We’re busy working on the 2023 edition of the martech landscape (interactive version at martechmap.com) that will be released on #MartechDay, May 2. Spoiler alert: if you were betting this would be the year the martech supernova collapses into a black hole… well, you might think of hedging that bet.
The number of weekly martech-related product launches on Product Hunt and new funding announcements on TechCrunch continues unabated. Most recently, a ton are riding the wave of generative AI with new APIs from OpenAI, Azure, and AWS. To be sure, there are a lot of duplicative ideas, and competition will ultimately shake out a bunch. But there’s more diversity of innovation happening here than cynics will acknowledge.
So who’s buying all of this new martech?
Enterprises have a growing number of niche use cases that their legacy platforms don’t address. The push towards open ecosystems makes it easier for companies to augment those investments with specialist apps.
On the opposite end of the spectrum, it is a golden age of tools for individual creators — whether they’re independent or working on the edge of a large organization. It’s been a couple of years since I presented my talk on Marketing Superpowers: How AI & No Code Transform Every Marketer into a Maker. The state-of-the-art there has since leapt ahead a full generation. (Memo to self: time to create the 2.0 version of that presentation.)
But the real sweet spot for martech and salestech innovation seems to be in upper-SMB and the mid-market. Now — disclosure — I’m the VP of platform ecosystem at HubSpot, which is a leading platform in that space. So assume I’m biased. But I brought data to back up my claim.
First, on the HubSpot side, my team works with our tech partners contributing to our App Marketplace of over 1,350 integrations. I have a front-row seat to new startups building into our platform, and I’m continually amazed by the creativity of the new and updated products that partners bring to our ecosystem. I swear, I’m not trying to pitch you. But purely for example purposes, take a look through the most recently listed apps to get a sense of all the different things people are building for mid-market marketing and sales teams.
But okay, okay, let me share some completely independent data with you.
Last week, I caught up with Roger Beharry Lall, the research director at IDC focused on marketing and promotional applications for growth companies. He kindly shared some of his latest findings with me that I found absolutely fascinating.
The chart at the top of this post is the first data point that caught my attention. 53% of mid-sized companies plan to increase their spending on new marketing technologies this year. Nearly 1 in 5 plan to significantly increase their spend on new martech.
Have I sufficiently emphasized the word new?
This is in the context of “current macro-economic situations.” In other words, despite the uncertainty of the economy this year — or, perhaps because of it — mid-market companies are seeking to invest more in martech today. They see it as essential to their growth and competitiveness. Unlike media budgets that are often highly elastic, they see martech as more foundational and evergreen. It’s not just the tech. It’s the organizational capital they’re developing to harness it effectively.
Now, that doesn’t mean it’s all shiny-object stack explosion in the mid-market:
According to IDC, 31% of SMBs plan to reduce their martech stack, at least in quantity of apps. That’s true consolidation. (“Yes, Virginia, martech consolidation does happen.”)
Another 24% — 1 in 4 — plan to switch out martech vendors. The size of their stack, as measured in number of apps, may not grow or shrink, but the make-up of which martech products they use is going to change. (This aligns with similar findings from my friends at martech.org in their annual martech replacement survey.) This is an opportunity for new martech startups to disrupt incumbents.
The most interesting statistic in that chart above is that 28% — nearly 1 in 3 — plan to fundamentally restructure their martech stack. That’s more than just consolidating or swapping vendors tit-for-tat. That’s rethinking the whole shebang. In terms of Martec’s Law, this is a rare reset opportunity.
That’s a huge opportunity for innovative martech products and services firms to help craft the New Marketing Stack.
So what triggers mid-market companies to go in search of new martech?
Well, if their current vendors become too expensive, that’s the top motivation to do some spring cleaning. Closely related, if they don’t think they’re getting value for the money they are spending, that’s the second most common reason to go shopping for more fuel-efficient models.
As Roger put it more colloquially, “Show me the money.”
But the next two most common reasons — and this is important — are companies seeking fresh perspective/innovation (34%) or navigating their own organization evolution (30%). They’re proactively searching for what’s new.
Or, in Roger’s words, “Show me the future.”
Collectively, these are the reasons why the future of martech will increasingly appear in these SMB and mid-market companies first. They’re ready to invest money in new martech. There’s a multitude of them worldwide, representing an enormous addressable market for martech vendors. (In contrast, how many Fortune 500 companies are there? And who’s buried in Grant’s tomb?) They have enough scale and growth momentum that they have interesting challenges and opportunities to be solved. They’re not wedded to gargantuan legacy platforms that will take a jack hammer to dislodge.
Most of all, they’re intentionally looking for the future of martech.
Because that spirit of innovation is how today’s small companies become mid-sized, and the mid-sized become tomorrow’s enterprises.
P.S. Are you a marketing operations leader at a mid-market company? Please consider entering your stack in the 2023 Stackie Awards to share with us some of the innovative new marketing apps that you’ve adopted and how they fit into your overall martech capabilities.
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