Has the martech industry reached its tipping point?
As 2016 comes to a close, the marketing technology industry has reached a tipping point, with 50 percent of US marketers stating they plan on spending more on marketing technology in 2017, according to research conducted by Walker Sands Communications and Chief Marketing Technologist.
The industry has never been more ripe, as this explosion of interest has led to the creation of more than 3,800 vendors, billions of venture capital dollars and sky-high valuations.
However, while companies are 2.8x more likely to substantially increase spending on tools and tech — from marketing automation to predictive intelligence, according to this year’s State of Marketing Report by Salesforce; there have been issues on the horizon about a sudden squeeze in venture capital in the tech sector, as well as, a swell of consolidation within the industry.
Many marketers read the reports as a portend of the martech industry bubble burst, the inevitable fall back to earth.
The answer appears to be somewhere in the middle.
In the last five years, venture capitalists poured $134 billion into the marketing tech space, VentureBeat reported. Tech vendor ranks grew from under 1,000 two years ago to more than 3,800 today. Technology giants, such as Oracle and Salesforce, developed and established formidable martech programs.
These results, according to Adam Solomon, VP Product at PebblePost, prove the marketing technology industry is healthy.
“The martech bubble is plump but not quite ready to burst. If you compare martech to ad tech, there are notable similarities in the number of point solutions (Martech has its own lumascape),” said Solomon. “But ad tech is much fatter with nearly 3,000 companies last time I counted promising the same results.”
The complexity of the marketing technology landscape has led to consolidation of categories, which according to Gartner’s marketing tech map, is comprised of 49 different smaller industries, including sales automation and social media marketing.
“With increased fragmentation comes market confusion around differentiation — hence the move to consolidate in ad tech, for example, Adobe’s purchase of TubeMogul,” said Solomon.
While there has been some acquisitions within the industry, such as Vista Equity Partners buying Marketo, marketing technology has yet to experience a significant purchase that changed the scope of it.
The greatest factor to changing the scope of marketing technology has been the innovation of the technology itself.
Fifty six percent of marketers believe the industry is evolving too fast, according to research conducted by Walker Sands Communications and Chief Marketing Technologist.
The rapid evolution of the martech landscape appears to be shaping how marketers build their technology stacks. Instead of getting locked into single-vendor suites, the reports shows that marketers are gravitating toward integrated best-of-breed architecture, which gives them the agility, flexibility and diversity of technology they can’t find in all-in-one solutions.
“Marketers are a tech-savvy group, and they’ve been frustrated in the past at their companies’ relatively slow adoption of marketing technology,” said Dave Parro, a partner and vice president who leads the marketing technology practice at Walker Sands, in a news release. “That seems to be changing, though, and they’re becoming much more optimistic about innovation within their organizations.”
Nearly half (48 percent) of marketers have embraced best-of-breed stacks made up of multiple tools instead of single-vendor suites (21 percent).
More than 60 percent of marketers, according to research conducted by Walker Sands Communications and Chief Marketing Technologist, have adopted these evolutionary tactics because they believe marketing technology helps them do their jobs more effectively.
“From my point of view, there’s healthy competition in martech today, giving rise to real innovation,” said Solomon. “Consolidation will come naturally to this space as marketers demand more holistic solutions.”