Chief Marketing Technologist

3 epicenters of innovation in modern marketing

Here's another way to visualize the relationship between big data and the other innovations happening in the marketing department.

I propose that there are three epicenters of innovation in modern marketing:

The first is customer communications and the revolution brought about by social media. Marketing communications has, rather quickly, moved from being a one-way broadcast to a more personal, two-way interaction with customers, prospects, and influencers, all interconnected together.

Organizations have had to embrace operational and cultural changes to adapt — many are still wrestling with those changes. But while technology certainly triggered this wave of innovation in customer communications, the software in this space is probably the least technically challenging for marketers to adopt. There is great innovation in this sphere, but it's not primarily technical in nature.

The second is customer analytics, using analytics and big data to better understand and measure customer opportunities. There is unquestionably a lot of value to be unlocked here, which is why the "data revolution" in marketing is so big right now. However, these innovations are generally much more technical in nature.

While there are some easy first steps here — high-level dashboards, basic web analytics, and data visualization tools such as Tableau — the technical water quickly gets deep. I picture it like a "continental shelf" of shallow data analytics. Once you drop off the edge into the deep data ocean, the software is considerably more complicated and isn't nearly as plug-and-play.

To really master customer analytics requires harder skills, such as statistics, modeling, predictive analytics, programming, data mining, etc. Acquiring these skills and integrating them into the marketing team will likely take more time and effort than the adoption curve associated with social media.

The third is customer experience, delivering remarkable customer experiences at every touchpoint in the customer lifecycle. In our digitally-malleable world, marketers can now wield technology to craft customer experiences that are powerfully differentiated — on a scale that was impossible to conceive not too many years ago.

I believe that the scale of this "experience revolution" will dwarf the other two.

There's already a growing customer experience movement in the marketing department — with the embrace of user experience and design (not just art/graphic design) professionals. But ultimately code is the clay from which most of these experiences are sculpted. It's with a mix of pre-packaged marketing software, custom developed applications, technical configuration, and plenty of "script" glue to tie everything together that these experiences are actually built and delivered — leveraging the state-of-the-art in hardware technologies (e.g., the latest smartphones and tablets) and major web services (e.g., the latest capabilities in Facebook).

Understanding how these technologies can be synthesized into compelling customer experiences — and having the technical capabilities to execute on those visions — presents a significant challenge for most marketing teams. But the opportunity is huge, strategically elevating marketing from communications to experiences. Marketing is still the champion of the brand. But the brand is now fully a direct function of customer experience.

This mission is "big experience."

Big experience is nearly unlimited in the innovations that lie ahead. They're not all technical in nature, but a significant portion of them are rooted in technology. To pursue these opportunities, marketing must expand its technical capabilities beyond data analytics. This is why marketing technologists, not just data scientists, should be a part of every marketing team's growth plans moving forward.

Of course, some of the most fascinating areas in marketing are at the intersections of these three domains. For instance, the intersection between customer analytics and customer experience, where personalization and big testing are sprouting.

Fundamentally, modern marketing is about combining all these innovations into a cohesive strategy and operational structure.

That is why, although big data is big, it shouldn't distract marketing leaders from constructing an organization that is capable of orchestrating all of these innovations together into a powerful and differentiated brand for the 21st century.

Marketing services and technology M&A increased 67% in 2012

The Jordan, Edmiston Group, Inc. (JEGI) investment bank released their report of 2012 M&A deals in media, information, marketing, and technology sectors last week. Overall, the number of deals and the total value of deals were way up — a 50% increase in the number of deals and a 43% increase in total value over 2011.

A few highlights worth calling attention to:

The sector with the largest number of deals and the highest total value — by a large margin — was Marketing Services & Technology. There were 485 deals in that category with a total value of $20.5 billion, up 67% and 36%, respectively, over 2011. This sector accounted for 9 of the 30 largest deals of the year.

Two deals in that sector that I believe are particularly important bellwethers for the marketing technology space were Oracle's acquisition of Eloqua for $871 million and ExactTarget's acquisition of Pardot for approximately $95 million. Consolidation in the marketing automation category is heating up — but I remain convinced that this will ultimately feed more overall diversification around a more standardized set of core platform providers.

Interestingly, 90% of the transactions covered by this report were smaller deals, less than $50 million in value. This is consistent with an environment where the costs of creating and deploying high-quality web-based software have dropped dramatically over the past 7 years. For many ventures, it's not necessarily a "go billion, or go home" environment. It is now easier than ever for entrepreneurs with a great idea to launch and grow with a minimal amount of capital. I believe this is one of the key forces that will continue to drive the ongoing diversification of marketing technology in the years ahead.

Global agency holding companies (Dentsu, WPP, Publicis) and large technology companies (Microsoft, Oracle, Salesforce.com) were naturally the most active buyers, but so were many companies from the marketing services world: Gannett, Rakuten, Sapient, INFOR, Advisory Board, and UBM. More strategic players are looking to have a role in this new age of the ever-more-powerful, technology-driven marketing department.

Looking forward to seeing some incredible growth in 2013!

