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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.