Marketing Technology Isn’t a Stack—It’s a Matrix

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A version of this post originally appeared on the V3*Broadsuite blog.

The universe of marketing technology tools and apps is exploding. The number of marketing technology vendors tracked by Scott Brinker, a.k.a. @chiefmartec on Twitter, has surged from 150 to nearly 5,400 in the past six years.

Though the flood of new entrants has significantly outpaced consolidation activity so far, merger and acquisition activity is picking up. Specifically, four large tech vendors—Oracle, Salesforce.com, Adobe, and IBM—hope to dominate the market by gobbling up small suppliers and rebranding the acquired products into all-encompassing suites.

The logic behind these moves, according to TFM Insights, is that buyers confused and bewildered by this fragmented landscape will flock to single-source solutions: “Thus the big software companies, alongside a number of smaller competitors, have seized the opportunity to sell their customers more complete marketing suites. In theory, this takes some of the hassle out of building a bespoke, marketing stack.”

Only time will tell how successful these vendors are. Industries do generally, of course, consolidate over time. Think of the American auto industry, which collapsed from hundreds of manufacturers in the early 1900s to just three main players by mid-century. Or the cable TV sector, which telescoped from 42 companies to four major providers in just 20 years.

Yes, but…Software is Different

But software industry consolidation is less linear. Even in the enterprise resource planning (ERP) segment, where a steep drop-off in new purchases after Y2K-fed consolidation—Infor alone acquired 16 companies between 2005 and 2016, and had snapped up several before then—there remain “hundreds of vendors offering best-of-breed (i.e., stand alone) ERP applications or integrated ERP software suites” according to Software Advice.

Software sectors are resistant to consolidation due to the low barriers to entry. It takes huge amounts of capital to build up an auto maker or build out a cable network. But it takes only an original idea, a couple of talented programmers, and modest quantities of pizza and Mountain Dew to start a software company. (Okay, that might be a slight over-simplification.)

The marketing technology segment may be particularly difficult to reduce to a handful, or less, of “suites,” given how diverse the landscape is. Brinker’s Marketing Technology Supergraphic organizes its 4,891 vendors into 49 functional groups across six major areas. Given the diversity, marketing technology applications don’t fall neatly into a “stack,” and “cloud” isn’t much more descriptive. The different functional areas actually resemble a large, complex matrix.

What’s a “Marketing Stack” Anyway?

The term “marketing stack” began getting traction in late 2015, as shown by the jump in Google searches:

Martech chart

Image source: Google Trends

The phrase was a play on the term “technology stack”—which is logical. That came out of the software programming world, where it generally described an operating system, database, web server, and programming language designed to work together to provide a development environment.

For example, LAMP is a technology stack combining the Linux OS with the Apache web server, MySQL database, and Perl, PHP pr Python scripting language, while the WINS stack consists of the Windows Server, IIS web server, .NET software framework, and SQL Server database.

A “marketing technology stack,” on the other hand, has no clear definition. This post alone highlights 21 different variations. The reason is clear: Unlike a programming environment, marketing technology isn’t so much a series of layers as it is a fluid matrix of different categories of tools, which can be mixed and matched to meet the specific needs of an organization’s overall marketing strategy, and even change within that organization over time.

Where to Start?

Unfortunately, there’s no clear “base” of the stack to begin with. Some organizations start with their contact database. Others start with tools that work at the top—or left side depending on your perspective—of the sales funnel, with tools that build awareness. Other models start with content at the base.

Regardless of the starting point, analytics are often at the top, or end,  of the “stack,” as that is where results are measured and decisions made about what to do the same or differently.

It’s the middle layer is where the functions, vendors, and tools involved get really muddled. CRM, marketing automation, and analytics are common needs, but what about social media campaign management? A tool specifically for Facebook advertising? Or content ideation, or influencer outreach, or video editing, or project management, or online surveys, or. . .

