Forrester’s first report on media tech/services spending shows customer experience and AI are driving budgets

As Scott Brinker’s recently unveiled Marketing Technology Landscape shows, the number of vendors in this space is still booming.

That boom now has some numbers attached to it, in Forrester Research’s first report specifically about marketing technologies and services.

“The US Marketing Technology and Services Outlook, 2017 to 2022 [fee required],” which excludes media spend, found that spending in this space will reach more than $122 billion by 2022, about a 20 percent increase over today.

And, indicating that Brinker’s eye-straining landscapes will become even more difficult to read, the report expects more “newcomers, fragmentation, and category blurring” as channels and budgets increase.

A key driver behind the increase in budgets, the report says, is the need to build customer experiences, as marketers spend less on media and more on experience-managing tools and related services.

As just one example, Forrester notes that United Concordia Dental has budgeted $45 million over three years for new database management systems, in order to improve customer scheduling and billing.

One big takeaway, report co-author Shar VanBoskirk told me via email, is that “growth in technology will outpace growth in services.” This will change the current balance where spend on marketing services is 2 1/2 times that of marketing tech, as more intelligence and automation continues to replace human-managed services.

For instance, the report points to how lingerie brand Cosabella switched from using a media agency to employing Adgorithm’s AI engine — resulting in what it says was an eye-popping 336 percent improvement on return from its ad spend.

The magnitude

VanBoskirk also validates one of Brinker’s ongoing conclusions — the idea that “a single marketing cloud to rule them all” is not happening.

“The reality,” she wrote, “is that most marketing functions are run by technologies assembled from multiple vendors, because they want specialist capabilities, they have legacy tools they have to accommodate, and because innovation is so rapid, they have to pick up a new vendor well before a big monolith can buy or develop comparable capability.”

The biggest surprise from the report, she said, was not that these trends were happening, but their magnitude.

“For example,” VanBoskirk emailed, “agency services — the traditional agency business that really defined present day marketing — has the slowest growth rate in our study. Companies are literally cutting out their AORs [agencies of record] in the name of using tools, contractors or in-house resources instead.”

But, even as the agencies — descendants from the days of classic “Mad Men” advertising — are being phased out, Forrester expects that behavioral targeting will decline and there will be a return to the kind of advertising that buys audiences based on content, the way a marketer might buy ads on a TV series to reach that kind of viewer.

By contrast, behavioral targeting through digital media has often targeted viewers themselves by their browsing and other habits. But, VanBoskrik writes, “expect a decline in behavioral targeting and a return to content-based business models,” particularly with the upcoming General Data Protection Regulation (GDPR) making behavioral targeting more complex because of consent requirements.