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8/9/2019 The Zero Latency Future is Now
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The Zero Latency Future is NowBy Paul Barsch, originally published in MarketingProfs, July 21, 2010
Todays advanced technology brings us virtual broadband autobahns that move data
across the globe with speed and precision. In an attempt to capitalize on fast-moving data,
some companies are using sophisticated applications and compute power to makedecisions faster than competitors. However, when machines move millions of times fasterthan humans, there are some implications for the decisions made by marketing
professionals.
A previous column Is the Speed of Decision Making Accelerating? cited how a centuryago, managers could take weeks or days to make important decisions. Thats because
before the advent of the telephone, it would take a substantial amount of time forinformation to travel by courier. Fast forward to the 21st century, most executives now
have a mobile device and can be reached at a moments notice.
Our global society is moving towards a zero latency world, where the reduction of timebetween decision and action is drastically reduced. And we need to look no further thanWall Streets high frequency traders for evidence.
John Plender of the Financial Times recently defined high frequency trading (HFT) as a
type of computerized dealing (that) exploits the millisecond gap between news eventsand their impact on markets such trading has expanded rapidly to the point where 60-
70% of the trading volume is in U.S. equities. Much of this volume is conducted by avery small number of companies.
So whats wrong with HFT? Plender cites potential problems, such as the ability (for
high-frequency traders) to see orders before they are public and the propensity for high-frequency traders to co-locate servers on the floor of stock exchanges for faster trading
(something not available to the average investor). In addition, the race is on where thewinner in high-frequency trading can close trades as fast as 250 microsecondsfaster
than you can blink your eye!
The speed of decision-making is accelerating. In HFT, the trend is unmistakable.
Machines are trading with and against each other. Theyre moving ahead of individualinvestors, leaving day traders in the dust. And as a Financial Times article notes, speed
isnt just confined to Wall Street: Technology has changed many other big marketsaround the world and tied them more closely together Such changes has created
winners and losers.
For marketers, the implications of zero latency are clear. For example, did you know thatrobots are purported to perform text mining on press releases when they hit the wire?
With analysis completed in microseconds, advanced algorithms then execute trades basedon what theyve learned. Your companys equity price could go up or down in seconds,
based on the words in your press release!
8/9/2019 The Zero Latency Future is Now
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In a zero latency world, what marketers (and other employees) say, write, tweet, andannounce can all be used as fodder by the machines to either raise equity prices or
destroy shareholder value. Our ability to react and fix our mistakes before they arenoticed is greatly diminished. All it takes is a bad press release, poorly written whitepaper
or negative analyst report.
And its not just PR. To borrow a phrase from Thomas Davenport, companies are nowCompeting on Analytics. Marketers must understand that they are now engaged in an
arms race with competitors mining their own (and third-party) data for insightsincreasingly by the hour and minute, and then taking action to better connect with
customers. Companies without these capabilities will increasingly face mammothdisadvantage.
Zero latency decision-making isnt the future. Its now. Are you ready?
Paul Barsch is a marketing director for a Fortune 500 software company. Read moreaboutBoundaryless Marketing, or follow him on Twitter @paul_a_barsch.