5 thoughts on Oracle's acquisition of Eloqua for $871 million

Wow, this certainly tops off a spectacular year in the marketing technology space: yesterday, Eloqua announced that it was being acquired by Oracle for $871 million. Reflecting on this last night, five thoughts came to mind:

Thought #1: Congratulations

First, big congratulations to Joe Payne, Steven Woods, and the rest of the Eloqua team! I've been a big fan of Steven's thinking around digital body language for many years. They've done an amazing job of executing on that vision.

Thought #2: Customer Experience

Second, the language around this announcement is very telling because it emphasizes customer experience so heavily. The headline for the press release expressly frames this acquisition as a part of a comprehensive mission "to help companies deliver exceptional customer experiences."

The graphic at the top of this post was included in the presentation deck released along with the announcement, and it positions Eloqua as the "marketing" component of The Oracle Customer Experience Cloud. Most of the rest of the deck focuses on this unified customer experience mission, as the following slide declares that "great customer experience is the sum of all interactions."

The rise of customer experience as the overarching umbrella for modern marketing has been one of the great themes of 2012, and this deal will certainly place that thesis at the center of many CMO-level discussions in 2013. "Every customer experience is a brand moment of truth." This is why everything is now marketing.

Thought #3: Post-Digital Marketing

According to Oracle EVP Thomas Kurian, Eloqua "will become the centerpiece of the Oracle Marketing Cloud." What's particularly striking about that statement to me is that Oracle is one of the giants of the traditional, pre-digital marketing world. Eloqua, in contrast, is one of the stars of the native digital marketing world. This merger — if executed in the way in which it's presented — will be a true mash-up of those two worlds at the enterprise level.

Customer experience may be the rallying flag for this, but there's something noteworthy purely about Oracle championing the vanishing boundaries between traditional and digital channels and methods. The Oracle-Eloqua deal is not the first move in that direction — IBM has clearly been pursuing this as well — but it is a major step forward in that transition.

This is what David Cooperstein of Forrester recently called post-digital marketing.

"Like the shift from modern to post-modernist art and architecture," David wrote, "where we encountered architects like Michael Graves and Richard Meier who blended modern purity with classical touches, we are entering a world where digital innovation is merging with traditional marketing fundamentals to create new approaches, new brand leaders, and new models for success."

Thought #4: Race to the Top

This is generally good news for Eloqua's larger competitors, especially Marketo and Hubspot, as they advance towards their own IPOs, as this acquisition further validates the scale of this market — and heats up some very attractive valuation ratios.

For the biggest strategic buyers though, this speeds up the tempo of the music. IBM and Oracle have now staked their claims with the Unica and Eloqua acquisitions respectively. Adobe and Salesforce.com — the two other largest contenders in the enterprise digital marketing space — are both missing this "marketing automation" backbone piece in their portfolios.

Now that Eloqua is off the table, I imagine they're taking a closer look at Marketo, Hubspot, Act-ON, Neolane, Infusionsoft, etc., as well as the publicly-traded ExactTarget (which now owns Pardot). Aprimo, which is owned by Teradata, is probably out of reach given the parent company's market cap. But maybe not for the likes of SAP or Microsoft? Good times in the corporate development office, I'm sure.

Remember those rumors of Microsoft acquiring Adobe a while back?

Thought #5: More Investment & Innovation Ahead

Given the major marketing software acquisitions that have happened this year, there's no doubt that we're in a wave of consolidation in this space.

But unlike other consolidation phases of other industries, I don't think this is the end game of the marketing technology landscape. On the contrary, I believe these deals will create a chimney effect that causes the start-up fires of new marketing technology ventures to burn even brighter.

We're experiencing simultaneous waves of consolidation and diversification in marketing technology. And I predict more investment in this space in 2013 than any year before.

Why? Because this new era of marketing — the post-digital marketing era of customer experience — is just at the beginning of a 10 to 20-year revolution. The world in which this new approach is emerging is still tremendously in flux, with new innovations appearing at an accelerating rate. There's no lack of opportunity for new ventures in this remaking of the world.

That being said, I do think this deal moves us closer to a market structure that has a consolidated marketing backbone supporting a diversified marketing body. This is the third possibility I discussed in my post on 3 different futures for marketing technology: a few consolidated platforms with highly diversified ecosystems of specialized apps.

According to the FAQs released by Eloqua and Oracle, "Eloqua will continue to be an open platform for marketing automation and integrate with third-party systems including sales force automation solutions and social platforms." It remains to see how open Oracle really is with their customer experience cloud. But given the open platform strategies that Salesforce.com, Marketo, Hubspot, and others are pursuing, they have incentive to accelerate towards a dominant position as an ecosystem player — or risk that being a weak spot in which competitors will surely attack.

It's going to be an exciting 2013.

Whatever it is, we're calling it "marketing automation"

"Marketing automation" as the label for a major — if slightly amorphous — category of modern marketing software appears to be here to stay. Three recent points on the curve:

• The acquisition of Pardot by ExactTarget, labeled as a marketing automation deal.
• The IPO of Eloqua earlier this year, again labeled as a marketing automation offering.
• A recent IDC report that includes marketing automation as an explicit budget allocation.

The latter is perhaps the most significant, as having a line item in the marketing budget is the Holy Grail of any marketing technology. When the challenge shifts from trying to convince people that they should buy a marketing automation platform to simply convincing them which one they should adopt, the industry has taken a major leap forward.

