MarTech: Exploring the Investment Space

What is MarTech?

MarTech, a portmanteau of marketing and technology, refers to the union of technology and marketing that results in innovative marketing tools designed to streamline, simplify, and automate various marketing processes, such as email marketing, outbound marketing, content marketing, and more. Some representative examples of leading marTech tools include Hubspot, Airtable, Crazy Egg, and SEMrush.

The ultimate goal of marTech is to help marketers reach their marketing goals by leveraging technology and data to reach a wider range of audiences faster and target them with the most relevant messaging through their preferred channels and platforms, be it ads, videos, images, ebooks, stories, and more.

That said, marTech solutions aren't exactly one-size-fits-all. Each platform is uniquely designed to help marketers fulfill specific objectives. This is why marketing teams utilize several marketing technologies, also known as the marketing technology stack, to cover all their bases, ensure better results, and attain their desired goals.

A Rapidly Growing Market

• MarTech is a booming industry with an impressive growth potential in the immediate and foreseeable future. It is currently pegged at $344.8B, with the US and UK having the biggest slice of the pie with a combined estimated value of $149.7B.
• Recent study reveals that marketing departments are dedicating 23% of their overall budget to marTech.
• According to a report by Ascend2, 50% of businesses have allocated 10% to 20% of their marketing budget to marTech. 22% of respondents plan to spend 20% to 40% of their budget on marTech.
• The marTech landscape currently has over 8K vendors. That's an impressive 5,233% growth in the past 10 years.

Building The Ultimate MarTech Stack

• The marTech environment contains a wide array tools and techniques. The critical task of choosing the best tools to put together the ultimate marTech stack can be daunting and complex. .
• 92% of successful marketers say that consolidating solutions in their tech stacks improves efficiency and productivity.
• 76% of marketers say they use 3 or more marTech tools to support their marketing efforts. 24% report using 2 or less.
• Simply put, there's no correct formula for building a marTech stack. The technologies you need depend on several factors, including industry, audience, budget, and more.
• Although the designs of successful marTech stacks vary from one enterprise to another, every marketer is expected to deploy the following technologies:

1. Marketing Attribution Software
2. Email Marketing
3. Content Management System
4. Customer Experience Software

• To meet their marketing goals, 62% of marketers reported they will need to update some or all components of their tech stack in the year ahead.
• MarTech stacks work great but only if they're designed to fit your marketing strategy. Thus, it is ideal that marketers devise their strategies first then find the best technology to support it.

As put by Michael Shen, marketing director at Zapier, "Understand the needs of the customer and then work backward toward the technology. This ensures your investment is actually helpful for the end user and not just a shiny new tool."

Prevailing Functions and Goals

According to a 2022 outlook report, the main functions for marTech in enterprises are the following:

• 64% - Email marketing
• 62% - Communication
• 54% - Social media
• 50% - Collaboration/meetings
• 41% - Project management/workflow
• 40% - Customer relationship management

The same report reveals the top goals of enterprises for investing in marTech:

• 54% - Improving customer experience
• 47% - Increasing engagement
• 45% - Improving efficiency
• 28% - Improving data quality
• 27% - Improving conversion rates
• 27% - Aligning the efforts of marketing & sales

MarTech: Tailwinds and Headwinds

Tailwinds

• Changes in consumer behavior. Consumer preference for digitization has altered their behavior. This has been reflected in a continuous demand for products that provide a good experienceMarTech solutions help enterprises collect and analyze large quantities of customer data, thus deriving insights to help them create and provide relevant content through the most preferred channels or devices, and to do so at scale.
• Emerging data privacy laws. Brands and companies need to take care of their customers' data, especially in a scenario where clients are aware of data sharing risks and need to feel that their information is safe. MarTech solutions will help enterprises handle the necessary changes with specific affordances covering data privacy laws.
• The shift to digital. The already known transition from a traditional world to a digital world has forced compelling marketers to upgrade from legacy systems and embrace new technologies to remain competitive and significant.

Headwinds

• Too many options. There's a technology overload in the marTech ecosystem which can overwhelm both users and investors. Vendors number by the thousands and picking the right partners is a complex and fraught endeavor.
• Overhauling the marketing culture. With new technologies, new expectations, and new consumers, many enterprises are struggling to find the right mix of strategy and technology to make their marketing efforts more effective. For most organizations, this step requires a big change in how they see and perform marketing. That leap from traditional to innovative will have formidable obstacles.
• The large gap between tech and skills. 72% of marketing firms said marketing talent is more essential than technology. But only 28% view their in-house talent and tech to be trained and working well. In addition, 86% of marketing employees still consult with their IT to fully leverage their marTech tools.

Notable MarTech Investments and Acquisitions

• Salesloft - Atlanta-based sales engagement platform Salesloft announced an investment of an undisclosed amount from Vista Equity Partners. The round puts Salesloft at a $2.3B valuation.
• Adventr - NY-based video communications platform Adventr raised a $5M seed round led by Paladin Capital, with participation from Reinventure Capital, Invisible Ventures, and musician John Legend.
• Mperativ - San Francisco-based revenue marketing platform Mperativ closed a $5M series A round led by GFT Ventures along with Heroic Ventures and Westwave Capital. This brings the martech app’s funding size to $6M.
• Mavrck - Boston-based influencer marketing platform Mavrck closed a $120M investment round led by Summit Partners. This is a big funding leap compared to the martech firm’s previous round of $5.8M in 2018. Mavrck has raised a total of $141.4M over 11 rounds.

MarTech: Here to Stay

Marketers have to recognize that marTech has become a crucial cog in modern marketing strategies. MarTech tools are no longer just nice-to-haves. Organizations need to have MarTech integrated into their marketing approach.

Given how the marTech landscape has spread far and wide, it's crucial for marketers to first devise a strategy in total alignment with their mission, their goals, and their customers. Once that's established, finding the right technology and partner becomes less daunting.

Get in touch with the Finalis Insights Team to learn how Finalis can help you stay up-to-date with your industry.

Sources: Statista, MarTech Alliance, Ascend2, Digital Doughnut, American Marketing Association, Franchising.com, Marketing Evolution, Intercom, socPub, Enterprise Times, Salesloft, Paladin Capital Group, Demand Gen Report, Summit Partners