Across the “middle layer” of tools, the answer to which tools are needed is—it depends. The answers will depend on whether you’re a B2B or B2C marketer; in a large, midsized, or small company; whether your sales are low volume/high dollar or high volume/low dollar; and most of all on your marketing strategy.

But in any case, the notion of a “marketing technology stack” is problematic. Viewing marketing technology as a matrix helps broaden perspective and avoid gaps and overlaps in key functionality.

Suites Can Be Sweet (Or Not)

The diversity of marketing needs and tool categories make it extremely unlikely any vendor will be able to build or acquire enough tools to serve as a single source. But what about the range of tools the suite providers do offer; should companies limit their purchasing focus at least within those functions?

Not necessarily. Though the tools within a single vendor’s “cloud” are (presumably) well integrated, many third-party tools integrate with the applications nearly as well. For example, while Salesforce.com has acquired ExactTarget for marketing automation and Radian6 for social media monitoring, it also lists more than 3,000 third-party technology partners on its AppExchange.

The best approach for companies that own at least two applications within one of the big four marketing clouds (and are happy with the functionality of and support for those apps) is to include additional tools from those vendors in relevant evaluation sets, by default. But consider tools from other vendors as well. Effective marketing technology matrixes are frequently a mix of best-of-breed and suite-based tools.

Ultimately, marketing technology tool selections should be driven by a firm’s marketing strategy mapped to functional needs. Individual tools should be evaluated both on their functional fit for the company’s needs as well as their technical fit with other applications already in place. Making smart decisions about marketing tool choices will increasingly contribute to competitive advantage. But these choices won’t fit into a nice, neat “stack.”

The Future of Marketing Technology (And What You May Want to Do About It)

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Scott Brinker recently unveiled, to much (deserved!) fanfare, his 2017 version of the Marketing Technology Landscape Supergraphic.  This year’s version includes 5,381 different applications, up 39% from a year ago.

The universe of marketing technology tools continues to expand (though not quite as quickly as the Supergraphic; see below). The key questions are: how is the future of marketing technology likely to evolve? Why? And how can marketing professionals best manage the increasing proliferation of marketing technology (martech) applications?

The Ever (?) Expanding Martech Landscape

Life isn’t going to get simpler for those making martech buying decisions any time soon. The number and variety of tools continues to expand, with both new entrants in existing categories (e.g., CRM) and entirely new categories of tools emerging. This expansion is based on several factors, including:

The changing role of marketing: Tom Kaneshige, writing on The VAR Guy, quotes Doug Pepper’s observation that “No role has changed as much as the marketer. They now lead the digital transformation of business.” Marketing is now charged with managing the end-to-end customer experience, not merely generating leads. Tool vendors, established and new, are developing innovative new tools to help marketers address these changes.

Increasing clouds: Cloud technology has lowered barriers to entry for new vendors and simplified implementation for marketers. It’s much easier to embrace new tools when there’s little or no need to get IT involved, install new servers, or go through a long implementation process.

Capital ideas: Venture capital (VC) firms see marketing technology as a promising area for investment. As with cloud technology, the availability of capital reduce barriers to entry for innovative new providers. Again, as Kaneshige notes on The VAR Guy, “Venture capitalists speaking at (the recent MarTech conference) said marketing tech’s close ties to revenue make the category fertile ground for a new crop of innovative, best-of-breed solutions that offer differentiation from the competition and move the proverbial needle.”

So the market is growing—though to be clear, not as quickly as the Supergraphic. As Brinker acknowledged to Kim Davis on DMN, most of the increase in the number of companies on his landscape weren’t new to the market, but rather previously undiscovered; “different verticals, international ventures, flying under the radar before, etc..”

And as he told Dom Nicastro on CMSWire, “A lot of these MarTech companies have been around longer and it wasn’t until this year that I discovered them. One reason is the international players.”

Bottom line, while it isn’t growing at 40% annually, the martech space is still expanding. Brinker concluded on DMN that over the past several years, through 2016, the “space has grown more than it has consolidated.”

