Getting a Grip on the MarTech Ecosystem

Never has the Marketing Technology (MarTech) ecosystem been so big or complex.

The numbers speak for themselves — over 1,800 vendors scattered across 43 different categories. And still growing.

It's enough to make any CMO's head spin.

In such a vast landscape, it's no wonder that marketers are often paralyzed by the frighteningly broad range of platforms and solutions available when building a marketing stack.

Disorientation or disinformation can lead to hasty, ill-informed decisions — or, worse, management reticence toward adopting badly-needed technology solutions, a problem flagged by over half the respondents in a WalkerSands Communications study.

This piece is the first in a series taking a closer look at the MarTech landscape: its evolution, what's driving its expansion, and some of the emerging players in key areas.

Why Has the MarTech Ecosystem Grown So Large?

Marketing messages have always been shaped by the mediums that carry them. In that respect, technology hasn't changed anything fundamental.

But unlike the dominant mass mediums of the past — TV and print — the internet, delivered through PCs and now mobile devices, is a user-centered, personalized medium. People choose what they read, watch, and interact with, rather than passively absorbing content designed for the masses.

The vast and still-growing reach of the internet — combined with an expanding global population and the deeply individualistic nature of online consumer behaviour — has created needs that only technology can address.

As they say: necessity is the mother of invention.

One key to understanding the rapid expansion of marketing technology lies in the fluid, creative, and inherently innovative nature of marketing itself.

As MarTech analyst Scott Brinker has pointed out, marketing software lacks the stability and standardization that characterize other corporate functions like manufacturing and finance. That openness creates space for any number of startups — or anyone with a novel idea — to enter with a product targeting any one of the over 130 distinct areas of marketing.

Hence the explosion of vendors offering everything from social media advertising to loyalty programs to mobile web analytics. It's no surprise that MarTech companies attracted over $130 billion in investment over a recent five-year period, including a record $47 billion in 2015 alone.

There is, however, another factor at play.

In-House Marketing Is Driving Vendor Growth

While technological advancement is perhaps the strongest force behind the growth of the MarTech ecosystem, the expanding array of solutions on offer is also a side effect of brands pulling work away from marketing agencies.

What's behind that trend? Two words: customer experience.

As marketers lean increasingly on personalized customer experiences to cement brand-consumer relationships, there is growing concern that marketing agencies aren't agile enough to exploit customer data in real time — and therefore can't stay effectively close to target audiences.

In response, companies are building larger in-house marketing teams, prioritizing faster reaction to consumer needs and maintaining tighter control over their customer data.

This shift has two downstream effects on the vendor landscape:

• Marketers working in-house — particularly those without deep technical backgrounds — need easy-to-use tools, such as tag and data management platforms, that demand minimal learning curves and little ongoing upkeep. This has fuelled rapid expansion of Software-as-a-Service (SaaS) solutions tailored to marketing use cases.
• Brands increasingly want tools built for their specific needs, not generic solutions designed for broad applicability. More customization means more vendors — especially startups — offering more specialized products, making the landscape larger still.

Challenges and Opportunities

Rather than being a source of frustration, the expanding MarTech ecosystem represents an opportunity for both vendors and buyers — though it certainly comes with challenges.

Marketers face an abundance of choices, and building an efficient, effective stack takes time and genuine research. But that abundance also means organizations can find a genuinely precise fit for their particular industry and use case, ultimately enabling them to be more responsive to trends and consumer needs.

For MarTech companies and startups, the opportunity is equally real. As the internet and the technologies layered on top of it continue to evolve, so will the specific pain points that new platforms can address — and the market for solutions that do it well.