There’s A $10 Billion Opportunity As Marketing Hits The Big Time

Comment

Image Credits: vitma (opens in a new window) / Shutterstock (opens in a new window)

Ajay Agarwal

Contributor

Ajay Agarwal is a managing director at Bain Capital Ventures, where he focuses on early-stage SaaS investing.

More posts from Ajay Agarwal

Editor’s note: Ajay Agarwal is a managing director at Bain Capital Ventures in Palo Alto where he focuses on early-stage SaaS and mobile investing. 

Marketing is no longer the forgotten stepchild of enterprise software. Traditionally underserved and under-penetrated, marketing is finally receiving its fair share of attention by technologists, founders and investors alike. Gartner famously predicted CMOs would spend more on IT than CIOs by 2017. IDC estimates $32.4 billion in marketing technology spending by 2018, growing at 12.4 percent CAGR. Hundreds of new companies are emerging every year, and thanks to Scott Brinker, marketers now have their own dedicated technology conference.

Three years ago, I wrote a post that called marketing “the next big money sector in technology,” and predicted it will “give rise to several multi-billion-dollar companies.” At the time, Omniture had sold to Adobe for $1.8 billion but was the only marketing-focused technology company with an exit north of $1 billion. All other enterprise categories over the past 30 years have created several multi-billion-dollar software companies across functional application areas: SAP (manufacturing), Oracle (financials), PeopleSoft (HR), Siebel (sales) and Salesforce (sales/CRM).

What’s changed in three years?

While we have yet to see a dominant >$10 billion company emerge in marketing technology, we have seen tremendous changes and progress in this sector driven by digital, mobile, social, analytics and commerce technologies. We have also seen several big exits in the last three years. A quick snapshot:

Company Value Acquirer
ExacTarget $2.57 Billion Salesforce
Criteo $2.54 Billion IPO
Responsys $1.50 Billion Oracle
Hubspot
Marketo
$1.23 Billion
$1.07 Billion
IPO
IPO
Eloqua $871 Million Oracle
Neolane $600 Million Adobe

Note: For public companies, these values are as of March 26, 2015.

The hottest standalone category to date has been marketing automation, which has become a “must have” solution for B2B CMOs. The two largest independent players, Hubspot and Marketo are both valued north of $1billion and are growing at rapid rates. Salesforce with its acquisition of Pardot is now a formidable player in the space as is Oracle through its purchase of Eloqua.   

What’s next?

All of this progress now sets the stage for my next prediction: We will see the first $5 billion-plus marketing tech company emerge over the next four years (and likely more than one). Three key drivers will get us there:

  • Predictive analytics and machine learning: The sheer volume of data about buyers, channels and communities that marketers can now harness is astonishing – and it’s the largest opportunity ever seen for CMOs and vendors alike. With sales and marketing automation in place to provide core workflow and plumbing, an ecosystem of new startups and categories has emerged to deliver added value and insight across marketing functions and channels. The best of these companies use machine learning and data science to tap into the marketing and sales automation data sets – and troves of external third-party data – to deliver insights and capabilities. This is especially valuable for B2B companies, where lead times are longer and purchase decisions are more considered. Early pioneers in predictive marketing include Infer, Lattice and 6Sense*.
  • Consumer identity and personalization: For B2C companies, identity is emerging as the backbone of user experience and digital commerce – similar to what lead management and marketing automation are doing for B2B. Most consumer purchases are quick, ephemeral in nature, and done with limited research. New B2C marketing competencies focus on user identity data and personalization, with a goal of having the right content and experience for each user (during the three seconds they are looking at that page on their tablet or mobile device). It’s the difference between a sale and a bounced user. Key players include Bloomreach*, Sailthru, Monetate, Optimizely*, Kahuna, and Appboy – all of which focus on optimizing web pages, mobile apps and/or email to drive the highest conversion and revenue per visitor.
  • Consumer behavior and targeting: Beyond identity, consumer behavior data is becoming increasingly critical for B2C marketing and commerce – location, past purchase behavior, demographics, preferences, household information, etc. This challenge has become increasingly difficult in a cookie-free mobile world, which makes traditional desktop targeting techniques useless. As a result, marketers are relying on vendors that bring cross-device targeting capabilities and others that can ingest anonymous consumer behavior on your website. The best marketers are leveraging this rich information to build massive in-house databases of customer purchase and browsing history. Companies like AgilOne, SmarterHQ, TellApart*, Retention Sciences and others are leading the way on this front.

What this means for marketers

The core infrastructure is now in place to manage online and offline marketing: website and e-commerce management; customer relationship management; mobile applications; email marketing; and sales force and marketing automation.

The new frontiers for CMOs in the coming years will be data science, machine learning and behavioral insights, which then drives optimization and personalization. This represents the largest opportunity ever seen for both vendors and CMOs alike. All of which should set the stage for the first $10 billion-plus marketing tech company.

Note: 6sense, Bloomreach, Optimizely and TellApart are Bain Capital Ventures portfolio companies.

More TechCrunch

Tags

Some Indian government websites have allowed scammers to plant advertisements capable of redirecting visitors to online betting platforms. TechCrunch discovered around four dozen “gov.in” website links associated with Indian states,…

Scammers found planting online betting ads on Indian government websites

Around 550 employees across autonomous vehicle company Motional have been laid off, according to information taken from WARN notice filings and sources at the company.  Earlier this week, TechCrunch reported…

Motional cut about 550 employees, around 40%, in recent restructuring, sources say

The deck included some redacted numbers, but there was still enough data to get a good picture.

