To appreciate the size and growth of the marketing technology space, just follow the money. In 2015 alone, over 300 marketing technology solution providers received $17 billion in funding. Investors are bullish about martech—in no small part because marketers are willing to spend in technology. One estimate, from the advisory firm IDC, projects that spending in this space will reach $32.3 billion by 2018. (And yes, that’s with a B.)
Martech is, obviously, already big business, but what’s ahead in this space? As the marketing and sales head of a high-growth company, I spend a lot of time mulling over this question. Here’s where I see the martech space heading in the next years ahead—and why they matter to CMOs and other marketing leaders.
We’ll look back at 2016 as the year of “peak martech.” Scott Brinker, a respected thinker in martech and program chair of the MarTech conference series, says we’ll see a “plateauing of the total number of active vendors in the space” due to exits, failures and pivots. “We’ll start to see some real consolidation in the more mature categories of the landscape,” he adds.
I agree with Brinker’s prognosis. While technology has played a significant role in transforming marketing teams from a cost center into revenue centers, the martech landscape has also become very confusing and overwhelming due to the number of vendors marketers have to deal with. Handling 30 to 40 martech vendors is not scalable from the perspective of CMOs and their teams.
While a one-suite-that-rules-them-all landscape is unlikely to emerge, I think we’ll see bigger players in the space acquiring smaller vendors, or smaller players coming together through partnerships and mergers. Consolidation and size will give more vendors more bargaining power. For buyers, a less crowded martech landscape also means a less stressful vetting process.
CMOs will demand more business impact from marketing technology.
Marketers need to be able to demonstrate positive return on their tech investments. As a recent Marketing Land article points out, marketers are becoming more discerning in their tech purchases and are cutting down on redundant and overlapping technologies.
Does this mean we’ll see a drop in martech spending? Not at all, since the data shows that companies plan to increase spending on marketing tech. But it does mean we’ll see companies spending more in categories where ROI has been proven—categories like conversion rate optimization, where demonstrated ROI is 223 percent. It also means that CMOs will be more judicious when it comes to newer tools with a lot of hype (think big data analytics in its early days) in favor of categories with more long-term play like customer intelligence and CRM.
Customer privacy and consent will become a bigger consideration.
Martech enables companies to collect an unprecedented amount of data—data they can use to deliver more relevant and more personalized content to customers. But studies show that customers don’t like how companies collect their data: a study released last year by the University of Pennsylvania’s Annenberg School for Communication, for instance, found that 91 percent of customers don’t agree that companies should be collecting their information in exchange for discounts.
Consumer concern is already inviting government action. In December 2015, European officials approved stricter regulations when it comes to the collection and protection of customer data. In places like the U.S. (where regulations are more relaxed), more and more people are using tools like ad blockers to avoid sharing their data and activities.
When it comes to using martech for data collection, companies will need to seriously consider giving customers more control—or risk losing their trust.
Business leaders—and customers—will demand more authenticity.
An unexpected consequence of the rise of marketing technology is the increased de-humanization of the brand-customer relationship. Many tools in the martech stack treat the customer as a number—as just another faceless consumer to remarket to, to convert or to move down the funnel.
But customers are humans, and humans are emotional creatures. A study published in the Harvard Business Review in November 2015 shows that companies that connect with customers on an emotional level see a huge payoff. “Embracing an emotional-connection strategy across the organization requires deep customer insights, analytical capabilities, and, above all, a managerial commitment to align the organization with the new way of thinking,” concluded the authors of the study.
CMOs and other members of the C-suite will realize that all the data they get from martech is no substitute for authentic engagement. That’s a good thing. Customers are more than just the wake of their data; their value is more than the sum of the trail of activities and data they leave behind. That’s why marketers must go beyond data. They must build their capacity for customer intelligence in a way that builds a genuine relationship with their customers. The companies that prioritize engagement—those that build a stronger emotional tie with their customers—will see more ROI from marketing technology.
Companies of all sizes are investing in martech in the hopes of improving their marketing strategy and driving more sales. To do that, companies need tools that will strengthen their relationship with customers. Ultimately, the vendors that help companies get closer to their customers are more likely to see success as the martech space matures.