2018 Martech Trends From Our Perspective
A sizable component of our thesis here at Bowery Capital focuses around the Chief Marketing Officer (CMO) and the money that they spend on technology. We continue to believe that this is an incredible area to invest and still represents one of the best opportunities in the venture capital ecosystem. To date we have made 9 public investments in the space. From large companies like MOAT to growth stage businesses like mParticle and ActionIQ and early stage companies like Elliot, we continue to love this space. After a few presentations to the public on our points of view and thinking we thought we would put pen to paper and lay out some 2018 Martech Trends that we are thinking hard about.
1. Smaller Budgets Leads To Less New IT Purchasing. In 2012, Laura McLellan at Gartner predicted that the CMO would spend more money than the Chief Information Officer (CIO) on IT. While we do not have the data yet to support whether or not she was right or wrong, Gartner also told us in December 2017 that budgets were constricting and marketers were getting tighter with their dollars through 2018. One of our 2018 Martech Trends is an expectation that this trend continues after five years of over-investment in the marketing business unit. Startups should be careful when painting an increasingly growing and flourishing market size.
2. Over The Next Five Years, The Pendulum Will Swing Back To Retention. Another component of the business unit that we find fascinating is the constant swing from finding new customers to keeping old customers. We’ve seen an enormous amount of focus over the past five years on net new customer acquisition, growth in paid and earned marketing spend, and aggressive expansion of the revenue line at all costs. This is highly likely to change as marketers focus on doing more with less money. ROI will be king over the next five years and startups who can prove this will benefit greatly from the trend.
3. Rise Of The Machines Touches Marketing In A Serious Way. Of all 2018 Martech Trends this is likely the most obvious.Machine Learning, Robotic Process Automation, Programmatic Advertising, and Artificial Intelligence will seriously enhance and displace the business unit in the years to come. Enhance is quite easy to understand as marketing gets more and more quantitative. Replace is a bit more nuanced. Marketers have grown their organizations so much in recent years that we believe there will need to be some correction. Like the USS Vengeance in Star Wars that was heavily automated to the point that she could successfully function with a crew of one person aboard, we believe startups tackling the human capital problem to create more leverage for marketers will be the winners.
4. The Offline <–> Online Problem Really Gets Solved. There are still a lot of challenges that marketers face in dealing with the offline to online (and vice versa) problem. Multiple versions of the point of sale system, multiple databases that contain customer information, multiple vendors for marketing automation.. The story is consistent across industries. One of the 2018 Martech Trends we are most bullish on is startups solving this problem for the ecosystem.
5. Beware Of The Walled Gardens. At Bowery Capital, we debate the merits of this a fair amount but at the end of the day our view is that most of the larger companies operating with large networks of engaged users are going to own and control their data. Things like pricing their own data, understanding how to work with external partners, and focusing on extracting the most value out of the user is one of our biggest 2018 Martech Trends. Startups should proceed with caution as the ecosystem has materially changed from five years ago.
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