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The State of MarTech Report

There has never been a more exciting time to work in marketing and technology. The world was already digitising rapidly, but the pandemic has accelerated this digital transformation. Companies that have been forced to adapt to evolving customer behaviours to survive now have an opportunity to thrive.

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Q&A: Scott Brinker on Martech Growth, 2022 Trends and Challenges

During our research for the recent Martech Report 2021/22, we had the pleasure of interviewing Scott Brinker. 

Our report finds that the Martech industry is now worth $344.8bn globally, and also looked at some of the recent trends, and the challenges marketers face with the technology they use. 

Scott features in this report, but he had plenty more to say about the industry. So, we're sharing the whole interview here. 

We talked about recent trends in the Martech industry, the effects of the pandemic (of course), the challenges of martech, and more... 

How do you see the Martech industry developing over the next 12 months?

I think it's always interesting to look at this from both the supply side, and the demand side.  

On the supply side I think there's a couple of really interesting trends happening. Every year I've been trying to track the growth of the martech landscape.  From the very first one, the moment I come out with the landscape, the analyst community and others comment on how oversaturated it is, and how it’ll radically consolidate and won't be this big ever again. And of course, next year it's even bigger.  

This trend continues, and the reason why is not that consolidation isn’t happening within individual companies and individual sort of categories.   

It reminds me of the Marc Andreessen quote about software eating the world. We're still early in that journey, and there are just so many aspects of business in life, you know that are now being facilitated by software.  

With so much innovation on top of this, there's a lot more ahead that this is gonna stay interesting for quite some time. What was interesting is that when the pandemic hit around the time I was publishing that 2020 Martech landscape people said half of these companies are going to be wiped out as a result of the pandemic.  

Yet actually the exact opposite happened - the pandemic saw one of the greatest accelerations of start-up creation in the history of the universe.   

We continue to see rapid growth within the marketing technology industry. I haven’t published a 2021 landscape yet, but we’ve been researching it. I’m quite confident in saying it will contain more than 10,000 vendors if we published it today. 

martech-landscape-2020-martech5000-slide 

So on the supply side, it continues to be a very rich landscape. Now there's a couple other things happening with the supply side that are really, really interesting.  

We're definitely seeing more platform ecosystem development. Marketers have been saying for quite some time that their number one pain point with so many of these martech solutions is that they don't integrate well and I think it's finally starting to get through to companies.  

They are realising that they can have a competitive advantage and win and retain business by having great integrations. 

The other trend that's really fascinating is something happening instead of consolidation. It's really more aggregation. What I mean by that is that vision that you were just going to get to one piece of software that magically consolidated everything and does everything you want.   

It's clear that's not on the cards anytime soon here because of the amount of apps, the volume of customer data and the processes that  people are building with low code and no code tools.  

There’s an explosion of stuff happening and so trying to consolidate that right now is just kind of a fool's errand.  

What you’re seeing instead is an entire set of software that's actually looking at that as an opportunity rather than as a barrier. Increasingly we’re seeing that part of the value proposition is the ability to aggregate, manage, and provide value from a very diverse landscape of apps and algorithms and agents and data sources.  

It's like they don't care how many different sources of data you have. In fact, the more different sources of data you have, the more value you get from their solution.  

Part of the success of collaboration and communication tools (Teams, Slack etc) was the fact that they would let you aggregate and integrate from all these other sources. So it wasn't just human communications but it was sort of like a communications interface to your digital operations.  

Slack has almost in many ways become like an aggregator of the communications experience across a wide set of tools. I could carry on with a bunch of examples, but I think that's another interesting trend on my side.  

It doesn't matter how much consolidation there is, there is still diversification so you're always going to see growth.  

What are some of the key marketing technology trends as you see them?  

A lot of the new trends that are taking shape are around AI, VR, those sorts of things. I almost started a no code/low code landscape earlier this year.  

Part of why I ended up not publishing it is because in many ways, this no code/low code thing has almost become the same way AI has where it's not really even a category anymore. It's a capability, it's a paradigm, that is now being adopted across software in pretty much every category that you can find.

