The greenfield of marketing software

Yesterday, I had lunch with Dharmesh Shah, co-founder and CTO of Hubspot and a friend of mine from MIT. Since we both run software-as-a-service (SaaS) start-ups in the marketing space, I always enjoy catching up with him because, even though we’re pursuing different product visions, there’s a lot of overlap in the challenges and opportunities we face in the market.

One of the observations that struck me in our latest discussion is how different software is in the marketing space than in its supposed kissing cousin of sales.

In SaaS, Salesforce.com is pretty much a living legend. The adoption rate they’ve achieved, across small businesses and large enterprises alike, is astounding. They have tens of thousands of customers — and are essentially the dominant player in sales force automation and, to a large degree, the CRM market.

In contrast, the marketing automation space has no lack of serious players — Eloqua, Aprimo, Alterian, Unica, Marketo, Pardot, etc. — as well as related firms, such as Hubspot and my own company, ion interactive, which specializes in landing page management and optimization (more broadly, post-click marketing). Yet if you were to take all of the customers of all of these companies combined together, they’d be measured in the thousands, not the tens of thousands.

Why is there an order of magnitude adoption gap between marketing and even just one, albeit very successful, sales software company?

A few theories to contrast marketing and sales software:

• Salespeople have been using software for a couple of decades now to track their contacts. Not to say that Salesforce.com wasn’t brilliant with their SaaS implementation — they did an incredible job — but programs like Act! and Goldmine had laid the groundwork years before. Getting salespeople to adopt Salesforce.com didn’t require them to convince people of an entirely new category of software for their businesses. In contrast, much of the software being offered to marketers is entirely new — most marketers have never used marketing automation or landing page optimization.
• There’s a reasonable amount of homogeneity in the structure and tasks of sales. Not to say that there aren’t differences from one company to the next, or one salesperson to the next, but I’d venture to say that there are far more similarities than differences. In contrast, marketing is a more diversified discipline, with more specialist roles. Consider that under the label “marketing” you have public relations people, brand managers, creative directors, database marketers, graphic designers, event managers, copywriters — the whole strange and wonderful split between marketing agencies and marketing departments — and that’s not even considering the new roles that the web has birthed (see next point). There’s a lot variation in how companies run marketing too, where the motivation to be creatively different than the competition is deeply rooted in marketing’s worldview. It makes the goal of “one software to rule them all” much more complicated.
• Every aspect of business has been changed by the Internet, but some more than others. Sales has been impacted by the web, to be sure, but for the most part sales today is a lot like sales was 10 or 20 years ago. Its skill set, tactical toolbox, and strategic thinking are largely the same. In contrast, marketing is in the middle of a complete whirlwind of creative destruction — as things like print advertising, direct mail, and trade shows are fading and whole new channels and vehicles of search marketing, social media marketing, post-click marketing, mobile marketing, and email marketing are emerging. Marketers are overwhelmed by the speed and scope of these changes, which makes it more difficult to define and adopt any one specific solution.
• When it comes to sales force automation and CRMs, you pretty much know who the competition is: Salesforce.com, Siebel/Oracle, SugarCRM. In contrast, because marketing software is such a new space, and one that is very much in flux, the competitive lines aren’t as clear. For instance, while ion maybe has two or three direct competitors in landing page management, there are probably two dozen companies that overlap in partial ways, from PPC campaign management to website optimization to behavioral targeting. All of these companies are trying to define the market according to their worldview, competing as much on memes and nomenclature as they are actual product features. Unfortunately, this noisy battle over framing the market(s) often becomes a cacophony for marketers who are trying to sort out exactly what they need. To a certain degree this is an embarrassment of riches — marketers have a wealth of choices at their feet. But choices can be hard to make.

There’s certainly a lot of good news in this prognosis. The opportunity for marketing software is wide open. It’s a safe assumption that eventually marketers will widely adopt software for their entire range of strategic and tactical missions. My opinion is that there will be many different winners in different categories, with interoperability driven by web services and semantic data. Other people predict a more consolidated outcome, akin to Salesforce.com.

The upside of having no dominant reference model yet is that innovators and entrepreneurs can give their imagination full reign. Because many of the problems being solved are entirely new problems, they’re ripe for creative and original solutions.

The downside is that sorting this all out is still a challenge for marketers and vendors alike. But what a spectacular challenge to tackle.