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AI and the Vanishing Middle Class of Tech Marketing Agencies

In the whirlwind world of marketing, there’s been this interesting trend bubbling up over the past five years.

It’s all about how companies, especially startups, tackle their marketing game plan. And guess what? It’s giving us a sneak peek into how AI might shake things up down the line and the impact that will have on the firms and agencies that help companies with their marketing.

Let’s discuss:

  • The present and future of earned media
  • How AI is shifting the conversation
  • Where marketing firms fit into this future.

Hope you brought your crystal ball! Time to dive in:

The Value of “Owned, Earned, Paid”

Now, I’ve always been a fan of the old “owned, earned, paid” mantra when it comes to marketing. You start by testing your message on your own platforms, then you let the world validate it, and finally, you splash some cash to get that message out there to more folks. Simple, right?

But here’s the thing: a lot of startups used to skip straight to the “paid” part. And honestly, it used to bug me. I mean, why burn through your budget before you even know if your message is hitting home?

But over time, I’ve come to understand why they did it. Early-stage marketing is always in constant tension with itself. The best way to be successful long-term is to have a strong, organic brand. This takes time. Startups have a finite runway. See, startups are always racing against the clock; some estimates show that 75% of venture-backed startups fail.  Startups need leads, they need buzz, and they need it all yesterday. And sometimes, waiting around for your owned and earned channels to gain traction just isn’t an option.

So, more and more, I’m seeing these startups starting with their own content and testing the waters to see what resonates. Once they’ve got something that sticks, then they start pouring some cash into promotion. Of course, they’d have a higher success rate if people on the other end of those ads had heard of their company. But in the early stage, you can’t always afford to play the long game. And I mean that literally.

The First Phase of AI Marketing Adoption

As the landscape of marketing continues to evolve, it is becoming increasingly important for early-stage startups to leverage the power of AI tools to maximize their marketing efforts and see quick returns on their investment. With the integration of AI tools into the marketing workflow, startups can automate the journey from owned to paid media, allowing them to reach a wider audience and build their brand more effectively.

The use of AI tools in marketing not only saves time and resources for startups; it also allows them to compete with larger companies that have bigger budgets. By utilizing these tools, startups can analyze data, personalize content and optimize campaigns in real time, ultimately driving better results and increasing ROI.

As outlined in this interesting post from a16z, we are in the first phase of AI marketing adoption. These tools are only as good as the marketer wielding them.

This is why early-stage companies will continue to need marketing support teams. A busy founder still doesn’t have the time to think through the marketing strategy, leverage all of the tools and then continue to optimize. However, the founder of the future is going to embrace the concept of drumbeat marketing — rapid deployment of messaging through integrated channels —  and expect his service provider to be fluid and reasonably priced.

In the long run this is a good thing, as I have seen many early-stage companies overpay for services they weren’t ready for and, as a result, didn’t make the most out of.

While the effectiveness of AI tools in marketing may reach a limit as more companies adopt them, there is still significant potential for growth and innovation in this space. If the rate of adoption of other transformational technologies is any indication, we still have years before the commoditization of AI tools. And, at the rate of innovation, who can even imagine what will be created in those interim years?

Balancing Human Authenticity with Automation

Of course, none of this exists in a vacuum. As AI continues to weave its way into every aspect of our lives, it’s only natural that it would find its place in marketing too. From automated content creation to predictive analytics, AI has the potential to revolutionize the way we approach marketing.

But here’s the thing: AI can only take us so far.

At the end of the day, marketing is still a fundamentally human endeavor. It’s about connecting with people on a deeper level, and understanding their hopes, fears and aspirations.

So, as we look to the future of marketing, let’s not lose sight of what really matters. Let’s embrace the power of AI, but let’s never forget the power of human connection. Because in a world where trust is currency, authenticity is king. And that’s something no algorithm can ever replicate.

Which brings me back to this question: what about earned marketing? You know, the stuff you can’t just buy with ad dollars. Things like media coverage, influencer endorsements, and all that good stuff.

I haven’t seen as many AI tools tackling this side of things. And you know why? Because building genuine relationships is hard to automate. Sure, you can automate the outreach and the follow-ups, but at the end of the day, it’s still all about human connections.

And as AI continues to reshape the marketing landscape, those human connections are going to be more valuable than ever. In a world where everyone’s got access to the same data and the same fancy algorithms, authenticity is a differentiator.

Predicting the Future of Earned Media

The future for larger marketing firms is earned media. Cultivating relationships will be harder than ever, which means later-stage companies will be willing to pay more to have access to them, as they will be a huge competitive advantage.

All earned channels are not created equal, however. Look no further than the decline in journalists and media. When I started my career in tech marketing in 2012, landing a big spot for The Next Web put me on the map within the company I was at. And yet I have successfully grown York IE’s brand over the past 5 years without achieving another one of those “lightning strike” media mentions.

The problem isn’t that media isn’t powerful anymore. It is that newsrooms are shrinking, so it’s nearly impossible to have a personal relationship with journalists anymore. As a result, media relations can’t really be considered an earned channel anymore. So what are the earned channels that marketing firms will try to compete in? Here are three:

Community Engagement

Building and nurturing communities around a brand or shared interest can be a powerful driver of earned marketing. Online forums, social media groups and niche communities provide opportunities for brands to engage directly with their audience, foster relationships and cultivate brand advocates who can spread the word organically.

Strategic Partnerships

Collaborating with like-minded brands or organizations can amplify a brand’s reach and credibility. Strategic partnerships allow brands to leverage each other’s audiences and resources, creating mutually beneficial relationships that can drive earned marketing efforts.

User-Generated Content (UGC)

Consumers trust the opinions of their peers more than branded content. As such, user-generated content is poised to become a cornerstone of earned marketing strategies. Brands that can encourage and leverage UGC effectively will likely see success in building trust and credibility with their target audiences. I love this because AI tools will make it easy for users to create compelling content.

The above channels are individually important. However, like Captain Planet, the real power is the combination of these channels. Relationships are too valuable to be siloed.

The Marketing Firms of the Future

That is why I see niche marketing firms that focus on a single channel consolidating into ecosystem marketing firms that can help across the spectrum.

As a result, I see the landscape of marketing firms being pulled apart to opposite ends of the spectrum: high-velocity AI-led firms that help early-stage and relationship-led ecosystem firms.

Ecosystem marketing firms provide comprehensive solutions across multiple earned channels. These firms understand the importance of building and nurturing relationships with customers, partners and stakeholders to drive long-term success. By taking a more integrated approach to marketing, these ecosystem firms are able to create cohesive brand experiences that resonate with audiences on a deeper level.

On the other end of the spectrum, we have high-velocity AI-led firms that cater to the needs of early-stage businesses looking to scale quickly. These firms leverage cutting-edge technology and data analytics to optimize campaigns, automate processes and drive rapid growth. While these firms may lack the personal touch of relationship-led ecosystem marketing firms, they excel at delivering results at speed.

As the marketing landscape continues to evolve, we can expect to see a further divergence between these two types of firms. However, it is important to recognize that both approaches have their strengths and can complement each other in a larger marketing strategy. Ultimately, the key is finding the right balance between high-velocity, AI-led tactics and relationship-led ecosystem building in order to achieve sustainable growth and success in today’s competitive market.

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