It wasn't always obvious that "marketing automation" would be the label for this category of software that emerged from lead generation and lead nurturing technologies, and came to include a wide array of analytics and social media marketing capabilities.

For a couple of years, a number of the major players in the space worked hard to change the name. Eloqua and Marketo both preferred to position their platforms as "revenue performance management" solutions. HubSpot has stalwartly resisted the term, preferring "inbound marketing," the category of marketing activities that it christened.

Why the rash against "marketing automation" from some of its very inventors?

For a while, marketing automation was starting to get a bad rap. Frankly, early implementations weren't always as successful as adopters hoped they might have been. (Remind you of the early days of enterprise resource planning? The early days of CRM? There's a pattern here.)

The word "automation" also implied a fairly mechanical, impersonal nature to the interactions, at a time when social media mania was rising, emphasizing the power of the human touch.

And, of course, every software provider in the world wants to differentiate their offering and control the message. To the degree that marketing automation was still up-in-the-air as the name for this category, there was plenty incentive to change the label to one that a particular firm could unequivocally own.

But over time, all of these reasons to avoid the term have faded. Marketing automation implementations are increasingly proving their ROI. All of the major analyst houses now refer to marketing automation and its best practices. The label "marketing automation" has outgrown its literal meaning, and indeed has shifted the discussion to how it can provide more personalized experiences.

That's really not too far of a stretch. After all, Amazon's amazing "personalization" is actually just an automated algorithm, not remote in-store greeters, madly typing away recommendations every time somebody lands on a page.

But the real reason marketing automation appears to have won is, well, that's just what everyone calls it. As vendors returned to the term, capturing interest from people who were searching for the term, more vendors followed suit. Here's the search trend for "marketing automation" on Google for the past 7 years:

After an initial peak of hype, there was a trough of disillusionment, followed by a slow and steady climb of enlightenment. It's the perfect incarnation of the Gartner Hype Cycle.

Now almost all of the key players in the space have "marketing automation" featured in the title of their web sites: Act-On, Aprimo, Eloqua, Genius.com, Marketo, Pardot. HubSpot still prefers inbound marketing, but they promote their marketing automation capabilities on their home page. Infusionsoft chooses to emphasize its CRM capabilities instead. IBM and Oracle are too large to register on this scale.

There may yet be a nomenclature revolution. Vendors who are trying to position "marketing automation" as a feature rather than the label for their overall platform may yet redefine the language of the market. But the stakes are getting higher.

3 different futures for marketing technology

My post from last week — is marketing technology consolidating or diversifying — resonated with the folks at HubSpot, and they invited me to contribute a few thoughts on that subject to their blog.

The result: Will Marketing Technology Look Like iOS Someday?

As illustrated in the graphic above, we consider three possible futures for marketing technology:

1. Diversified with no real center of gravity (kind of what we have today), on the left.
2. Consolidated into a handful of all-in-one marketing suites, in the upper right.
3. A few consolidated platforms with highly diversified ecosystems of specialized apps, in the lower right.

I call the second one the "ERP vision" of marketing technology consolidation, while the third is the "iOS vision" as an alternative. Here's an excerpt from my the post on the HubSpot blog:

Can we have the best of both worlds, consolidation and diversification?

Indeed, that may be the answer. Consider an alternative "iOS vision" of marketing consolidation, where a small number of platforms emerge as the "backbones" of marketing operations. The analogy is inspired by Apple's iOS and Google's Android platforms — two contenders that have unquestionably consolidated mobile operating systems, while simultaneously fueling an explosion of diversified apps built on their foundations. Apple just recently announced the availability of over 700,000 such apps. It doesn't get more diversified than that.

Of course, most marketing technologies are far more complex than consumer smartphone apps. Don't take this metaphor literally. But conceptually, the same architecture could exist. Imagine a handful of marketing platforms that standardize certain events, workflows, and data structures at the core of marketing operations. By exposing a rich and expressive API, other marketing software products could easily interface to that backbone, using it to seamlessly feed in and out of a company's overall marketing technology ecosystem.

Companies could have the benefits of a consolidated infrastructure, sparing themselves expensive custom integration work at every turn, while simultaneously leveraging a plethora of specialized marketing applications that combine to give them a unique set of superpowers tailored to their distinct brand vision of the ultimate customer experience.

Sound far-fetched? Well, take a look at Salesforce.com's AppExchange. Or the business software synchronization service Zapier. Or, more relevant to readers of this blog, HubSpot's App Marketplace. The parallels to Apple's app store don't seem so far off in comparison.

Click to read the full post.

Is marketing technology consolidating or diversifying?

Is marketing technology consolidating or diversifying?

Every few weeks it seems like we see a new round of marketing technology acquisitions, especially from Oracle, Adobe, IBM, Salesforce.com, Google. For example, Google's recent acquisition of Wildfire. There are certainly plenty of anecdotes to support the narrative that marketing technology is consolidating.

At the same time, however, the pages of TechCrunch, VentureBeat, PandoDaily, GigaOm, etc., are constantly pumping out announcements of new ventures launching in this space. For instance, this recent article on GoodData. And while not all start-ups make it past the embryonic stage, enough of them gather enough momentum to achieve escape velocity and become real companies.

