Brinker's yearly marketing technology supergraphic hit the streets in January. It featured 100 percent growth in the number of vendors in this space, climbing to 1,876.
People are frightened. People are excited. People love this MarTech stuff. It's all over the place -- marketing technology ads on Pandora, FM radio and of course all the rage in trade shows.
But is it an unprecedented tech landscape? Has this kind of explosion ever happened before? We thought this would make for another good discussion this week.
Is this marketing technology landscape really unprecedented?
Darren Guarnaccia, Chief Strategy Officer, Sitecore
As Chief Strategy Officer at Copenhagen, Denmark-based Sitecore, Guarnaccia leads the company's global strategy and corporate development functions, shaping the company’s products to meet ever-evolving requirements. His responsibilities include strategic planning and management, technical briefings with analysts, press and major clients, mergers and acquisitions as well as strategic alliances. He has a marketing and sales background, and experience in developing and positioning new products. Before Sitecore, he was VP of product marketing at RedDot (now OpenText Web Solutions). Tweet to Darren Guarnaccia.
In a word, “yes.” The explosion in marketing tools is different than past enterprise booms in CRM and ERP.
There are a lot of reasons for this -- new channels yield new opportunities, a global developer workforce, improved developer productivity -- but the biggest thing driving the proliferation of marketing technology is much more basic: Low barriers to entry.
It’s a lot easier to create a world-class software product today than it was 30, 20, even 10 years ago. Successful software companies used to be huge, “a thousand mice pulling a chariot.”
This model still works for Microsoft. But remember companies like Borland, Lotus Development and Ashton Tate? Not so much. Nearly every new software company now sells its software as a service (SaaS).
According to SaaS consulting firm Montclare: With the SaaS business model, software companies can get started and become profitable with far less investment and staff than were required in the past.
Venture capitalists estimate that it takes about $25 million in capital investment to build a world-class SaaS firm today, compared to roughly $50 million only a few years ago. Some new SaaS firms utilizing Platform-as-a-Service (PaaS) foundations are operational with less than 10 employees. These kinds of efficiencies have spawned a multitude of highly efficient competitors.
But -- and this is an important “but” -- just because marketing tools can be launched quickly doesn’t mean they will be around for the long haul.
There are two reasons for this: first, anecdotally, I am seeing incredible traction in Sitecore CEO Michael’s Seifert’s assessment of our industry is in a “marketing arms race.” Marketing organizations are simply running out of bandwidth to integrate a patchwork of point solutions. Secondly, economic forces again are at play.
While it may be easy to bring a world-class SaaS software product to market, it’s incredibly expensive to reach maturity. To wit: “[B]uilding a SaaS business takes a lot of time and money. In fact, the average time between founding and IPO was 9.5 years and the median was 8 years.
At a minimum you’d have to expect to spend 7 years building your business, though it could take 13 years.” In a marketing environment that changes so fast, I don’t think the majority of the smaller tool companies can survive the long road to maturity.
Ashu Garg, General Partner, Foundation Capital
Garg works with startups in sectors ranging from marketing technology to big data and analytics to online financial services and education for San Francisco, Calif.-based Foundation Capital. Garg serves on the board of directors of TubeMogul, Localytics, Conviva, ZeroStack, AdRise, FundsIndia.com, IndiaHomes.com, Spotzot and TreeHouse – and served on the board of Aggregate Knowledge until it was acquired by Neustar in late 2013. Ashu was also closely involved with Foundation’s investment in FreeWheel which was acquired by Comcast in 2014. He has also led seed investments in Robin Systems, HotHouse Labs, Shopular and BaySensors. He has personally invested in Reflektion, DataBricks, Jhana Education and Vienova Education. Tweet to Ashu Garg.
The interaction model between marketers and buyers today is completely different from what it was even 10 or 20 years ago. TV as we know it is on its way out, and consumers are increasing the time they spend with newer forms of media.
Never before have media options and consumption changed this fast -- at least not in the last 100 years. By 2020, more than 80 percent of media will be consumed digitally, and users will spend more than 50 percent of their time consuming media on their mobile devices.
And these changes in buyer behavior have led to a corresponding shift in CEO priorities -- digital marketing is now the number one tech capability CEOs identify as a near-term need.
As a consequence, CMOs will be the single most influential driver of technology spend in large corporations in the next 10 years, driving marketing technology spend from $12 billion to $120 billion by 2025.
Startups and vendors are seeing the opportunity that’s been created by these trends and evolving CMO pain points, which is why we’re seeing this unprecedented growth in the MarTech landscape today.
