Marketing Tech is a Dollar Magnet
Everyone following this space closely knows that the lines between marketing tech and ad tech, not to mention sales tech, are increasingly blurred. In one sense, this is a good sign that traditional silos are breaking down, and smart businesses are recognizing that their marketing, sales and support teams, and their advertising partners, need to be working from the same data.
But according to a story in today’s Wall Street Journal, there are more mercenary reasons for categorizing platforms, solutions and tools as marketing technology. Marketing tech, or “martech” as some prefer, is a dollar magnet. While venture capital investment in ad tech is supposedly “running dry,” with total funding sliding from a peak of nearly $3 billion in 2011, to under a billion last year, marketing tech funding has been steadier, at around $1 billion last year and this year.
On the one hand, the WSJ is making something out of nothing here. A closer look at the graph which illustrates the article actually shows investment in ad tech and marketing tech hovering around the $1 billion mark for the past five years. The 2011 spike in ad tech is a curious outlier.
At the same time, the article does suggest that marketing tech—especially as a SaaS proffer—provides a more attractive business model. Marketing tech vendors typically monetize their solutions through subscription, providing a consistent basis for revenues. Ad tech businesses, on the other hand, often rely on ad service volume, leaving them vulnerable to market fluctuations, or just to customers shopping around.
But there’s one observation in the article which will sound familiar to readers of DMN and The Hub: There’s “a distinct, small third category of companies that straddle both advertising and marketing technology, which received $290 million in U.S. venture capital investment last year.” Exactly right, and it’s the vendors offering both innovative, software-based solutions for targeting (including predictively), tracking and optimizing ads—as well as buying and serving ads programmatically—which are likely the ones to watch.
The new DMNTech will be watching this space.