So, which is it? Is the inflow greater than the outflow, or the other way around?

Working on my updated marketing technology landscape for this year, I've come to the conclusion that the answer is both. Once you start breaking down marketing technologies into subcategories — email marketing, marketing automation, testing & optimization, etc. — you can see which are growing and which are contracting.

Some subcategories of marketing technology have clearly consolidated. CRM is fairly mature, with Salesforce.com, Oracle, and only a handful of other contenders. Web analytics — as a subset of technologies within a broader analytics category — is also relatively mature, with Google, Adobe, IBM, and Webtrends holding the strongest leads. And, more recently, PPC bid management software has narrowed, with Adobe, Marin, Acquisio, and Kenshoo. Consolidation has happened both via acquisitions and organic attrition of ventures that didn't make the cut.

Other subcategories, however, are diversifying at an explosive rate. Take, for example, social media marketing products and platforms. In spite of major deals such as Google's acquisition of Wildfire, Oracle's acquisition of Vitrue, and Salesforce.com's acquisition of Radian6, the number of new and growing ventures in the space is staggering. Check out Awareness, Attensity, awe.sm, Actionly, ArgyleSocial — and that's just a few that begin with "a."

And just when you think a category is locked up, shifts in the overall landscape of marketing crack open fresh opportunities. So the CRM market might be mature, but the emerging concept of social CRMs has given new players such as Nimble and SpoutSocial a foot in the door.

Forces driving consolidation vs. diversification

There are lots of reasons why the marketing technology landscape is continuing to expand and diversify. First, there is the opportunity, which is measured in billions and is still largely greenfield:

• The migration from traditional to digital marketing still has hundreds of billions of dollars on the table. This isn't just a shift from TV ads to web banner ads; it's a shift in what constitutes marketing beyond old-school advertising tactics.
• The digital vehicles in which marketing operates are still being invented and shaped — even major players such as Facebook and Twitter are still experimenting with their offerings to marketers on which their businesses are (theoretically) based.
• Buyer behavior patterns are changing in both B2B and B2C — evolving mobile interactions as one example. Consider the BYOD (bring your own device) movement in companies, which has powerful implications on how prospects are reached and engaged in B2B marketing.
• Most companies are still facing enormous challenges in operationalizing their marketing engines in this new environment and are seeking solutions. (See everything is marketing, everyone must be agile.)
• Products that specialize in a particular "point solution" can often out-innovate more general-purpose products that are covering too wide of a swath of the broad marketing technology landscape.
• The next new thing in the digital world — digital environments in our cars? NFC interactions with mobile devices? the next-generation of TV? wearable computing? Internet-connected home appliances? a whole new kind of social network? — can appear at any moment, and with it, alter the entire field of marketing again. The only thing constant in marketing these days is change.

Then there are the enablers to chase those opportunities, which have lowered the barriers to entry:

• Small teams can produce amazing software quickly. Thanks to great open source frameworks and platforms, along with cloud computing architectures, it has never been easier, cheaper, or faster to create compelling software. If you have an idea, you can make it real.
• The lean start-up movement has established a business framework for launching such ideas quickly and effectively.
• Infrastructure-as-a-Service (IaaS) and Platform-as-a-Service (PaaS) providers give start-up companies the ability to deploy robust and highly-scalable solutions on-demand. You don't have to build out your own datacenter.
• Capital is readily available and actively chasing these opportunities in the marketing space.
• Every time there is a change in the marketing environment, the incumbent vendors are at risk — the larger they are, the harder it is to adapt their businesses and their platforms to quickly address the new requirement. This gives new start-ups a window of opportunity.
• Digital marketing, ironically, makes it easier for start-ups to reach a laser-focused target audience.
• The world economy is increasingly encouraging entrepreneurship (with carrots and sticks).

But what about consolidation? In many ways, the forces at work in marketing technology consolidation are the same forces that drive consolidation in almost any industry:

• If a certain subcategory of marketing technology stabilizes — as, say, search PPC bid management has — then it becomes harder for products to differentiate, and the field narrows; one product can substitute for another more readily, encouraging eat-and-convert acquisitions.
• Investors eventually want an exit, which provides pressure to sell to a larger company or go public and buy up smaller companies.
• Other things being equal, buyers would prefer to deal with fewer vendors.
• Other things being equal, buyers don't like to swap out implemented solutions; with a finite number of buyers, a certain subcategory will eventually become saturated.
• Platform providers — Salesforce.com is a great example, and some marketing automation products seem headed this way — thrive by having other developers build on top of their foundation. But developers, who become the lifeblood of a platform, are only able to cater to a limited number of platforms. System dynamics push to settle on a few dominant platforms.

I think there's another factor in consolidation that influences the marketing technology space: the more a subcategory's data has long-term value, the more the market seeks consolidation.

This would explain why three generations of CRMs have tended to converge to a few players. The CRM has become the de facto "system of record" for tracking marketing's relationship with customers over years. In contrast, social media marketing is ephemeral — the half-life of insight from social media monitoring may be measured in days or weeks, but not years. Companies can switch to a new social media monitoring product with less concern about historical data.

The case for consolidated platforms and diversified ecosystems

Question: Is the app store on Apple (a) consolidating and shrinking or (b) diversifying and expanding?

