My fellow marketing technology enthusiasts, mark this week in your journals. Here at their Marketing Nation Summit in San Francisco, Marketo just triggered a major inflection point in our industry.
First, let me set the stage for the significance of what they’ve done.
For a number of large companies assembling marketing “suites,” the narrative they’ve been preaching is: buy from us, and you’ll get everything you need in one box. Buy our cloud or hub, and you’re all set. It’s been an attractive narrative to buyers, who have certainly been frustrated with DIY projects of patching together disparate software from dozens of vendors. And obviously, it’s an attractive narrative to the suite sellers, who would like to exclusively own those relationships.
The black fly in the chardonnay, however, is that narrative is disconnected from reality.
Marketing and technology are simply changing too rapidly. The scope of marketing is expanding exponentially by the day, as its responsibilities grow from customer communications to customer experiences, spanning the entire customer lifecycle.
To pretend that a single software vendor will master all of that — and be able to keep up with all the innovations blossoming in a thousand directions across the industry — and somehow make that all stable and useable is, in my humble opinion, a fantasy.
Instead, I’ve believed for some time that the major players in the industry would do far better to pursue open platform strategies — positioning their software as the foundation of a marketer’s technology ecosystem, while enabling, encouraging, and outright championing third-party software products to plug into their backbone.
To be fair, many of the major marketing systems out there have laid the technical groundwork for this. They’ve provided APIs for third-parties to connect their applications. They’ve established partnership programs for those third-parties. You can probably find a list of those partners somewhere on their website — although for some vendors, it’s actually quite hard to find them.
But few have made third-party software a key part of their positioning. That would create dissonance with the “everything you need is in the box” narrative.
There are some notable exceptions. Salesforce played the third-party platform strategy masterfully with their CRM. Eloqua, ExactTarget, and Marketo have all been growing their third-party marketplaces. Act-On made their third-party marketplace a key part of their positioning last year.
But most, when they look at my landscape of nearly 1,000 marketing technology vendors, contact me only to say, “Just so you know, we also have capabilities in this category, this other category, that other category, etc.” They’re focused on being able to claim that they cover everything in the landscape themselves. That’s fine. I appreciate where they’re coming from, and I’d like to do a better job of fully representing their footprint.
But I feel they’ve missed the larger point of the spectacular diversity and innovation in that landscape. I’ve been waiting for one of them, someday, to reach out and say, “You know, we’re never going to keep up with all of these innovations ourselves — so here’s our plan to co-opt hundreds of these other marketing technology innovators into our platform.”
Well, Marketo just reached out and said that. Actually, they announced it on their blog.
Marketo moves to become the marketing software platform
Yesterday, Marketo co-founder and VP of marketing Jon Miller posted the Rise of the Marketing Platform on their blog, which outlines Marketo’s new strategic position. In a section on Why a Platform? Why Now?, he points right at my landscape and a post I wrote claiming that a 1,000 marketing technology companies is the new normal — a theory that makes most major marketing technology vendors cringe — and declares, yes, this is what’s happening, and we’re going to embrace it enthusiastically.
To quote his post:
I think there will ultimately be two main classes of marketing software companies:
- Marketing Experiences: These companies are all about delivering customer experiences at the point of interaction. This can include video advertising, content marketing, event management, social media marketing, and display ads, to name just a few.
- Marketing Platforms: The core systems of record for marketing that provide a common way of orchestrating the experiences across channels and applications, including operational management and measurement, with the ultimate goal of driving customer engagement.
The platforms will provide open ecosystems that the other companies can build on and plug into. The “marketing experience” companies are the horns, strings, percussion, and wind instruments; the platform is the orchestra conductor making sure everything is in harmony. A great platform helps you sidestep cacophony, and stands in as a virtuoso conductor who unifies your marketing into a lyrical masterpiece that can truly captivate its audience.
Marketo wants to be the leading marketing platform.
But to achieve that, they’re shining a spotlight on hundreds of other software vendors producing technology for “marketing experiences.” Marketo isn’t claiming that they’re going to provide all those capabilities within their own product, all wrapped up with a nice bow. They’re not pretending that those other vendors are peripheral. They’re not disparaging them with FUD tactics.
Instead, they’re acknowledging that these other marketing experience software companies bring tremendous value to the table. They’ve committed to make it easier for marketers to pick and choose from that incredible cornucopia of marketing technology solutions and seamlessly integrate them into their environment. And they’ve committed to give third-parties deep access into their platform’s data repositories, workflow capabilities, analytics, and more.
