The State of Marketing Technology, in 12 Charts
When Salesforce flirted with acquiring Twitter over the last month, marketing technology (martech, for short) suddenly found itself in the spotlight.
Why Salesforce? How did these guys get so big? What the hell is a CRM1 anyway? You could see the questions bouncing around as people suddenly wanted to understand the complex world of martech.
Martech is everywhere. Just this year, Microsoft fought off Salesforce and bought LinkedIn for $26 billion. Meanwhile, artificial intelligence, such as IBM’s Watson or Salesforce’s Einstein, is being promoted as the future of business intelligence. And marketing technology, according to a recent report from The Wall Street Journal, is receiving more venture capital investment than advertising technology.
With so much attention on the subject, now is a good time to look at the current state of the martech industry.
1. There’s a ton of martech companies
Above you is the martech “Lumascape,” as Scott Brinker, editor of ChiefMartec, calls it. The chart offers a segmented look at the 3,500 companies Brinker considers part of the martech industry. And yes, it’s incredibly overwhelming. (If you’d like to get a closer look, click here for downloadable versions.)
While it’s true that martech is a huge, complicated space, the Lumascape shouldn’t scare you as much as it might at first. As Ad Age editor Ken Wheaton argues, the Lumascape for almost any digital industry would be overwhelming if you put all the logos of individual products together in one image. “There’s an implied message that you should be totally overwhelmed by the topic and go running to the nearest consultant for help,” he writes.
The Lumascape really tells us two things:
1. There is immense competition.
2. “Martech” serves as an umbrella term for a variety of disparate products.
What the Lumascape fails to tell us, however, is that there’s a certain amount of consolidation. Big brands like Adobe, Oracle, Salesforce, IBM, and Marketo wield considerable power, and their product suites (or “clouds”) are the primary tools for many businesses. Plus, as Jack Marshall of The Wall Street Journal points out, many of these smaller tools angle to either be acquired or integrated into the larger players’ clouds.
Yes, the space is huge and complicated, but there’s also stability at the top.
2. Data undergirds everything
Brinker’s Lumascape may give us a snapshot of the whole industry, but what kind of martech are people actually using?
Analytics takes the top spot here, though the term “analytics” casts a wide net in this data-driven age. Options range from the ubiquitous and free (Google Analytics) to the wildly expensive and advanced tools offered by powerhouses like SAS and Oracle. Almost every marketing platform includes some sort of built-in analytics capability.
Still, it goes to show that analytics tools are the bedrock of martech since almost every other technology listed in the eMarketer chart is designed to create an onslaught of data. Marketers need good analytics tools to help figure out what the hell all this data means.
CRM tools like Salesforce took a close second, which isn’t surprising considering their ubiquity in B2B marketing. Social management platforms came in third, demonstrating social media’s increasing importance in the marketer’s toolkit. Surprisingly, marketing automation technology finished second to last, despite the popularity of tools like Marketo.
Perhaps the most interesting result, however, was that only 1 percent of marketers claimed to use no technology at all.
3. The glut of technology is creating problems
I pulled a few charts from a report by DataXu titled “Modernizing the Mix: Transforming Marketing Through Technology and Analytics.” Hat tip to ChiefMartec for bringing it to my attention (it’s also in the eMarketer report I linked above).
We already know that only 1 percent of marketers don’t use any technology. But the glut of technology—particularly the lack of communication between the brands—is also one of marketing’s biggest problems. Martech is still relatively new, and managing the array of software is a challenge. As the Lumascape shows, a lot of software exists on islands, which makes managing them and teasing out meaningful results difficult.
A 2015 report from Digital Doughnut and Oracle shows just how poorly many companies implement martech. Only 8 percent of respondents thought their company managed the introduction of new technologies well, while 40 percent said their companies didn’t do it well.
This discrepancy highlights one of the biggest threats to marketing success: Professionals don’t know if their marketing actually works.