With over 650,000 apps and growing ("there's an app for that"), the answer is obviously (b). Sure, there are some rock stars such as the Angry Birds franchise, and certainly lots of apps that fade away after their first release. But in between those two extremes are many solid, successful apps that address the needs and desires of specific target audiences.

You don't hear massive clamoring for app consolidation. What Apple has done — Android too, and Microsoft hopefully — is create an ecosystem where diversification is a feature, not a problem. Of course, that's only made possible by consolidation of the underlying platforms: the three horse (?) race of Apple, Android, and Microsoft's Windows Phone 8.

Marketing technology doesn't have to take it to that extreme to harness some of the same dynamics. As I discussed in my post comparing suite, platform, and portfolio strategies in marketing technology, a platform offers a good balance of consistency in fundamental data and processes with flexibility in plugging in more specialized capabilities.

Despite the reasons for consolidation ("other things being equal"), I believe marketers will need some strategy to address diversification for two key reasons:

1. The marketing landscape is going to be in flux for the foreseeable future.
2. Marketers must continually seek ways to differentiate their brands and experiences.

A small number of fundamental platforms — Brian Halligan of HubSpot has called them marketing operating systems, furthering the iOS analogy — supporting a diverse ecosystem of specialized applications offers the best of both worlds. Ironically, such consolidation of platforms would encourage more diversification of applications that could build on top of those foundations.

These applications may not be as tightly bound to their respective platforms as they are with iOS, but rather may be more loosely coupled, exchanging key data and events via APIs. Services such as Zapier hint at the possibilities of a configurable fabric of different applications.

Consolidation of platforms would not only encourage diversification of other commercial marketing technology offerings, but it would enable companies (and, interestingly, agencies) to develop more custom components and "creative technology" experiences connected into these marketing backbones. As Jon Miller of Marketo recently said, "When marketing departments and lead generation agencies share common technology, the leads and information can be synced in real time."

Which subcategories of marketing technologies will emerge as these platforms? CRMs such as Salesforce.com probably have the strongest position today, but marketing automation systems such as Eloqua, Marketo, HubSpot, Aprimo, Act-On, Pardot, Infusionsoft, etc., hold much promise to serve as the backbone of many marketing processes. Other contenders may emerge from multi-channel marketing solutions, web experience management systems, and a new generation of big data/business intelligence/analytics products.

Potentially, some service providers may evolve into a kind of virtualized platform themselves — Axciom, Experian, Epsilon, Accenture, Infosys, and possibly the next generation of large agencies may provide a service layer wrapped around a technology backbone. Ventures such as Fabric and Code illustrate some of the possibilities of that approach. But that's a post for another day.

Marketing Technology Landscape Supergraphic (2012)

Marketing is in a whirlwind of technological innovation. It's thrilling, inspiring, and a little dizzying.

Last year, I made the first version of a marketing technology landscape infographic to try to glimpse the "big picture" of this broad field. I'm pleased to now share with you the all-new 2012 version of this supergraphic above (click to open a large version that's actually readable).

Its purpose is to illustrate how incredibly diverse and vibrant the marketing technology ecosystem is. It includes over 350 different companies, from small start-ups to Fortune 500 giants, across 45 different categories, from agile management to video marketing.

Admittedly, it's incomplete — merely a representative sampling of all the varied technologies in marketers' lives today. Under constraints of time and space, there are many companies and categories that weren't included and that no doubt deserve to be. (If one of those missing companies is yours, I apologize. Please tell us about your venture in the comments.)

Categories are by no means definitive. We could debate for hours what is or isn't "marketing automation" (as I have, much to the chagrin of the people sitting next to me). The labels in our industry are in flux, as are many of the companies themselves, which are constantly adding new features, acquiring new products, and pivoting to new positions.

Some categories are unfairly broad — such as analytics and social media marketing — simply because further subcategorization seemed tedious. As a result, for instance, you could implement analytics solutions from Chartbeat, Clicktale, ClearSaleing, and Compete with almost no overlap in functionality.

Many companies could make a case for being in multiple categories, but in the interest of diversity, there are few duplicate entries. The exceptions are mostly the Big Guys — Adobe, IBM, Oracle — whose large portfolios of marketing technology acquisitions defy any simple designation. Where acquisitions have retained their own brand (e.g., Radian6 or Heroku under Salesforce.com, Wildfire under Google, etc.), I've tended to leave them in "as is."

Three notes: First, my own company, ion interactive, is included in the graphic in the landing pages circle (which is part of the testing and optimization sphere, which is part of the broader web site constellation). Second, the inspiration for this came from the wonderful LUMAscapes produced by LUMA Partners. Where I go broad, they go deep, with several amazing and thorough diagrams of subindustries within marketing.

Finally, your eyes aren't playing tricks on you. Some logos are bigger than others. There is no meaning or ulterior motive to this — at least no conscious one — other than trying to squeeze logos of various dimensions into crowded or very crowded categories in a hopefully semi-aesthetically-pleasing fashion.

If you're new to this blog and want to know more about how to make sense of this "technologification" of marketing, I humbly suggest these pieces:

• Why marketing software will never be like ERP
• Marketing technology: suite, platform, or portfolio
• Marketers: you are the software you use
• Agencies and the marketing technologist revolution

And, of course, the classic: Rise of the Marketing Technologist. Enjoy and let me know what you think!

