By Paul Wiefels, Managing Director, Chasm Group LLC
Marketing technology (aka “martech”) has now become the Frankenstein of technology. During the last decade, martech applications were created to automate the last sizable business function – marketing – and in so doing, provide a set of more granular metrics that marketers could use to show the ROI associated with their numerous efforts. Beleaguered CMOs, sometimes regarded by their peers on the executive staff, notably in B2B companies, as conference organizers, party planners, or the brand police now could transform both their function and themselves by delivering more direct contributions to revenue. They could connect spend to return, lead nurturing to lead scoring, and so on. But these nascent technologies soon revealed the need to digitize a lot of other stuff to augment, complement, or simply enable a process that was growing in complexity. The venture community was quick to recognize that CMOs had budgets, so they jumped in big time and enjoyed some early wins via IPOs (e.g. Marketo, Hubspot); or through acquisitions at significant premiums (e.g. Eloqua, Pardot). Over the past five years, we have seen what many regard as an axiom in both the software and venture industry: what’s worth doing is worth overdoing.
FOMO, fear of missing out, now characterizes martech, both supply and demand. The folks at Martech Today feature an infographic (“The Martech 5000”) that now is comprised of more than 7000 entrants; while BCG reports that in 2017 CMOs spent more on technologies than CIOs did. Marketers now boast of their “marketing stacks.” The MarTech Conference sponsors the Stackie Awards where contestants vie for industry encomiums (and a top 5 finish) via submitting “a single slide that illustrates their marketing stack in some conceptual way.” Cisco was a winner in 2017 with 39 different technologies.
All good I guess if such efforts really deliver. But doesn’t it also sound, well, excessive? Think about it. A contract negotiation for each application after much shopping, sales meetings, and POCs. A service level agreement (SLA) to manage for each. Myriad overhead issues associated with onboarding, integration, training, and getting it all to work together. And the potential for a less than salutary effect on the cost of sales. Some of this is overhead that the VP Marketing may not have to deal with directly but many others in the company do. Now, if you’re Cisco, it might be classified a necessary nuisance – small beer in pursuit of customers that can be extremely valuable individually and collectively. But if you’re not?
More importantly, can a function that now relies on all this be sustained? Can an industry which spawned all this be sustainable? Supply-sider’s argue that there are effectively zero barriers to entry in software today, thanks to open source projects, relatively cheap infrastructure-as-a-service (IaaS), global talent markets that are accessible, and, ironically, low cost digital marketing channels and capacity. On the demand side, marketers must continue to expand their scope and scale to meet evolving buyer expectations, new marketing innovations, and the need to differentiate themselves from a multitude of global competitors.
It sounds good when you say it fast but look deeper. Such arguments belie the evidence of every major consolidation of IT infrastructure, typically initiated by economic slowdowns, over the past 30 years. The world discovers that it does not need and will not pay for 7000+ software companies – for marketing or anything else. Things go slowly at first then go very fast. “Me too” becomes “me dead.”
We’ll look at why and what to do about it in the next installment.