The pressure is on: build a technology infrastructure to drive more revenue, lower the cost of customer acquisition, improve customer experience, and at the same time innovate to drive competitive differentiation.
A daunting ask at the best of times, but in the current maelstrom of the MarTech environment it’s hard to know where to invest and how much to invest. Scott Brinker just released his latest MarTech landscape, which now shows close to 7,000 products in the market, up from 5,000 only a year ago. These numbers are consistent with our database, which is actually up to 8600 products. These numbers can make the stomach lurch as you think — what am I missing?
The reality is that the jump in the number of products is more reflective of products surfacing that have been around for quite some time — so there’s not as many new products as you might think. In fact, our data shows the number of new products in the MarTech space has been steadily dropping since 2013 when more than 500 new products were launched. According to our database, the combined number of new products released in the last two years was just over 200.
How to Narrow Your MarTech Focus
We all struggle to keep abreast of the technology that is relevant to the tasks we perform. Rather than familiarize yourself with every product in every category (you can do that when it’s needed), my recommendation is to make sure you are aware and evaluating the new areas of innovation. From a marketing technology perspective the categories/technologies where a lot of innovative activity are: personalization, data management and compliance, blockchain, and artificial intelligence.
Personalization in its many forms is the key to standing out in a noisy world, making it well worth the investment of time to stay abreast of the latest innovations in this area. You can’t enact any kind of personalization strategy without clean data so data management is also very important. And with the European GDPR data privacy regulations coming into effect on May 25, this is an area to watch closely to ensure you have the tools you need to be compliant with regulations. Blockchain on the other hand is a) an enabling technology and b) still in the “buzz” phase and is not ready for prime time. Keep an eye on developments, but do not invest time or money at this point. Artificial intelligence is also an enabling technology and is popping up on vendor feature lists across the spectrum of marketing technology. Initial applications for AI are likely to be in personalization, chat, content creation and targeting.
Keep in mind most AI functionality today is either marketing hype (just because there is an “algorithm” involved does not mean it is AI) or machine learning (doing something faster, better) rather than AI (doing something entirely new), so make sure the “AI-enabled” product you are interested in doesn’t result in you paying a premium for something that isn’t actually driven by AI.
Related Article: Tame the MarTech Beast for Better Customer Journeys
Should You Decrease Your MarTech Spending?
Yet as the MarTech universe is expanding, spend appears to be dropping. Gartner reported MarTech investment dropped in 2017 from 27 percent to 22 percent of the marketing budget. Is MarTech spending going off a cliff? What about projections that overall MarTech spend will grow to $125 billion by 2025? Should you pull back on your MarTech spend this year, or continue to increase spending? If you are increasing your spend, how do you justify that to your CFO after they see the Gartner report?
The definitive answer to should you decrease your spending on MarTech is ... drumroll ... maybe! It all depends on where you are in the MarTech absorption cycle.
Over the last few weeks I’ve had the opportunity to sit down with a number of senior level marketing operators and MarTech experts. One of the consistent themes that came through in these conversations was that this is the “Year of Rationalization.” Everyone had a slightly different take on what that meant, but in all instances it was a response to a heavy investment in MarTech over the last few years and the need to step back to make sure those investments were the right ones, that everything was working as it should, and that the team was properly utilizing the tools that had been purchased. In essence, a temporary pause in spending to allow for proper review and absorption of everything that had been purchased to date.
So if you find yourself in that quandary, some of the key things you should ask yourself include:
- Do the functional capabilities of the MarTech suite align with marketing goals? Are those goals big enough or too tactical? Do goals and technical requirements need to be rethought?
- Data strategy and integrity: is data being handled correctly, are we compliant with all regulations, is our data consistent and synchronized across all platforms and all teams?
- How well-integrated are all the pieces of the marketing technology stack? Are there places where integration is needed to optimize performance?
- Do we have the analytics in place to properly assess both our technology performance and campaign performance, and properly attribute results to where they belong?
- How well is each platform being utilized? Do we have the team skills to properly leverage the platforms we have?
- Do we have the right process around MarTech strategy and acquisition? How do we better include IT and our non-technical stakeholders in defining strategy and in implementing new tools?
- Do we require behavioral change to be more effective working across teams and geographies in the organization?
It's All Part of the MarTech Cycle
This shifting of gears strikes me as completely sensible — we all need to step back and take stock of where we are every now and then. Whether MarTech spend is 27 percent or 22 percent of the marketing budget is irrelevant. It comes down to doing what you need to do to achieve your marketing goals.
Every person I spoke with had a list of new product priorities for the year (most were in the areas of data management and customer experience) but pursuing those priorities was balanced by programs to rationalize what was already in place. Over time, I think we are going to see ups and downs in MarTech spending as organizations occasionally try to consume too much technology at one time and then have to pull back and put the emphasis on optimizing what’s in place.
So back to the “maybe” answer on whether to decrease your spend on MarTech. If your stack is rock solid, fully integrated and meets your marketing goals, you may be ready for another big cycle of spending. But if you need to address the questions above, it might be time to hit pause.