Is “Marketing Experiences” Technology Risky Business?

The marketing technology business is booming. At this point the “landscape” is more like a universe, with nearly 1,900 vendors serving marketers. But, as much as marketers may want it all, there’s only so much technology that any one company can buy—and, frankly, only so much that they really need. The result: Not surprisingly, different types of marketing technologies are growing at different rates, as well as being funded to varying degrees.

A cursory look at the “Marketing Technology Landscape” that ion interactive CTO Scott Brinker created earlier this year as compared to ones he created prior show significant growth in the marketing experiences area. This includes tools for content, email, mobile, search, social, video, and much more. In other words, technologies that help marketers provide the optimal customer experiences at specific touchpoints. 

Being a data junky, RJMetrics CEO and Cofounder Robert J. Moore decided to figure out why the marketing experience category is outpacing other areas so significantly, and what that might mean in terms of their value. 

“Investors want to know where they should be investing,” Moore says. To me, this includes marketers looking to invest in the “right” technology not only for their immediate needs, but also for longer-term needs. “And entrepreneurs want to know what type of company they should start next, or how the market that they’re currently in is developing,” he adds.

Growth mode

First, Moore discovered that over the past five years growth in the marketing experiences category has surpassed growth in all of the other categories. For example, 120 marketing experiences companies launched in 2012, as opposed to only 69 new companies across all other categories combined. Second, he noticed how narrowly focused many of the companies are as compared to businesses in many other categories. Based on that, he surmised that these smaller companies might be less valuable, as well: “The billion-dollar question [behind my research] is, ‘If there are more marketing experiences companies because each of them is more narrowly focused, is the average company worth less?'”

According to Moore’s research, the mean amount of funding that marketing experiences companies received is $25 million; this is the lowest amount among any category in Brinker’s infographic.

In fact, infrastructure companies received more than twice the funding than marketing experiences organizations. And even marketing operations companies are better funded than businesses that provide tools for marketing experiences.

That said, Moore wasn’t convinced that funding equates to “value.” As he points out, it may require less capital to build and run a company that provides marketing experience technologies. So, Moore looked at number of employees, because that tends to be a growth indicator. In this area marketing experiences companies also lag.

It seems, however, that neither of these issues is negative. On the contrary, seemingly, it takes less capital and staff to launch and run a marketing experiences company than it does for other organizations in other marketing technology categories, Moore surmised. These lower barriers to entry have translated to a flood of new options in the marketing experiences area.

For marketers, these findings should be a not-so-subtle reminder to conduct thorough research into which marketing-tech vendors will be right for their organization’s marketing strategy; and not rush to judge, positively or negatively, based on factors that might be misleading.

                                                                                                            Charts courtesy of RJMetrics

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