I think if we try and clear away the hype, what we actually see as a genuine trend is increasingly more and more that software applications give you the tools to either customise them, or create things that previously you would have had to have a software developer custom build for you.  

So now the software itself has evolved to a level where it's just a lot more malleable by business experts rather than technical experts.   

I think it's very hard to pick a no code/low code winner because at this point it’s become so pervasive throughout so many products that I don't think there'll be a winner.   

I think you're gonna see a lot of winners in other categories and part of why they win is because they did a really good job with how they leverage machine learning and the way they handle no code / low code extensibility.  

How do you assess the impact of the Covid 19 pandemic on the martech industry? What changes do you think will become permanent? 

I think the way I would describe it is for the past five to 10 years pretty much every company has been talking about digital transformation.  

I've consulted with a number of them, and they all has these five to 10 year plans of how they’re going to digitally transform and everything always took longer than anyone anticipated.  

Then Covid hit and essentially it was this kind of like punctuated equilibrium in evolutionary theory. It's this idea that basically this cataclysmic event happens and it’s a case of  adapt or die.  

And as a result being forced into that uncomfortable corner about how we can engage with our customers digitally or be able to manage our internal organisation purely through digital channels as well too.  

The number of companies that rose to that challenge was remarkable. My hat goes off them. The outcome is like a lot of these things that were lower priorities just had to get done and martech was definitely one of those areas.  

Anything that was around digital engagement with customers really became front and centre and so I think there's been a number of data sources that all suggest that the industry moved overall. Pick a number somewhere between  two years to 10 years, and that’s how far it’s moved within just a year.    

Maybe some solutions involved a bit of scotch tape and chewing gum and baling wire and there’ll be some refactoring to get the foundations to be a little bit more solid, but we’re not going back from these digital offerings.  

We are going to return to physical channels in some ways, and we're going to see those things continue to thrive but even the way in which we think about the technology that will support those channels and engagements will just be a lot more mature than it would have been.  

Will pandemic working practices remain in place?  

I think the other key trend in this regard has been the growth of remote work and the digital empowerment of employees. That's also been a permanent shift. This doesn’t mean that everyone's going to be all remote all the time, but I think it'll be very rare to find a company that doesn't have the capacity to have remote staff. 

Whether this is implemented in a hybrid model or some other way, each company will find its own balance for its culture and its needs.  It's been a phenomenal boon because there's so much talent out there in the world, particularly in technology fields. .  

For a long time it’s been fairly clustered in a few geographic regions and tech hubs. These hubs are super expensive to live in and there's incredible competition for those positions, which makes it a real bottleneck on talent.  

Now that we've got more and more of these capabilities to be able to work with talent pretty much anywhere in the world and integrate it  much more deeply into the rest of the organization, this becomes a huge advantage.   

Do you feel that there are skill gaps in martech and marketing operations? 

Yeah, how can there not be? Technology moves so fast. Let me put it this way -  all I have to do is put tiny little logos on a slide, and I can't even keep up with that. That is like the easiest lowest level you can imagine with this stuff, and I can't keep up!  

I have nine people I worked with on that last landscape and we couldn't keep up. So you think about people actually implementing this stuff and harnessing it and learning it and leveraging it. There's basically no way we can't be in a position where there is almost an evergreen skills gap.  

talent shortage

(Data from Martech Report 2021)

It's just the nature of this rapid technology evolution, and this creates a couple of really interesting dynamics.

One is that those organisations that understand this issue as a permanent structural challenge, not just a one time thing,  are going to be the winners.  

If, instead of simply plugging gaps, organisations develop the capacity and culture, and the management mechanisms to continually be refreshing, this can be embraced as a competitive capability of the organisation.  

That being said, everyone wants to leapfrog as much as they can so they're looking for talent out there that you know has already done pieces of this, and it's still a small group - the demand clearly has outpaced supply.  

Is this skills gap also a challenge that martech vendors need to address?  