Pitch Deck Teardown: Cloudsmith’s $15M Series A deck

The company is describing the event as “a chance to demo some ChatGPT and GPT-4 updates.”

OpenAI’s ChatGPT announcement: What we know so far

Unlike ChatGPT, Claude did not become a new App Store hit.

Anthropic’s Claude sees tepid reception on iOS compared with ChatGPT’s debut

Welcome to Startups Weekly — Haje‘s weekly recap of everything you can’t miss from the world of startups. Sign up here to get it in your inbox every Friday. Look,…

Startups Weekly: Trouble in EV land and Peloton is circling the drain

Scarcely five months after its founding, hard tech startup Layup Parts has landed a $9 million round of financing led by Founders Fund to transform composites manufacturing. Lux Capital and Haystack…

Founders Fund leads financing of composites startup Layup Parts

AI startup Anthropic is changing its policies to allow minors to use its generative AI systems — in certain circumstances, at least.  Announced in a post on the company’s official…

Anthropic now lets kids use its AI tech — within limits

Zeekr’s market hype is noteworthy and may indicate that investors see value in the high-quality, low-price offerings of Chinese automakers.

The buzziest EV IPO of the year is a Chinese automaker

Venture capital has been hit hard by souring macroeconomic conditions over the past few years and it’s not yet clear how the market downturn affected VC fund performance. But recent…

VC fund performance is down sharply — but it may have already hit its lowest point

The person who claims to have 49 million Dell customer records told TechCrunch that he brute-forced an online company portal and scraped customer data, including physical addresses, directly from Dell’s…

Threat actor says he scraped 49M Dell customer addresses before the company found out

The social network has announced an updated version of its app that lets you offer feedback about its algorithmic feed so you can better customize it.

Bluesky now lets you personalize main Discover feed using new controls

Microsoft will launch its own mobile game store in July, the company announced at the Bloomberg Technology Summit on Thursday. Xbox president Sarah Bond shared that the company plans to…

Microsoft is launching its mobile game store in July

Smart ring maker Oura is launching two new features focused on heart health, the company announced on Friday. The first claims to help users get an idea of their cardiovascular…

Oura launches two new heart health features

Keeping up with an industry as fast-moving as AI is a tall order. So until an AI can do it for you, here’s a handy roundup of recent stories in the world…

This Week in AI: OpenAI considers allowing AI porn

Garena is quietly developing new India-themed games even though Free Fire, its biggest title, has still not made a comeback to the country.

Garena is quietly making India-themed games even as Free Fire’s relaunch remains doubtful

The U.S.’ NHTSA has opened a fourth investigation into the Fisker Ocean SUV, spurred by multiple claims of “inadvertent Automatic Emergency Braking.”

Fisker Ocean faces fourth federal safety probe

CoreWeave has formally opened an office in London that will serve as its European headquarters and home to two new data centers.

CoreWeave, a $19B AI compute provider, opens European HQ in London with plans for 2 UK data centers

The Series C funding, which brings its total raise to around $95 million, will go toward mass production of the startup’s inaugural products

AI chip startup DEEPX secures $80M Series C at a $529M valuation 

A dust-up between Evolve Bank & Trust, Mercury and Synapse has led TabaPay to abandon its acquisition plans of troubled banking-as-a-service startup Synapse.

Infighting among fintech players has caused TabaPay to ‘pull out’ from buying bankrupt Synapse

The problem is not the media, but the message.

Apple’s ‘Crush’ ad is disgusting

The Twitter for Android client was “a demo app that Google had created and gave to us,” says Particle co-founder and ex-Twitter employee Sara Beykpour.

Google built some of the first social apps for Android, including Twitter and others

WhatsApp is updating its mobile apps for a fresh and more streamlined look, while also introducing a new “darker dark mode,” the company announced on Thursday. The messaging app says…

WhatsApp’s latest update streamlines navigation and adds a ‘darker dark mode’

Plinky lets you solve the problem of saving and organizing links from anywhere with a focus on simplicity and customization.

Plinky is an app for you to collect and organize links easily

The keynote kicks off at 10 a.m. PT on Tuesday and will offer glimpses into the latest versions of Android, Wear OS and Android TV.

Google I/O 2024: How to watch

For cancer patients, medicines administered in clinical trials can help save or extend lives. But despite thousands of trials in the United States each year, only 3% to 5% of…

Triomics raises $15M Series A to automate cancer clinical trials matching

Welcome back to TechCrunch Mobility — your central hub for news and insights on the future of transportation. Sign up here for free — just click TechCrunch Mobility! Tap, tap.…

Tesla drives Luminar lidar sales and Motional pauses robotaxi plans

The newly announced “Public Content Policy” will now join Reddit’s existing privacy policy and content policy to guide how Reddit’s data is being accessed and used by commercial entities and…

Reddit locks down its public data in new content policy, says use now requires a contract

Eva Ho plans to step away from her position as general partner at Fika Ventures, the Los Angeles-based seed firm she co-founded in 2016. Fika told LPs of Ho’s intention…

Fika Ventures co-founder Eva Ho will step back from the firm after its current fund is deployed

In a post on Werner Vogels’ personal blog, he details Distill, an open-source app he built to transcribe and summarize conference calls.

Amazon’s CTO built a meeting-summarizing app for some reason