The real trick for marketers, though, will be separating the noise from the solutions that will actually help move the needle. To do that, they will need to focus on solutions that help them measure ROI, produce authentic content at scale and achieve mass personalization, among other points. The solutions that help marketers achieve these goals will thrive, while others will eventually fall by the wayside.
If you go back in history, there has been a trend of one C-Suite executive taking center stage each decade. In the 1980s it was the CFO, in the 1990s the VP of Sales, and in the 2000s the CIO. Now, we are entering the “Decade of the CMO.”
Scott Vaughan, Chief Marketing Officer, Integrate
Vaughan is chief marketing officer of Scottsdale, Ariz.-based Integrate, a cloud-based, closed-loop marketing software provider. Vaughan leads the company's go-to-market and marketing strategy focused on serving its growing customer base. His experience and passion is focused on unlocking the potential of marketing, media and technology to drive business and customer value. His approach is to share insights and learnings. Tweet to Scott Vaughan.
It is not unprecedented from my view. Transformational markets often have these characteristics as they ramp. Changing customer behaviors and adoption of technology are key drivers of this transformation.
Marketing’s scope and expectations have expanded greatly over the last five years to tackle this transformation.
Marketers are now accountable (ROI and results) for generating prospects, creating revenue, delivering customer experience, etc., in addition to the myriad of other initiatives they own.
And, today’s consumer -- who marketing must delight and serve -- is always-on and their expectations have increased.
To have perspective for the marketing tech movement, look at automation movements across other business functions -- think manufacturing in the '80s and '90s and IT in the '90s and '00s. It's marketing's turn to automate to drive more value and accountability. In these revolutions, new titles, roles and many different providers/vendors will rise and fall as CMOs and marketers navigate through it.
All that said, it doesn't detract from the task at hand to sort through the myriad of technologies and options. My bet is there will be more providers in the next few years followed by a natural migration to major platform players and consolidation.
You also see this materializing with the major marketing platform providers working on creating “ecosystems” that integrate and stitch together tech, processes and data for customers. Examples are Oracle’s AppCloud and Marketo’s LaunchPoint.
The difference for this marketing tech sea change is that it is happening in the era of Cloud, Apps and APIs. These are now the norm, lowering the barrier to entry for MarTech providers.
Charles Nicholls, SVP Product Strategy, Marketing Solutions at SAP
Nicholls is responsible for driving the strategy for the CEC marketing solutions portfolio at hybris SAP. He brings deep expertise in buyer behavior, and how marketers can leverage behavioral data to engage with customers most effectively across the customer journey. Nicholls’ primary focus is to define and drive the CEC solution roadmap in the area of marketing products.
Before joining SAP, he founded behavioral marketing company SeeWhy, which was acquired by SAP in June 2014, serving first as CEO then as chief strategy officer. Tweet to Charles Nicholls.
It’s hard to think of a parallel where there has been so much change in such a short amount of time.
The rapid "mobilization" of consumers has led to dramatic shifts in buyer behavior and the journey to purchase is infinitely more complex than before, spanning multiple social, devices, apps, channels and methods of purchasing.
At the same time there is a revolution just beginning in both payments (with the emergence of digital wallets) as well as in-store technology (mobile checkouts, beacons, footfall tracking, RFID, NFC etc.)
For marketers, this means that that there is an explosion of consumer data both online and increasingly offline in the mall and stores.
This data presents a new "Wild West" of opportunity for marketers as well as massive challenges in understanding all these potential signals of intent that customers are giving us. There are also significant risks, particularly related to privacy and consent.
With this explosion in opportunity, comes an associated explosion in tools.
Paige O’Neill, Chief Marketing Officer, SDL
As chief marketing officer of Maidenhead, Berkshire-based SDL, O’Neill brings almost 20 years of experience in senior marketing roles. She combines product marketing expertise with an extensive background in communications and PR and a passion for developing thought leadership programs that build strong awareness and differentiate companies from the competition. Prior to SDL, O'Neill served for over three years as vice president of marketing for integrated marketing leader Aprimo. Tweet to Paige O'Neill.
In some ways yes, as more of the marketing budget is going to technology more than ever before, which is accelerating this growth.
However, the marketing budget as a percent of revenue is not technically growing, so the shift occurring is one from manual resources to automating.
We’ve seen growth like this at various times in the past with other markets, such as ERP and CRM -- so while this isn’t unprecedented, marketers are clearly seeing the need to find better ways to compete and better ways to connect with their prospects and customers.
We are finally starting to tackle some of the tough problems in marketing around focusing on customers and addressing their needs directly.