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Marketing technology has a long way to go. only 4.1% penetration
This makes sense but I want to add some coloring.
The reason for this % is that unfortunately most marketing tech so far has been incremental at best. Its all just automating things that people already do without adding much of additional value. There are some interesting targeting and data tools but nothing has made me say “holy shit I just saw the future” in years.
First lets talk about the upper market -big brands and agencies. They are aircraft carriers that need new tech to be a HUGE order of magnitude increase over what they currently have. If your product is incremental, bigco doesn’t know how to buy you which makes the selling process a real pain --trust me I know from experience.
If you consider that most marketing tech companies are only a few years old and the sales cycles the low % makes sense for the big players.
Now lets go down market:
The 28MM SMB's, the companies are quicker to adopt SaaS, but often times market tech companies are too expensive.
Marketo is $10k annually and the average SMB’s top line is $5.3MM —thats SMB’s with a website. $10k annually isn’t a ton of money, it can be a hefty commitment without really “knowing” how something like Marketo can help because ROI just isn’t obvious up front. The SMB managers mind is probably thinking “I have Janice in marketing that does this so why spend another $10k? Will it make me $20k this year?” Once adopted I’m sure this thought changes, but adding another $10k expense without a clear return isn’t at the top of SMB manager’s mind.
This is one of the reasons that there is so much movement in the world of ad tech. Its largely software driven, however, all of the costs are hidden in the transaction. This makes it REALLY easy to ROI before you try something they could always just stop testing the the cost drops to zero.
IE if you were a big brand, you would fire your digital agency and train your team to start using something like MediaMath (a DSP). You place buys on a CPM basis and MediaMath takes a %. You realize it isn’t working, so you just stop spending. No need to fire FTE’s or anything. Just make smaller (or no) orders.
If you were a small co, you would try something like Google Adwords, and pay per click. If the $5k you sunk into the test didn’t work, you just try something else.
In both cases there is no monthly overhead of a piece of software that may not help in growing the top line.
We simply need more core innovation in marketing tech. Things currently are too incremental to justify the upfront cost.
Quick bit about me that makes me qualified to talk about this:
- My previous company, Prosperio, was a adtech provider that serviced the Fortune 500. We sold in July.
- I have personally transacted over $20MM in ad inventory on various mediums during my career.
If you want to chat some more ping me on twitter @jsfour
Pinged you - not on twitter.
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