Though the flood of new entrants has significantly outpaced consolidation activity so far, merger and acquisition activity is picking up. Specifically, four large tech vendors—Oracle, Salesforce.com, Adobe, and IBM—hope to dominate the market by gobbling up small suppliers and rebranding the acquired products into all-encompassing suites.
The logic behind these moves, according to TFM Insights, is that buyers confused and bewildered by this fragmented landscape will flock to single-source solutions: “Thus the big software companies, alongside a number of smaller competitors, have seized the opportunity to sell their customers more complete marketing suites. In theory, this takes some of the hassle out of building a bespoke, marketing stack.”
Only time will tell how successful these vendors are. Industries do generally, of course, consolidate over time. Think of the American auto industry, which collapsed from hundreds of manufacturers in the early 1900s to just three main players by mid-century. Or the cable TV sector, which telescoped from 42 companies to four major providers in just 20 years.
Yes, but…Software is Different
But software industry consolidation is less linear. Even in the enterprise resource planning (ERP) segment, where a steep drop-off in new purchases after Y2K fed consolidation—Infor alone acquired 16 companies between 2005 and 2016, and had snapped up several before then—there remain “hundreds of vendors offering best-of-breed (i.e., stand alone) ERP applications or integrated ERP software suites” according to Software Advice.
Software sectors are resistant to consolidation due to the low barriers to entry. It takes huge amounts of capital to build up an auto maker or build out a cable network. But it takes only an original idea, a couple of talented programmers, and modest quantities of pizza and Mountain Dew to start a software company. (Okay, that might be a slight over-simplification.)
The marketing technology segment may be particularly difficult to reduce to a handful, or less, of “suites,” given how diverse the landscape is. Brinker’s Marketing Technology Supergraphic organizes its 3,800 vendors into 49 functional groups across six major areas. Given the diversity, marketing technology applications don’t fall neatly into a “stack,” and “cloud” isn’t much more descriptive. The different functional areas actually resemble a large, complex matrix.
What’s a “Marketing Stack” Anyway?
The term “marketing stack” began getting traction in late 2015, as shown by the jump in Google searches:
Image source: Google Trends
The phrase was a play on the term “technology stack”—which is logical. That came out of the software programming world, where it generally described an operating system, database, web server, and programming language designed to work together to provide a development environment.
For example, LAMP is a technology stack combining the Linux OS with the Apache web server, MySQL database, and Perl, PHP pr Python scripting language, while the WINS stack consists of the Windows Server, IIS web server, .NET software framework, and SQL Server database.
A “marketing technology stack,” on the other hand, has no clear definition. This post alone highlights 21 different variations. The reason is clear: Unlike a programming environment, marketing technology isn’t so much a series of layers as it is a fluid matrix of different categories of tools, which can be mixed and matched to meet the specific needs of an organization’s overall marketing strategy, and even change within that organization over time.
Where to Start?
Unfortunately, there’s no clear “base” of the stack to begin with. Some organizations start with their contact database. Others start with tools that work at the top—or left side depending on your perspective—of the sales funnel, with tools that build awareness. Other models start with content at the base.
Regardless of the starting point, analytics are often at the top, or end, of the “stack,” as that is where results are measured and decisions made about what to do the same or differently.
It’s the middle layer is where the functions, vendors, and tools involved get really muddled. CRM, marketing automation, and analytics are common needs, but what about social media campaign management? A tool specifically for Facebook advertising? Or content ideation, or influencer outreach, or video editing, or project management, or online surveys, or. . .
Across the “middle layer” of tools, the answer to which tools are needed is—it depends. The answers will depend on whether you’re a B2B or B2C marketer; in a large, midsized, or small company; whether your sales are low volume/high dollar or high volume/low dollar; and most of all on your marketing strategy.
But in any case, the notion of a “marketing technology stack” is problematic. Viewing marketing technology as a matrix helps broaden perspective and avoid gaps and overlaps in key functionality.
Suites Can Be Sweet (Or Not)
The diversity of marketing needs and tool categories make it extremely unlikely any vendor will be able to build or acquire enough tools to serve as a single source. But what about the range of tools the suite providers do offer; should companies limit their purchasing focus at least within those functions?
Not necessarily. Though the tools within a single vendor’s “cloud” are (presumably) well integrated, many third-party tools integrate with the applications nearly as well. For example, while Salesforce.com has acquired ExactTarget for marketing automation and Radian6 for social media monitoring, it also lists more than 3,000 third-party technology partners on its AppExchange.
The best approach for companies that own at least two applications within one of the big four marketing clouds (and are happy with the functionality of and support for those apps) is to include additional tools from those vendors in relevant evaluation sets, by default. But consider tools from other vendors as well. Effective marketing technology matrixes are frequently a mix of best-of-breed and suite-based tools.
Ultimately, marketing technology tool selections should be driven by a firm’s marketing strategy mapped to functional needs. Individual tools should be evaluated both on their functional fit for the company’s needs as well as their technical fit with other applications already in place. Making smart decisions about marketing tool choices will increasingly contribute to competitive advantage. But these choices won’t fit into a nice, neat “stack.”