How Long Can This Keep Going On?

Will expansion continue, or is the martech space on the edge of consolidation? As Yogi Berra famously said, “It’s tough to make predictions, especially about the future.” Here’s a quick look at the case for both scenarios, along with a best guess.

One key consideration in asking this question is to define the “space.” The expansion and consolidation pattern for a specific product category (such as CRM systems) will certainly be different than for martech as a whole (which includes everything from video editing and social listening tools to analytics and marketing automation).

For example, Brinker’s Supergraphic includes 202 different products in the “Marketing Automation & Campaign/Lead Management” category. That’s unsustainable. It’s reasonable to expect that over the next several years perhaps half of those solutions will disappear, through market failure or acquisition and absorption into other products.

But the larger martech ecosystem may very well continue to expand, through both innovative new entrants into existing categories (particularly analytics) as well as the creation of entirely new categories.

Why might the martech market begin to consolidate soon? Markets normally follow a fairly predicable pattern of rapid growth and then leveling off, either entering decline or an extended period of modest growth. This is the point at which larger and stronger vendors begin acquiring smaller players in order to offer customers a broader product suite with fewer relationships and integration points to manage.

Indeed, as Brinker illustrates in this graphic, the market is already concentrated, if not yet consolidated: a small number of vendors command the majority of dollars spent.

Log tail of marketing technology vendors

George Slefo, writing in AdvertisingAge, reports Joe Stanhope of Forrester Research views the current market as a “complex” and “unhealthy ecosystem.” Brinker contends that duplication, particularly in apps, will lead inevitably to consolidation. “Remember when there were hundreds of flashlight apps? I think you see echoes of that in the marketing tech landscape; there’s a lot of duplication and overlap.”

Yet, Stanhope adds, “The fact it keeps growing this way — and the fact a lot of the categories shouldn’t be categories in the first place — shows us that we still haven’t gotten to the tipping point where you’re going to start to see more consolidation.” Brinker, per Slefo, “agrees that fewer choices would make it easier for marketers who are interested in adopting the tech. The thing is, that’s not the reality.”

And Kaneshige points out that “For more than a year, pundits have prophesized the end of the marketing tech boom. It’s a bubble on the verge of bursting, they warned…(yet) the marketing tech gold rush shows no signs of slowing down.”

So, on the other hand, why might the martech landscape continue to proliferate? First, it’s not clear the market overall (beyond well-established subsegments like email service providers and marketing automation) is anywhere near mature.

Second, low barriers to entry, combined with entrepreneurial optimism. invite a steady stream of new entrants. As Davis notes on DMN, “one of the traditional hallmarks of a consolidate(d) industry is a high barrier to entry: This doesn’t seem to exist with marketing tech — but…I suspect the traditional view of consolidation preceded the cloud.”

And Slefo quotes Chris Jacob of Salesforce.com observing, “There will always be new vendors and there will always be new players thinking they can disrupt the old world order. That will never change.”

Third, even the largest vendors—the potential consolidators—may be resigned to a large and expanding ecosystem, at least in the near to medium term. Nicastro quotes Brinker concluding these larger vendors have “realized there is no way they are going to be able to do it all themselves.”

Guidance for Marketers: Think Like a Wall Street Trader (and a Guitar Hero)

Nassim Nicholas Taleb, author of The Black Swan: The Impact of the Highly Improbable, built a highly successful trading record by consistently keeping 85-90% of assets in relatively safe, conservative investments, while putting the rest into more speculative, but also potentially much more lucrative, ventures.

Marketing leaders may want to follow a similar approach. Invest most of the technology budget in established tools for core marketing functions. But reserve a slice for experimenting with intriguing new tools, startup vendors, and emerging categories.

That experimentation is important, because following the pack is no way to stand apart from the herd (pardon the mixed metaphors). Those interesting new tools may help you to leapfrog competitors rather than follow them.

