More MarTech Tools, Less Market Consolidation?

  • by , Op-Ed Contributor, July 20, 2017
Scott Brinker’s annual Marketing Technology Landscape graphic is a reminder that the marketing and advertising technology ecosystem continues to grow at a startling rate. This year, five times as many marketing automation vendors were added to the chart than were subtracted.

There are now 212 companies in total, a 36% increase. Brinker notes that this is a strong sign against the consolidation that many experts have predicted. As he points out, if the market for these tools were really consolidating, would we see this much growth in 2017?  

In my estimation, there are two, more telling indicators that substantial consolidation across the marketing technology landscape is still in the distant future.

Both Marketers and Investors are Driving Growth

As the automation category grew to over 200 players, the combined landscape of marketing and advertising technology expanded by 40%, to a whopping 5,381 vendors. Of those, only 7% are enterprises, and nearly half are “niche” players with less than $100 million in revenue. There are two key factors driving these numbers:

Investors:  While a rare few marketing technology players eventually do IPO or grow to the size of a large enterprise, the vast majority exit via an acquisition. This means that funding point solutions, with an eye towards a relatively quick exit, is an attractive investment for many investors.  And if you talk with investors, you’ll quickly see a palpable desire to ramping up their spend, with some estimating that 100x more money will be invested in the marketing space in the near future.
Marketers: End users, at both brands and agencies, have an insatiable desire for new approaches that, deliver the very latest forms of customer communication or interactions.  Even though many of these end users lack the skills to fully leverage the point solutions they’ve invested in, there is always a pull towards the new shiny object.

The truth of marketing is that every customer is unique, the journey from tire-kicker to brand advocate complex, and no single approach has been able to handle all. This is the reality driving innovation across the industry, and unless every consumer assimilates to a common personality, this will not change.

Yes, marketers seem overwhelmed by the vast array of technology available — but this is a cry for increased integration, not consolidation.

Consolidation is not Integration, and Marketers Need Integration

Brinker argues that the surge of automation players and vibrant ecosystem of niche players is a sign of sustained growth to come. While this certainly helps keep marketers at the forefront of new techniques, it’s not helping deliver better customer journeys.  Looking at the marketplace, it’s clear that consumers are demanding a better cross-channel experience.

This is not lost on marketers. As Gartner recently reported, a top CMO request is the integration of marketing tools to make various systems work together. Selecting a marketing cloud system might seem like an easy way to achieve this, yet this often fails to meet expectations because of slow innovation cycles and acquisition integrations to the cloud.

Consolidation slows innovation. Instead, marketers must look for new tools to meet the needs of the ever-increasing number of channels and ways of doing marketing. This explains the continued growth of tools and why the convergence and consolidation many have predicted isn’t happening.

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