We are the 1% (of global marketing spend)

Marketers will spend about $1 trillion this year on external costs: everything from advertising of every kind, marketing services such as direct mail and lead generation, agency fees, data and intelligence such as market research, and — at the very bottom of the stack — software and technology.

In 2012, marketing technology will account for only 1% of marketing spend.

According to a recent report by research analyst Dan Salmon, the amount spent on software and technology globally this year will be around $12.1 billion out of the $984.6 billion spent on all external marketing costs. (Dan's report does not cover in-house marketing expenses — primarily staff — such as creative personnel, data analysts, "marketing IT departments" or the CMO.)

My initial reaction was: the revolution will be rounded down?

For its 1%, marketing technology has disproportionately disrupted marketing-as-we-knew-it. Given the tremendous impact technology has had on the remaking of marketing, it's hard not to feel a little cognitive dissonance around the notion that it's captured such a tiny portion of the budget.

However, this number is a little misleading because, in fact, technology has disrupted and innovated many of those other categories. Within advertising, it's digital advertising that is growing at the rate of 18% this year. GroupM just released an updated forecast predicting $99 billion will be spent on digital advertising this year (out of $506 billion spent on all advertising). Gartner just released a report predicting $8.8 billion will be spent on social media advertising alone this year.

The very channels of this advertising are a function of technological innovation.

Similarly, marketing services, agency fees, data and intelligence services, etc., are all leveraging new technologies in their infrastructure and operations. Companies such as Axciom, comScore, Compete, Epsilon, Experian, etc., instantly leap to mind.

Last but not least, these numbers not only leave out marketer's in-house spend on technology-centric staff, they also leave out the contributions of the IT department. While the shift in spend between marketing and IT is in flux, varying significantly from one company to another, there's clearly a major portion of IT investment in technology-powered "customer experiences" that are moving under marketing's umbrella.

But there are two other ways to look at this:

1. Technology is bringing efficiency to marketing. For a fraction of media spend, smart technology can have an outsized impact on marketing outcomes. I've seen this first-hand in the conversion optimization space, where a small investment in targeted landing pages with A/B testing can have double-digit lift on lead generation or e-commerce transaction metrics. To achieve that net increase with just more advertising would require a massive increase in budget.

The relative cost efficiency of technology provides a sharp contrast to just how inefficient marketing spend has been in the past.

2. The opportunity to move marketing spend from traditional buckets to technology-driven ones is still huge. For all that has happened so quickly, we must acknowledge that we are still in the early phases for a multi-decade transformation of marketing. There have been many great marketing technology wins, but they're dwarfed by the potential for what can be won in the future.

After all, as it is elsewhere, that 1% wields incredible power and influence.

Here's the more detailed breakdown of spend numbers — and growth trends — from Dan's report:

Imagine 20 different technologies integrated into your website

How many different solutions do you estimate you have integrated to support your website capabilities today? How many do you anticipate you will have integrated into your website 2 years from now?

For eCommerce professionals, the answers are surprising:

• 42% have 10 or more solutions integrated in their sites today
• 69% expect 10 or more solutions integrated in their sites within 2 years
• 31% expect 20 or more solutions integrated in their sites within 2 years
• only 6% expect 1-4 solutions integrated in their sites within 2 years

Even to a marketing technology polyglot such as myself, that's staggering.

Yet, upon reflection, quite plausible.

This data comes from a new Forrester paper commissioned by Monetate, Getting the Most from Your Replatforming Project, interviewing 140 eCommerce professionals. ("Replatforming" is the term when an eCommerce site moves from one platform to another. It can also apply to other marketing platforms, such as CRMs and marketing automation systems.)

Admittedly, eCommerce tends to be more technologically complex than other online marketing and customer experience vehicles. But I suspect that most digital marketers feel the number of moving parts in their universe is increasing, not decreasing, for the foreseeable future.

In spite of all the forces for M&A consolidation and grand visions for the "one suite to rule them all," the evidence suggests that the trend is moving towards more heterogeneity in the digital marketing ecosystem, not less. At least in Forrester's study, the motivation is straightforward: it's what needs to be done to grow the business and remain competitive.

The reality of this increasing technological complexity is evident in the "best practices" that emerged in Forrester's research. Although only 34% of the participants identified themselves as belonging primarily to IT, the consensus of recommendations were around more rigorous testing methodologies, more in-depth architectural reviews, and more technical due diligence on vendors. The technical fluency required of — and demonstrated by — leaders in marketing, customer service, and eBusiness is increasing.

Also seems likely that more marketing departments will have a chief technologist, no?

Marketing technology: suite, platform, or portfolio?

This is a follow-up to my post on why marketing software will never be like ERP (but it's still going to be a ridiculously huge, multi-billion dollar industry).

The marketing technology landscape continues to expand and evolve at a breakneck pace. But while its vibrancy is in large part due to a fertile environment for start-ups, the hundreds of billions of dollars at stake in this reincarnation of the marketing industry has attracted the attention of many very large businesses. They include existing big technology companies (e.g., Adobe), huge IT services firms (e.g., Accenture), and, of course, the biggest agencies and marketing service providers (e.g., from Axciom to VivaKi).