A second source of differentiation lies in how well you use the marketing technology you have in place. Consider investing in real-time integration and strategic training to enable your team to get more out of those tools. Anyone can pick up a guitar, but not just anyone can be Carlos Santana.

Finally, take advantage of new sources of information to help make strategic martech decisions. As the marketing tools market grows larger and more complex, feature-function review sites like Software Advice, GetApp, and G2 Crowd, while still valuable, are no longer enough.

As Kaneshige notes, “Consultants with expertise in specific vertical industries and geographies know their customer’s unique business challenges and can highlight marketing tech solutions that solve them.”

Brinker himself has plans to make his supergraphic research more usable to midmarket marketers. Noting that “hundreds of MarTech companies orchestrate a niche set of capabilities on top of existing suite platforms,” Brinker told Nicastro, “It really seems like it’s suite and best-of-breed. Maybe the suite or best-of-breed discussion is coming to an end.”

To that end, per Slefo, Brinker says he is “working on some really big ideas, including one where his beloved chart evolves from conversation piece into something that can actually function as a utility for marketers.”

Brinker envisions creating “an Angie’s List-like database where marketers can sift through thousands of companies and find one that’s specifically tailored to their needs, as well as read reviews left by other customers,” along with new visualizations of his martech supergraphic data.

Another potentially interesting resource is martechexec.com, planned for launch soon. Founder Lana K. Moore has promised a site that will help “marketing technology execs get to the top of their game,” through peer reviews, discussion forums, and other tools. The goal of the site is to be “Angie’s list meets Reddit for marketing technology professionals,” Moore adds.

And of course there is this site, designed to fill the gap between cutting edge enterprise-tech blogs and the feature-function review sites, by providing a B2B marketing technology model and guidance for B2B marketing professionals in small to midsized firms.

67 MarTech Bloggers: They’re the Reason for this Site, They’re the Inspiration

The best online business tools series on the Webbiquity blog, which led eventually to the creation of this website, is the result of months of research, cataloging more than 100 reviews from 67 experts, covering more than 700 unique tools across nearly 50 categories.

Several have acknowledged their contribution along the way and helped promote the series; a few may still be unaware of the role their wisdom and judgments played.

So, with apologies for the reference to the maudlin Chicago tune in the title above, to fully recognize all the bloggers, journalists, and other experts whose work inspired development of the Webbiquity series and this site—here are the 67 reviewers.

Aaron Riddle
Adam Connell
Aidan Huang
Alexandra Jacopetti0
Amanda Pressner Kreuser
Amanda Stillwagon
Anders Orsander
Anders Pink
Andrew Jenkins
Andrew Medal
Andy Crestodina
Ann Smarty
Antonio Calero
Ashley Feinberg
Carolyn Nicander Mohr
Catherine Pham
Cent Muruganandam
Christopher S. Penn
Dan Trefethen
Daniel Hebert
David Leonhardt
Dhiraj Das
Emily Bonnie
Emily Taing
Frederik Vincx
Holly Chessman
Ian Anderson Gray
Ian Cleary
Igor Beuker
Jack Simpson
Jackie Dove
John Lincoln
Julia McCoy
Kari Rippetoe
Kathryn Aragon
Katie Lance
Kevan Lee
Kevin Webster
Kim Roach
Kristen Tischhauser
Kristi Hines
Lauren Goode
Lesya Liu
Lilach Bullock
Lindsay Kolowich
Lisa Sicard
Matthew Capala
Michael Brenner
Michael Estrin
Michael Stelzner
Mike Lizun
Mike Williams
Nate McGee
Neil Patel
Nick Mead
Nikhil Jain
Nikki Woods
Patrick Whatman
Rebekah Radice
Richard O’Flynn
Robbie Richards
Shira Abel
Stephanie Castillo
Teddy Hunt
Tim Ash
Ty Rothstein
Wendy Marx

Thank you all!