and the ability to crunch massive amounts of data quickly to deliver the right message to the right person at exactly the right time.

Adding to the complexity, marketers and developers are now looking for ways to market to consumers in physical stores or other places via mobile devices in real time based on their exact locations.

For example, a consumer products company might send a coupon to a consumer’s smartphone or smartwatch as she walks through a certain aisle in a store, based on her behavior during the visit, or a vendor might send a special offer to a traveler as he makes his way through an airport.

We have reached the tipping point in marketing where speed and precision will win out over traditional marketing approaches. Success or failure of marketing campaigns will be measured in milliseconds. Companies that reach the consumer at just the right time and ahead of the competition will win out. At the same time, marketers must crunch ever-increasing amounts of data to make those decisions.

Recent comments by Walmart’s vice president of marketing, as reported by Advertising Age, provide a clear indication of where marketing is headed. At a recent digital marketing conference, this marketing executive noted that digital ad buying has reached a level of complexity that it now needs to be done programmatically using advanced computer algorithms.

This means that, like Wall Street firms, chief marketing officers and chief technical officers will need to think a lot more about real-time analytics and reducing latency in their digital supply chain.

In real-time marketing, latency can mean the difference between reaching the consumer at just the right time, or being preempted by a competitor who got there a hair quicker, or getting a digital ad placement at an optimum price. Spread across all your marketing efforts, shaving or gaining nickels and dimes can quickly add up to substantial winnings or losses.

Latency is not purely about having the fastest computers and the most elegant algorithms automating marketing decisions: Latency needs to be wrung out of every step in the digital marketing supply chain. This becomes increasingly critical as the amount of data that needs to be analyzed skyrockets.

Wall Street firms, by far the most sophisticated companies when it comes to analyzing data quickly and reducing latency, place data centers close to the action in order to reduce the time it takes to send data between point A and point B. They situate their computers as close as possible to partners and customers, and they use the fastest, most advanced networking technologies to connect. Every aspect of their infrastructure is optimized to gain extra milliseconds in making decisions and then executing them.

Likewise, in the new order of marketing, computer systems will need to be both close to where their customers are and even closer to partners and systems with which they need to exchange data or information in order to carry out aspects of the campaign (such as combining demographic data from a third party provider with a company’s own proprietary customer data, or pulling discount pricing information from a product manufacturer).

Welcome to the age of real-time marketing. Soon, CMOs will be using many of the same techniques Wall Street has used for years to get a leg up on the competition and extract every bit of value from their marketing efforts.

This will only intensify competition for the best mathematicians and data scientists. It will also drive intense competition for the most coveted data center locations.

Matt Miszewski is Senior Vice President of Sales and Marketing at Digital Realty, one of the world’s largest data center providers with more than 130 properties in strategic markets worldwide.