(I call this frothy intersection The Marketing Technology Frenemy Triangle.)

The major strategic question they're facing — as are some of the maturing start-ups who are becoming large businesses themselves — is how to achieve stability and scale in such a diverse and rapidly changing technology landscape. The very dynamics of continuous disruptive innovation that make this environment so attractive to start-ups pose significant challenges to larger organizations.

There are three "pure" strategies for scale in this space — and, of course, an infinite number of variations — that we're seeing different players pursue:

• Suite — everything in one box from one company
• Platform — a "marketing backbone" connecting products from many companies
• Portfolio — a flexible collection of loosely-coupled products supported by one company

While I believe that all of these strategies are viable in the right context, the pros and cons of each differ significantly — both for the ventures themselves and their customers.

Marketing Technology Suites: One-Stop Shops for Marketers

The idea of a marketing technology suite is simple: one unified software offering from a single vendor that includes everything you need — as long as you only need everything it has.

The appeal of a suite is obvious. It's complicated for a marketing organization to get their arms around all the different marketing technologies out there, decide which ones are right for them, and figure out how to put the pieces together.

In theory, an all-in-one suite can spare marketers from having to deal with all that. They select one vendor, and they inherit a whole collection of marketing technology components and services already wired together. Depending on the sophistication of the suite and the marketing organization purchasing it, there may be configuration and customization required — but that happens within a relatively well-defined set of boundaries.

This is probably the fastest way for a marketing organization to implement a big chunk of new marketing infrastructure, requiring a minimal amount of marketing technologist talent on its team.

However, this simplicity comes with some trade-offs:

• If the suite doesn't have a feature you want — or it doesn't implement it in a way that you like — you're often limited in what you can do about it.
• In particular, if significant changes happen in the broader marketing ecosystem — say, new Google or Facebook APIs, or a new channel like Pinterest — you may have to wait a while before the suite provider updates or integrates with them.
• Your eggs (and more importantly, your data), are all in one basket: switching to a different vendor — or hurdling a catastrophic event with your existing vendor — can be painful and expensive.

The key challenge for suites is that the fabric of the new marketing is still being woven. A suite provider must keep up with all the diverse facets of modern marketing under their umbrella — web sites, search, email, social, mobile, etc. — which are constantly in flux. A suite runs the risk of becoming the jack-of-all-trades, master-of-none. The more stuff that gets bolted on, the harder it becomes to maintain a cohesive, clean architecture — entropy works against you.

Are the trade-offs worth it? For small businesses without much appetite for marketing technology management, a suite makes a lot of sense. HubSpot is a good example of such a suite (although they seem to be pivoting towards more of a platform strategy — more on that in a bit), as is Infusionsoft.

For larger organizations with more at stake in their marketing infrastructure, the risks and benefits of a suite are more difficult to weigh. Does a suite mesh well with your structure and operations? Is it a cultural fit, for both your organization and your customers? What options do you have as needs diverge? Adobe and Aprimo are examples of more enterprise-class suite providers that cater to such organizations.

Strategically, a suite aims for two things: (1) a core set of features that hopefully have reasonable stability, such as email marketing; and (2) a relatively homogeneous (and readily identifiable) target audience. If they can achieve critical mass with an integrated solution before their customers need more modular solutions, then they can leverage that position in the future — such as with a new generation of suite or an evolution into more of a platform.

Marketing Technology Platforms: Backbones to the Body of Marketing

One solution to the constraints of an integrated suite is to open it up: a marketing technology platform. A platform doesn't try to do everything itself, but instead provides a foundation on which many other more specialized products can be stacked.

A platform might initially appear suite-like, providing a wide collection of features out of the box. But unlike a closed suite, a platform is inherently open: it makes it easy to swap out or enhance those features with other third-party or custom components for more specialized needs as an organization (or the broader marketing ecosystem) evolves.

But usually, a platform is more than a starter-collection of disparate features. Typically, a platform has one primary purpose, something that can serve as a foundational service or master data repository that other software and services can leverage.

Salesforce.com is the quintessential example of a platform, providing a "system of record" for prospect and customer data. One of the tenets of their success was making it incredibly easy for third-party products to plug into their environment and share data back-and-forth. Organizations can pick and choose the plug-ins that best serve their needs — or write their own if they want something more custom-tailored.

Marketing automation companies — such as Eloqua, Marketo, Neolane, and Pardot — are to varying degrees pursuing platform strategies, seeing customer profiling and interaction through marketing automation as a more sophisticated "system of record" than CRMs. ExactTarget is trying to leverage their enterprise email marketing service as a platform. And as mentioned earlier, Hubspot is transitioning to a platform strategy — worth reading this interview with their CEO on becoming a "marketing OS".

Other platform contenders are based around digital asset management, e-commerce, web content management, advertising data management. Since there's some distance between these different categories, it's certainly feasible for a company to adopt more than one platform, albeit in different capacities.

For companies selecting a platform, they need to weigh three things:

1. How well does the "core" feature of the platform serve your needs? For instance, Salesforce.com is a great platform — but does its foundation as a CRM work well for you?
2. How big is the ecosystem of partners and third-party developers around a platform? Is it healthy and growing? Will you have a lot of choices in what you can plug into it?
3. How easy is it for you to work with their APIs to fully access your data and build your own custom enhancements? How stable are those APIs?