That’s a problem throughout both ad tech and martech. Part of the trouble stems from the nature of data collection. A company can only collect so much data, both from a legal standpoint and from the fact that consumers will only divulge a certain amount. Then there’s the difficulty of creating a martech stack that consistently spits out easily understandable, integrated results.
The two pain points, however, may signal how the industry will evolve in the future. The companies that make a marketer’s job easier—by consolidating the amount of vendors they have to work with, and providing easy solutions for proving results—will win.
4. Companies continue to invest in martech leadership
Around the world, companies are now giving a person (or team) dedicated ownership over the company’s martech. It’s a smart move, especially in light of the confusion those previous charts showed. Expect the “yes” in these pie charts to continue growing in the coming years.
When it comes to actual purchase decisions, though, there is less consensus.
(Note that I had to remove Europe because of cropping issues. There’s a near-even split among CMOs and CMTs at the top.)
A lot of the divergence could come from variance—what one company calls a content marketing technologist may be what another calls a chief digital officer. Still, the data shows that, especially in the U.S., CMOs are expected to be technology experts, or are given the task despite not being technology experts.
One would then assume that most firms let CMOs own martech. It’s an odd choice, since CMOs are usually tasked with many responsibilities. Managing and following the martech space can be a full job in itself, hence the emergence of the CMT. It makes sense for CMOs to be involved in the purchasing decisions, but it may be more prudent to put a specialized employee in charge of martech.
5. B2B marketers think content marketing tools are key
This study, conducted by Spear Marketing Group, a B2B agency, gets at a number of interesting trends. The big takeaway here is how important content marketing technology has become for B2B marketers. The majority of respondents say it is the most important technology both in the moment and in the future.
Some caveats here: This survey only included senior marketers, and 92 percent of respondents worked for a company with fewer than 5,000 employees.
CRM’s precipitous fall in importance from now to the near future (from 68 percent to 29 percent) is also interesting. It looks as though lead lifecycle and attribution reporting technology, which performs similar functions, may take its mantle. However, just because fewer marketers claim CRM is the most important technology does not necessarily mean they don’t have any use for it anymore.
The results here are particularly fascinating in light of the next chart…
6. But automation tools are the ones expected to deliver ROI
When it comes to ROI, marketing automation tools are top dog, despite the respondents not labeling it the most important technology. Still, there is a relative amount of stability here between “most important” and “delivering ROI.” It’s also worth considering the wording here: The question asks what technologies are expected to deliver ROI, not which ones actually do.
The results here may also be a result of certain technologies popularity more than anything. Technologies like predictive analytics and personalization are still in their early stages, and it’s possible they will shoot up the charts once there is more powerful machine learning and wider adoption of the technologies.
7. Tech knowledge is critical, but so is creativity
This chart comes from the previously mentioned report “Modernizing the Mix: Transforming Marketing Through Technology and Analytics.”
The data here skews toward larger business (76 percent of respondents worked for companies with more than 500 employees), but the fact that 78 percent of respondents listed “understanding marketing technology” as increasingly important underscores the significance of martech. However, the report also proves that technology isn’t everything. Creativity is still the primary skill marketers think they need.
Today’s marketers are hybrids: half creatives, half tech nerds. Some lean more one way than the other, but hiring a team that balances the two is key.
8. The digital transformation has only just begun
It may seem like we’re at peak tech, but if this study from The Economist Intelligence Unit is any indication, we could just be at the beginning. Eighty-four percent of respondents claim their company is just starting to implement a digital transformation or is still in the planning stages.
Marketers are also going to invest more in martech.
Only 2 percent plan to decrease their investment in martech, despite the considerable confusion companies face with such an overwhelming amount of options.
The main takeaway here is that marketers are willing to pay for the latest tech, but they’re still struggling to make it all work together. As venture capitalists and big shots like Salesforce keep looking to invest, marketers caught in the middle of the storm are going to have to keep up.Image by Tzido Sun / Shutterstock