I think you’ll see a lot of the vendors, everyone from like Salesforce to HubSpot, realise this is the bottleneck throughout the industry and you’ll see them really leaning into helping to provide education.  

It’s like what Carlos is doing here with MarTech Alliance -  providing the education and training to this next generation of professionals.

A combination of anyone being able to participate wherever they are in the world and  companies that are willing to take slightly less experienced people who have that mindset / skill set and support that is important.   

Capitalism, for all of its ills, is highly efficient when it comes to matching supply and demand. Right now demand exceeds supply but we're finding ways around that.  

Is there a reason why brands are still changing their martech tools on a regular basis? What are the reasons as you see them? 

There is definitely a difference between augmenting a stack with new capabilities versus swapping out fundamental technologies. 

I’ve seen data that showed the most commonly replaced tech is marketing automation systems and CRM. These are some pretty foundational systems that people are swapping out. 

I think there's a couple of things happening there. First of all, those are also some of the oldest systems out there -  Salesforce started out in the late 90s, and some of the first generation marketing automation tools came out at the same time.  

In any field where technology is advancing very rapidly, you’ll have these legacy systems and at some point the subsequent generations of tools start to have architectural advantages that drive the need for change. 

Just like talent, this tech can become a kind of bottleneck which affects how quickly companies can move, or how many people can use it, so it’s natural to look for software that is more accessible to a broader range of people.  

I think the other thing is this thing around extensibility. The amount of software in the organisation overall just continues to expand, and some of these more modern platforms are designed to support this cloud integration environment.  

All those factors come together for any one company, and it's going to be a trade off among them, but I don't think it's the fault of the people who built those stacks, because what the world looked like five years ago when people made those choices, was just very different than it is today.  

Some of our report findings suggest that people aren’t using martech to its full potential. What’s your view on this?  

It’s a loaded question too because there's a few different ways to look at this.  

 I think this question of utilisation is a really interesting one, because when you buy these large software applications they just include a ton of functionality.   

If you talk about utilisation of the total percentage of that functionality that any company taps into that I think everyone would agree at this point the utilisation rate is probably quite low.   

I don't think that's the right metric though. It actually doesn't matter how much different functionality a particular piece of software has, what matters is the subset of that functionality that I choose to use is  actually effective for me and is getting me results.  

There's probably always some set of additional functionality that product has that could be useful, and perhaps I should invest time in learning that. However, I'm really nervous about this technology for technology's sake. Just because some piece of software has a feature, does that mean you should use it?  

I think the fact that some functionality in a particular tool goes unused by a particular company isn’t necessarily a bad thing and long as it's effective overall. 

How important is the role of marketing operations, both now, and as martech becomes even more central to marketing?  

Marketing ops should take responsibility for having an efficient stack that efficiently delivers the capabilities that the rest of the marketing organisation wants to leverage.  

It’s about deciding how to get the most out of tools we have, deciding which new ones we want, and the trade off of what we’ll get from it relative to costs - not just subscription but in terms of overheads like management and training.  

I see the marketing ops people as the governance layer, making sure that the stack is efficient. 

How do you see the purpose of martech more generally? Surely it’s not about tech for tech’s sake, the ultimate goal must be about improving the experience for the end user?  

Yes, sometimes we lose sight of this by thinking, wow, there’s some great martech out there.  At scale, how do you keep making sure that you're connecting all the dots, so that the complete experience delivered to the customer is good?  

I think it's hard, I don't think it's because people don't want to do it, I think it’s just this balance between having a really large organisation and at the same time having this tech beautifully connected so everything just works in harmony together.   

I haven't even looked at how to achieve this but I'm quite sure it's like a Pareto curve, a trade off. We can push that curve out and keep coming up with innovative ways to do this and that but there is still some inherent trade off there between scale and the harmonisation of the entity as a whole. 

This is why I love this stuff. I think it's a hard problem, but it's one where there's lots of room to innovate, and maybe the thing is not that any of us are ever going to be absolutely perfect at it but, boy, if we are better than our competitors, perhaps that’s enough.