Marketing technology (martech) will suffer a “short-term hit rather than a long-term death,” according to Scott Brinker, because of the COVID-19 health pandemic. The crisis will inspire martech firms to further embrace digital operations and digital customer experience, strengthen performance marketing and tools and embolden less-expensive products to thrive in platform ecosystems.
Brinker, author of the Chief Marketing Technologist Blog, shared those thoughts late last month when he released his yearly Marketing Technology Landscape Supergraphic. He and his team discovered 8,000 martech solutions, an increase of about a 1,000 from last year’s report. Brinker reported 150 martech solutions in his initial year of research in 2011.
“The empirical evidence would suggest that the world is becoming populated with more and more software options out there,” Brinker told CMSWire. “It's just that there are no barriers to entry creating software. Software doesn't have to be a major VC-funded unicorn trajectory, the next Adobe or whoever, to have a place in this world.”
Martech Didn’t Take Initial Big Hit from COVID-19
What does that mean for marketers? They’ll continue to have access to apps that connect to larger ecosystems or work well on their own.
Perhaps the biggest question with martech's future — or any software category, for that matter — is can martech power through the latest economic crisis? Reports suggest the current pandemic will lead to the sharpest recession in the US since the Great Depression. It’s a little early to tell how martech will ultimately respond. But some have already produced reports that martech, at least in the public markets, is doing better than others, as Brinker noted in his martech landscape report.
LUMA Partners reported in its Digital Brief 027 — Market Report Q1 2020 that the downturn in the public markets due to fears over COVID-19 has been more consequential for ad-tech (down 44% in market value percentage) than martech (down 26%) from Feb. 19 through March 26.
Still, martech vendors will have to contend, as the pandemic rages, on with factors such as reduced business spending due to economic uncertainty, thinly-stretched marketing operations dealing with the crisis and reduced VC spending because of perceived vendor risks for startups, according to Brinker.
Businesses Lean in to Digital Engagement, Transformation
Those are the headwinds of martech against COVID-19. One of the tailwinds, according to Brinker, is that martech will gain more positive momentum because we likely will see an explosion of new software that's designed to help people in a world that is increasingly remote. Martech will thrive as businesses, even more so than ever, embrace digital operations and digital customer experience, Brinker added.
“Are we going to see all sorts of software innovation that breaks through?” Brinker said. “Video conference is great, and obviously webinar companies have their phones ringing off the hook through all this, but it feels like that's just barely scratching the surface of what's going to be the next wave of apps that make work from home, or distributed work environments, 10 times more productive than they are today.”
Kristi Knight, chief marketing officer at customer experience software provider InMoment, said the well-established digital world emphasizes that marketers must gather feedback not only on the digital customer experience, but must also collect data on the employee and market experience, too. “By looking across three verticals,” she said, “marketers will be able to identify patterns that drive business improvement in retention and recovery moving forward."
Related Article: Marketing Technologists Take Their Rightful Place Says Scott Brinker
Can Data Be the Martech Savior?
Alice Song, chief operations officer of martech provider Traject, said she is definitely seeing evidence of the Brinker-cited headwinds and tailwinds in martech. Where growth was the focus prior to COVID-19, stability, future proofing and customer communication have become the new north stars, she added.
Pandemic or not, data solutions in this year’s martech landscape (1,258 in total) grew 25.5% from 2019, by far the top growth of any solution. Management tools were next with 15.2% growth (601 total), followed by Social & Relationships (13.7%, 1,969), Commerce & Sales (9.0%, 1,314), Content & Experience (5.6%, 1,936) and Advertising & Promotion (4.1%, 922). “The largest growth being in the data category makes sense from what we are seeing, and we expect that to continue throughout 2020,” Song told CMSWire. “Data helps drive insights and leads to a better understanding of the more specific headwinds and tailwinds that are impacting your business. As an example, we've seen customers double down on SEO data as a long-term investment during this time and move away from ad spend.”
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Performance Marketing Tools Valued in Recession
If marketers weren’t already feeling pressure to justify marketing spend — nearly half in this Ascend survey (PDF) see increasing marketing ROI as a martech priority — a pandemic likely puts that worry into overdrive. Performance marketing tools and capabilities is not a category, per se, but it’s sprinkled throughout the martech ecosystem, according to Brinker. Martech tools that allow marketers to demonstrate ROI on spend should thrive, he added. “This is where there's this tradeoff between headwinds and tailwinds,” Brinker said. “I think at the moment, the headwind is really strong because people are just so uncertain as to exactly what's going to happen. Depending on who you read or listen to, on any given week, we're either going to rally out of this and reopen and recover or we’re going to jump back to the doom and gloom side.”
Most businesses are hedging their bets. Some will seize opportunities in the meantime, but others are still “trying to figure out what's the set point,” Brinker said. “And then once they do, then I think what you'll see is they will set their forecasts for how they are going to perform for the next 12 months.”
And that’s where performance marketing will kick into high gear: will martech not only get marketing teams through this pandemic but also help marketers lift their brands out of it and into the foreseeable future?
Related Article: What Does Martech's Ecosystem Evolution Mean for Marketers?
Performance Marketing Can Be ‘Pivotal Strategy’
The main point marketers should take away from Scott Brinker’s Martech Landscape report is that focusing on performance marketing can be a pivotal strategy through the rest of 2020 and into 2021, according to Mary Pat Donnellon, chief revenue officer at martech provider CallRail. “A lack of insight into the efficacy of marketing efforts is the number 1 pain point marketers face today,” Donnellon said. "As businesses head into a period of economic fragility, marketers need a clearer picture of the tactics that are actually moving the needle for their business so they can double down on those, while eliminating lesser ones.”
Platform Ecosystems Working Their Magic
The other tailwind Brinker said will help marketers power through the economic storm due to COVID-19 is “less expensive products can thrive in platform ecosystems.” Brinker noted his bias being the vice president of platform ecosystems for martech provider HubSpot, but, he added, ecosystems thrive around almost all major marketing platforms. Check out Adobe’s and Salesforce’s, for instance. “There is going to be some foundational platform capabilities like delivering email at some level, and we really probably don't need another service that just does that underlying component,” Brinker said. “Where things get interesting now is the stuff you're building on top of those foundations. Within an ecosystem, marketers will get a large collection of capabilities that in previous years they had to assemble from independent martech companies, solutions that were disconnected from each other. And it would have been much more expensive, in actual subscription costs but certainly with the overhead of trying to integrate that and make it all work.”
Budget pressures coming out of COVID-19 may actually give a new generation of martech companies a chance to accelerate their conversion prospects, Brinker said. Then again, he added, the martech incumbents could “benefit a certain amount from people saying it’s just one more thing they don’t want to think about changing.”
Related Article: Make It Stop: Martech Landscape Hits the 5,000 Mark
Focusing on Brand Positioning
Martech tool efficacy aside, Song of Traject said brand positioning is incredibly important during this time. How organizations show up in the market and for their customers will be an indicator of how they will come out on the other side, she added, with Zoom being the prime example. “This has been a huge focus for us,” she said, “and many of the other brands in the space. How do we support our customers and the larger community.”
