The Gist
- Rapid growth. Martech’s 27.8% growth rate highlights the dynamic expansion of the market.
- Atomized tools. Specialist apps dominate, offering flexibility and seamless integration.
- Generative AI impact. Generative AI tools are driving innovation and diversification in martech.
The marketing technology landscape grew “by a lot” in 2024. A 27.8% growth rate in the last year to be precise. That is probably the largest growth in the past 13 years. Frankly, as publishers of the yearly “Marketing Technology Landscape” supergraphic, we don’t care about the size of the martech market.
We keep track of the martech tools out there for one reason only: to thoroughly understand what is happening in the marketing technology space. And “thoroughly understanding” is what you should do, too, as a marketing professional, judging by the fundamental dynamics we observe.
With the number of tools as high as 14,106, understanding marketing technology looks daunting, let alone using it properly. For the more tech-savvy, it resembles an enormous candy store where you can get a sugar high on tools fast. If you ask me, both situations are not good for your company and your customer.
So, how to approach this martech monster?
Taking a few steps back, we see three major trends are shaping the future of marketing technology. Understanding these trends empowers you as a marketer to navigate this ecosystem relatively easily.
1. Marketing Technology Grows Faster Than It Consolidates
It is a fact that the martech landscape continues to expand rapidly. With the decreasing costs of software, consolidation is probably not around the corner. Since the first Martech Landscape in 2011, the industry has grown by an astounding 9,295% for 13 consecutive years. That is an annual growth rate of 41.8%.
Consolidation does happen, no doubt. Every year, there are multiple reasons why martech tools are removed from our overview. This year this is what the numbers look like.
- 76 – Out of business.
- 61 – Acquired & merged.
- 61 – URL change, due to merged products or modules.
- 33 – No longer martech, now fintech, edutech, etc.
- 32 – Now agency, giving up software ambitions.
Source: The State of Martech 2024
The numbers this year sum up to 263 deprecated tools in total. That’s only a 2.1% churn rate from last year’s cohort. That is probably an all-time low. It is a very low number compared to the 3,068 new tools added. This low churn rate underscores a critical insight: Consolidation does not happen as fast as the growth in the market.
This implies that waiting for the market to consolidate is not a strategy. In the past 13 years, we haven’t seen a sudden shake-out of tools, or one vendor acquiring hundreds of other vendors and pushing small ones out of business. So how can you deal with the tsunami of martech tools? Let’s deep dive into the tsunami and see what it looks like on the inside.
Related Article: Marketing Technology Landscape Grows to 14,106 Solutions
2. Say Goodbye to Point Solutions, and Welcome Martech Atomization
The growth is fueled by a trend that we could label “martech atomization.” Martech is atomizing into smaller, specialist apps that perform one marketing job to be done well and seamlessly integrate with the ecosystem partners. Labeling specialist apps as “point solutions that create legacy and data dead ends” turned out to be “specialist apps that prevent legacy that integrate well.”
Our data shows that specialist apps play a vital role in stacks. Like many other industries, the martech market shapes like a Long Tail. We analyzed over 1,500 real-life martech stacks and found that specialist apps consistently make up about 50% of martech solutions used by companies. This trend has remained stable over the last seven years. These Long Tail tools are not only here to stay, they have been present in stacks “all the time.”
Data also shows that specialist apps are more popular and better received by users. Data from Clearbit and G2 indicates that martech solutions with lower revenue tend to have higher ratings and are generally preferred over larger, more cumbersome solutions.
Let’s not forget the other half of the stack, the Head or Torso tools. Our recent survey shows that stack owners consider one or two tools as the “center of their stack.” Seventy-four percent of companies have central platforms, such as CRM, MAP or CDP, around which these specialist apps orbit. This setup allows for flexibility and specialization, catering to specific needs. This prevalent practise is what multi-product suites intended to do for companies, however only 4.2% consider them as the center of their stacks.
Related Article: Martech Solutions: Think Like an Engineer
3. Generative AI Fuels Growth and Atomization
One of the biggest contributors to martech’s growth and atomization is generative AI. In 2024, a staggering 77% of the new martech tools are generative-AI-based. We did not factor in the 3,135 marketing-related GPTs built in the Open AI ecosystem. Generative AI (GenAI) is revolutionizing martech, driving significant growth and innovation. Of the GenAI-based tools, 53% focus on content-related tasks such as copy, image and video creation. However, generative AI’s potential extends far beyond content generation.
Our research identifies numerous generative AI applications in areas like Sales Automation, Business/Customer Intelligence and Live Chat & Chatbots.
Take Sales Automation. Here are some use cases supported by new generative AI tools.
- Client meetings, notes, supporting material (n=137)
- Lead sourcing and outreach (n=65)
- Lead scoring (n=27)
- Pitch decks (n=18).
What about business/customer intelligence and data science?
- Data infrastructure, storage and unification (n=65)
- Data interpretation and chat with data (n=37)
- Data sourcing and extraction (n=11).
The reality about generative AI use cases is that we are in the early stages of the technology hype cycle. The generative AI capabilities are impressive, but value-driving business applications are still scarce. It requires time to do a lot of experiments to find the generative AI use cases that are gold nuggets for the company.
Many companies have started experimenting with various GenAI use cases relevant to their customer journeys. They track their effectiveness and prioritize those that offer the most significant benefits. Early adoption and continuous experimentation with generative AI can provide a competitive edge in your marketing efforts.
Source: MKT1 newsletter
Parting Thoughts on Martech
The best way to embrace martech growth and atomization, which includes the generative AI wave, is to actively set up and manage your martech backlog and incorporate generative AI use cases. The martech backlog contains customer use cases and viable business cases and is assigned an owner in MarketingOps or RevOps.
The martech backlog brings priority, focus and relevance to what matters to your company and your customer. It will make the 14,106 tools less daunting and reduce the martech sugar rush.
Learn how you can join our contributor community.