To quote a bit more of Jon’s post:
The implication of this model is that a marketing platform does not need to do everything in marketing. (In fact, I would argue that cloud vendors who claim to provide “all the solutions that marketers need” are missing the point.)
Instead, the right platform needs to bring a core set of capabilities, and then be open to third-party solutions that build on the common foundation.
That is a bold statement. Think of some of the other major vendors you know in this space and imagine them saying something like that. It’s a gutsy move. But it’s also the right move — and I bet I know at least one other analyst who would agree with me.
Digital marketing consolidation is not inevitable
This is a significant departure from the narrative of consolidation that other analysts have been predicting for the marketing technology space. To quote Martin:
[We've] all seen the logo farms and transit maps that show herds of providers just yearning to become the pick of the litter. Common sense says a frenzy of acquisition in 2014-15 should lead to a more domestic setup where a few megahubs divide most of the market, from CRM to advertising and analytics. We’ve already seen convincing shakeouts in categories such as ad servers, website analytics, marketing automation and, most recently, data-management platforms.
Is rollup inevitable? After the catfights subside, will we peer over a postapocalyptic landscape that looks something like telecoms or airlines, with four to five big bananas monitored by the government?
I doubt it. Just look at the logos themselves: They keep spawning not only providers but also categories that didn’t exist five minutes ago (geolocation analytics, anyone?).
Even though Gartner has championed the concept of digital marketing hubs at the center of this frenzy, Martin cautions that those hubs will be unlikely to consolidate the broader marketing technology landscape into self-contained suites for three reasons:
- The phenomenal rate of change in marketing and technology makes it impossible to capture everything in a bottle.
- Big companies simply cannot innovate at the rate of all these diverse start-ups.
- The conventional methods of lock-in that favored mega-vendors are waning.
The speed of change in digital marketing alters math. It is not a stable system, and it has seemingly unlimited access to capital. The end state is nowhere in view. Products shadow the rate of change of underlying components, such as processing and connectivity, which improve at a rate that is not linear. This is a market that literally moves at the speed of light; an industry may never have changed so much, so fast.
The parallels between Martin’s perspective and Marketo’s new strategy are striking. Both have observed the explosion of creative marketing technology and don’t see any sign of it slowing down. Both believe that having one vendor who “does it all” is unrealistic and that marketers should embrace a heterogeneous marketing technology stack.
But Marketo, with its new platform strategy, has a way to turn Martin’s three cautionary notes to their advantage. And in the process, they may become the Platonic ideal of Gartner’s digital marketing hub concept.
A few predictions of my own
While I’m generally wary of prognostications, I’m feeling emboldened that my predictions that marketing would not evolve like ERP and that 1,000 marketing technology vendors would be the new normal seem to be gaining momentum.
At the risk of overplaying my hand, I’ll make two more predictions:
First, marketing software developers will embrace Marketo in return. An open platform with large adoption provides a terrific vehicle for other marketing software vendors to accelerate their adoption by becoming plug-and-play solutions on top of it. It gives them technical advantages (easy integration is what every one of their customers want), but it also gives them a market channel to reach their audience. This will be a virtuous cycle — the more marketing applications that plug into Marketo, the more others will want to. In fact, it will inspire new entrepreneurial ventures that will be built as Marketo plug-ins from Day 1. (Side bet: some of the more interesting ones will come from forward-thinking agencies.)
Second, other major cloud/hub/suite vendors will tack to platform strategies too. This will be easier for some than others — not so much due to technical barriers, but due to barriers of politics and pride. But most will overcome those barriers because they cannot cede victory in the coming “marketing platform wars” to Marketo by sitting this out. They need to win third-party/ISV share. They cannot afford to become Blackberry while their competitors become iOS and Android.
To be sure, Marketo still has a lot of work to do to live up to the platform vision that they’ve unveiled. They have to make sure that third-party developers really feel the love — not just at a technical level, but at a marketing level. If they do, I think they’ll gain an impressive lead in this next era of the marketing technology space.
The real winners here, however, will be marketers. They’ll end up with the best of both worlds: a stable foundation for their marketing infrastructure and the flexibility to plug in an amazing array of creative marketing applications without the pain of the previous DIY era.
It will truly be the Golden Age of Marketing Software.