There has been a lot of noise about the marketing technology ecosystem exploding. ChiefMartec started their marketing landscape in 2011 with 150 companies, and now track over 7,000 companies.

This trend is not unique to marketing technology. Netskope, which provides network cloud security for enterprise sees an uptick in SaaS consumption not just in marketing, but sales, hr and finance departments as well.

Gartner forecasts enterprise software spend to reach $400B this year, with almost $4T in IT spend. And, beyond any recessions, this number will continue to increase.

But why is marketing topping the list?

The customer

Marketing is about exposing your product to your customers. This could be in store (packaging, store brands, corners), online (advertising, website) and a multitude of other avenues (radio, print, direct mail etc.).

To reach a customer and to keep growing a business, marketers have to constantly evolve to compete in existing channels (TV, email, organic) as well as innovate with new channels or marketing formats (Instagram Stories, Podcast sponsoring).

Every channel requires a number of technologies to maximize the effectiveness of of marketing efforts. Do you run a website? You will need excellent analytics, SEO, retargeting and pixel technologies, A/B testing, attribution, email capture and more. Rinse and repeat for your other channels (Social, PPC, Email etc).  

Software Complexity Multiplier: # of Active Channels

Revenue growth and channel maturity

Your product is your core revenue driver, but marketing (and in technology companies growth teams) are seen as drivers of new and retained revenue.

New channels yield very high incremental gains initially, but as the low hanging fruits disappear it becomes harder to maintain the growth rate (Remember Zynga in the early days of Facebook). At the same time, optimization strategies appear which given your newfound scale are worth pursuing: increasing sale a few percent on a $3B brand has a much larger net effect than 50% on a $1M brand). This specialization leads to an explosion in add-on software.

A classic example is email. Initially, companies begin with regular blasts targeting their whole email list. Over time, the list grows large enough that segmenting it becomes a worthwhile and necessary investment, or else unsubscribe and delivery rates take a toll. Next is personalization which often entails enriching your customer profiles with 1st and 3rd party data. Finally, you strive for a dynamic and creative experience based on the device, weather, time of day and a myriad of other factors.

Software Complexity Multiplier: Channel Maturity

Advertising, Attribution and ROI - Never perfect

Marketing commands large budgets and on no other channel can it be deployed faster and with more reach than with advertising. Be it from driving earned media (the recent Nike Kapernick Campaign) to setting up thousands of keywords for an ecommerce site, the marketing department has a responsibility to show the money is well spent.

  1. The more channels are active, the more attribution becomes a difficult problem to solve
  2. The larger your spend, the more focus there is on investing that money well
  3. Data regulations and fraud muddy the picture

Measuring and proving their impact is what marketing teams live and die by. And this "type of protection" doesn't come cheap. CFOs ultimately rely on benchmarks to calculate budgets relative to revenue but even large companies like P&G struggle to assess the effect of their investments.

Software Complexity Multiplier: Marketing ROI measurement accuracy %

Closing Thoughts

Marketing teams are an important driver of revenue growth at any company, and as their responsibilities grow, so do their software needs. I listed three important factors that explain why marketing is such a heavy consumer of software.

  1. The # of active channels
  2. The maturity of the channels
  3. The level of accuracy required in the measurement of marketing ROI

As you explore your next marketing software addition, I invite you to explore what some of chief.io's marketing professionals use in their roles.