Big Crunch - The Expansion and Contraction of MarTech

  • 31-Aug-2016

In Cosmology, the Big Crunch (loosely speaking) refers to the scenario where the universe stops expanding and starts contracting.  I see some clear analogies in digital marketing technology.

MarTech Expansion and M&A years

The Marketing Technology (MarTech) category has been on an expansionary path — at least on the supply side — for many years now. One of the factors fueling this expansion has been the expectation that Chief Marketing Officers (CMOs) will increase their technology spend — according to some estimates, spend even more than CIOs on technology in the near future.

This led to a flurry of acquisitions in the MarTech space (approximately up to 2014) as vendors wanted to get in on the action in this space.

MarTech Underperformance

However, the overall customer experience suggests that MarTech adoption remains in early stages and also underperforming. This has been one of the main findings in our 2016 Digital Marketing Technology survey, and is also borne by our just released Campaign & Lead Management Technology research. 

It all makes me wonder if a kind of MarTech contraction process is underway.

Some Vendors Retreat

Some vendors who made big-ticket acquisitions in the go-go years have been shuttering / divesting / changing strategy. Sample these:

  • Intuit sold off the acquired Marketing Automation and Communications vendor, DemandForce
  • Google shuttered the acquired social media marketing tool, Wildfire
  • LinkedIn (prior to getting acquired by Microsoft) shut down the acquired ad-serving took, Lead Accelerator
  • SDL retreated from the social media intelligence and monitoring space by selling the acquired tools
  • Cision pivoted away from the social media monitoring tools it acquired from Visible Intelligence
  • Teradata put together a marketing applications portfolio using a string-of-pearls acquisition strategy but then sold it off to a private equity company

But does this herald a broader retreat?  Perhaps not.

MarTech Expanding and Contracting

This is a large space as Chief MarTec's super graphic illustrates. Some Schumpeterian creative destruction is to be expected.

My take here: the marketplace is both expanding and consolidating at the same time.

As consumer behavior changes and technology evolves, new categories of use cases emerge and new vendors sprout to support those use cases. For instance, mobile marketing automation, account-based management, content marketing tools, data management platforms, A/B testing tools — all of these can be considered relatively new categories of MarTech software. This is the expansion part.

But as each individual category evolves and matures, there is vendor consolidation and shake-out and the list of vendors considerably thins. This is the contraction.

What Does This Mean for You the Technology Buyer?

As this MarTech Big Churn plays out, there will be vendors that'll shine brightly while others may implode. So, you'd want to pay a lot more attention to the technology you're selecting or you risk ending up in a black hole.

You need to consider not just how good the technology is but take a long, hard look at the strategic considerations. With in-depth research and executive decision tools for selection, we'd love to help.

 

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