Here’s a more detailed breakdown of the stages, as I think of them:
1. Innovate
The category is just emerging. Most people aren’t aware of it. The early vendors pioneering the category may be jockeying for different labels to call the category.2. Expand
The category has broken through and is now rapidly gaining traction. Many new vendors enter the space, both new start-ups being launched as well as more established companies adopting their products (and content marketing) to address the opportunity. Smart venture capital investments happen at this stage. The label for the category has generally converged, and subcategories are starting to emerge. Examples today include account-based marketing and interactive content marketing.3. Peak
The category is at maximum vendor noise. If we were to view the parallel adoption curve, products are now crossing the chasm into the “early majority.” Partly to counter the noise, subcategories are increasingly well-defined. Consolidation through acquisition begins to happen at notable valuations (which drives even more late entrants and investment into the category in the short-term). An example today is the content marketing category, which has well-defined subcategories for content curation, content distribution, and content lifecycle management. Interactive content marketing is essentially a subcategory that grew so large — and differs enough from the rest of the category — that it split off into a category of its own. (Reminder: I’m biased when it comes to that particular category).4. Consolidate
The category is now becoming mature, and the leading vendors are pulling away from the pack. A significant number of vendors will exit the space in this stage, either by being acquired, running out of funds, “pivoting” to a different category, or gently fading into the night. A few new vendors enter the space at this point, but they’re either very deliberate or very delirious. Subcategories are well-defined, but several will likely collapse together. The subcategories more likely to persist align with market segmentation: for instance, SMB versus enterprise, and B2B versus B2C. An example today is the marketing automation category, which has very distinct subcategories for market segments, but within most of those segments, there are usually 2-3 leaders and maybe another 3-5 runner-ups — and then the mindshare for the rest drops off precipitously.5. Challenge
The category is now mature, consolidated down to a small number of well-established brands within each subcategory (which mostly correspond to market segments). In the adoption curve, the category is now selling into the “late majority.” There is tremendous growth in adoption at this stage. There may be a couple of big mergers that are more about economics than technology, but the dominant players often become complacent (since they “won” the category), which leaves the door open for new challengers. To succeed, those challengers must have a clear strategy to disrupt the status quo, and they may actually trigger the development of a new category (for instance, the way MAPs disrupted email service providers). Another example would be the CRM category — with a handful of established brands owning the majority of the market, but still the occasional disruptive new entrant (e.g., HubSpot’s CRM). There are three important points here: First, the marketing technology space is a collection of many different categories — each at different stages of maturity within the above model. This is why predicting the rate of growth or consolidation in the overall martech space is so difficult; while some categories are consolidating, others are expanding, and still new ones are being explored. Second, there are new entrants to the market at all stages of a category’s maturity. The real difference is the quantity — which I’d say is greatest in the EXPAND stage. If you lump these first two points together, my best guess is that the overall growth of the marketing technology landscape looks a bit like this:
We’re approaching a lot of consolidation for some big categories, but new categories (and new disruptive entrants in existing categories) will continue for some time. As some vendors leave, new ones will continue to arrive. The total number active may be nearing a plateau, but I don’t think we’ll see massive consolidation of the overall space — at least not as far as I can see within the horizon of the next several years.
Third, the number of active marketing technology vendors may be nearing its peak, but the adoption of marketing technology has tremendous growth ahead. I was just reminded of this by Sheryl Shultz at CabinetM (a fascinating service for marketers to track and manage martech vendors) last week. She sketched out the following curve on a piece of paper:
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In other words, it will be a tough market for many marketing technology vendors (and their investors) to grapple for dominance in each category, but the winners have incredible growth opportunities ahead of them. The opportunities for applying marketing technology effectively inside organizations are still in the early stages of blossoming. It’s a great time to be a marketing technologist.Scott Brinker is the author of Hacking Marketing, the editor of chiefmartec.com, the program chair of the MarTech conference series, and the CTO of Ion Interactive. He is also the mind behind the annual Marketing Technology Landscape Supergraphic, which featured over 3,800 vendors this year. This post was republished with permission from chiefmartech.com. To see the original, click here.