While it's usually more work for a company to fully harness a platform, connecting in other products or making their own custom extensions, the benefit is a solution that is more tailored to your business. When new innovations appear in the market, it's often easier to incorporate them into your system. This raises the stakes a bit too: if you're going to use a platform as a cornerstone for other product purchases and custom development, you want to make sure that it's a good foundation for the long haul. Switching platforms is a daunting proposition.

For platform companies they must do two things really right: (1) have a great core functionality, a tent-pole for marketing, that has longevity and lends itself well to connecting other marketing and sales components together; (2) grow their partner and third-party developer communities as fast as possible. There's a bit of a chicken-and-egg conundrum there: customers want platforms with lots of partners; partners want platforms with lots of customers. A really strong offering for (1) can buy time to grow (2).

Note that growing a partner ecosystem is much more a business mission than a technical one: how much does the platform company really invest in the success of their third-party developers? It's easier to say than do (i.e., a suite in platform's clothing).

Marketing Technology Portfolios: We Have an App for That

Perhaps the most interesting marketing technology enterprises are those pursuing a portfolio strategy.

With a portfolio strategy, a company has a number of different marketing technology products that they offer. Social media marketing? We have an app for that. Mobile marketing? We have an app for that. And so on.

Usually, there's not hardwired integration between the different products in the portfolio. Instead, they tend to be "loosely coupled" — they can work together and share data, but they don't have hard dependencies. This can give portfolios some of the benefits of a platform: components from outside the portfolio can be swapped in when needed for a specific customer. It's a very malleable technology strategy.

There are a lot of other advantages to a portfolio strategy:

• Each product in the portfolio can be "best in class" for its particular function
• Each product can evolve as quickly or slowly as the market demands, independent of the others
• As new marketing innovations emerge, new products can be acquired or developed independently
• One product can often "open the door" with a new customer, and then other products follow
• Services can shield customers from the technical complexity of more advanced products

But these advantages come with a different set of trade-offs.

A portfolio is not as tightly integrated as a suite, even if it appears on the surface to cover much of the same functionality. How big of a challenge this is depends on how tightly coupled you believe the different facets of modern marketing need to be. Everyone agrees they should be coordinated, yes. But how tightly? Too loosely may leave cracks in customer experiences; too tightly may constrain different channels and programs from blossoming in their own natural way or adapting quickly to new requirements.

The other challenge is positioning. A suite or platform company has a manifest identity: the suite or platform. It's not surprising that such companies tend to have product-centric cultures. But a portfolio has a more nebulous technical identity — that's its strength but also its weakness.

This is why portfolio strategies are often best for services companies. Their identity is wrapped up in the service they provide customers — their portfolio of technologies is an enabler to fulfill that mission. Large agencies that are looking to develop their own technology offerings tend to follow this strategy, as do major marketing services firms such as Axciom, Epsilon, and Experian and major IT-into-marketing consultancies such as Accenture, Deloitte, and Sapient. And, of course, IBM.

For customers, engaging in a services relationship with a portfolio-oriented marketing technology company can deliver even greater speed-to-implementation than adopting a suite. The services teams, who are experts in using their portfolio, can help configure and operate solutions on your behalf. However, customers weighing a relationship with such a portfolio company should consider the following:

1. Will the services provider integrate with your other systems outside of their portfolio?
2. Will your internal staff be able to develop fluency with the technology to direct your own marketing initiatives without dependency on the services provider?
3. Will you be able to continue to use the technology if you part ways with the service company at a later point? Not just licensing, but feasible operations and maintenance?
4. Will you be able to extract your core business data from the service, as both insurance for catastrophe and the option to transition to other offerings?

The portfolio strategy is immensely flexible, and it can give a company the greatest adaptability to ongoing changes in marketing. Unlike suites or even platforms, there's less risk of technical atherosclerosis — assuming the portfolio is actively managed. But the vision of how the pieces fit together into a cohesive offering to customers requires a narrative that transcends the technology. That's an opportunity and a challenge.

Hybrid Marketing Technology Strategies

Although the "pure" strategies described above frame the landscape of how large marketing technology companies are evolving, the reality is more subtle. Many companies mix these strategies to varying degrees. For instance, Adobe has a digital marketing suite, but they also have a non-services based portfolio of other marketing products. Or IBM, which at the highest level seems like a services-oriented portfolio company, is large enough to contain entire suites/platforms within their portfolio.

But hopefully identifying the core strategy of a company helps clarify their strengths and challenges — whether you are growing such a company or you're a customer or partner considering which vendors to align yourself with.

For marketers, remember: you are the software you use.

P.S. In full disclosure, in case you don't know, I'm the co-founder of a marketing technology company, ion interactive, that produces a product for advanced landing page management and conversion optimization. (See why landing pages are awesome.) You could argue that biases me towards platforms and portfolios, as those strategies are more compatible with my company to plug into those environments. On the other hand, I might make the case that our strategy was chosen because I believe the marketing technology landscape favors platforms and portfolios. (On top of that, we often sell our product to people who have suites anyway, as it doesn't require any deep integration.) But please interpret the above analysis with that aspect of my perspective in mind.