Breaking down the push and pull of expansion, consolidation across the martech app ecosystem
As the martech industry continues to grow exponentially, two paradoxical truths remain constant: Massive consolidation in platforms and massive expansion in apps.
Everyone in our industry knows that the growth rate among marketing technology applications has been exponential for years now. The 2020 Marketing Technology landscape released last month included 8,000 solutions. There were fewer than 200 logos on the chart in 2011, which means we’ve seen a 5,233% increase in martech solutions in less than a decade.
Even in the current economic crisis and the impact it will have over the next 18 months, some martech companies may see gains. Forrester reported this month it expects marketing spend to drop 28% in the U.S. by the end of 2021, with CMO budgets losing $222 billion. And yet, Forrester predicts tech spend will not only hold, but expects data and analytics, advertising technology and marketing automation to grow by 2% — a very slight growth, but still growth.
And within all of this growth across our industry, two (what seems like) opposing realities exist, according to MarTech Conference Chair and editor of Chiefmartec.com Scott Brinker: There is a massive consolidation in platforms; and there is a massive expansion and diversification of apps.
The push and pull of consolidation versus expansion
“Everyone is surprised by how fast it has grown,” said Brinker about his Marketing Technology Landscape super graphic, “One of the questions I’m constantly asked is why?”
Brinker doesn’t believe there is a single force that can explain the massive growth across the martech industry, and that if you try to attribute it to one driving factor, the evidence won’t support it. Instead you have to take multiple factors into consideration. There is also the another layer to this growth: the birthrate of martech apps versus their death-rate.
“Anyone can launch a software product. The question is can anyone sustain a business,” said Brinker.
And then there are the two driving forces that keep showing across the marketing app ecosystem: The push and pull of consolidation versus expansion.
“The ‘paradox’ of consolidation and expansion, in martech and in SaaS more generally, is then simply explained by math,” writes Brinker in his deep-dive exploration of the platform dynamics driving martech app expansion and consolidation, “Platforms consolidate while spawning more apps than they remove. The net number of apps in the world grows, even while there is intense competition driving consolidation further down in the spectrum.”
Brinker notes that one of the key ways platforms compete with each other is by enabling more apps than their competitors, “The more intense the competition is between platforms, driving their own consolidation, the more apps they help create.”
In other words, the industry simply can’t help itself — as long as major platforms continue to compete, the app economy will grow.
“Its not a paradox,” writes Brinker, “It’s the very structure of business in the cloud.”
What does it mean for marketing technologists
One way to consider what’s happening across the martech app landscape is to think of it in terms of our media and entertain options. Once upon a time, consumers had four channels they could access through their television, along with maybe a few local studio channels that came in fuzzy if your TV antenna wasn’t placed just right. And then, cable and satellite TV came along — bringing with it an explosion of entertainment options.
And now? There are streaming options, OTT platforms, social networks pushing out original content. YouTube channels. TikTok. Quibi. All exponential growth that has resulted in the ability to both layer and integrate these options, and if you’re a content producer all you need is a smartphone — much like the developers building specialized apps that don’t necessarily even have to know how to code with so many cloud platforms offering no-code and low-code capabilities.
In the same way we get to pick and choose our, sometimes very niche, entertainment viewing options, marketing technologists have a smorgasbord of solutions: Starting with their foundational platforms and building out to the various specialized and custom apps that can be integrated.
“Platforms have truly embraced being platforms,” said Brinker, “With third-party integrations, we all end up making the customer happy. Instead of looking at [other martech] companies as competitors, they see them as complementary integrations.”