Marketing Automation Vendors Have a Tough Road to Travel, but Rewards Await
Marketing Automation is a hot topic. News about multi-million dollar investments in the space has sparked not only interest from marketers but a multitude of competitors crowding an already jammed market. Is like driving down the highway only to see the traffic stopping right after you take the next curve. As the traffic is slowly moves, some cars faster than others, many drivers start wondering if they should take the next exit.
Marketing Automation Still In Its Infancy
In 2009 Forrester Research estimated that between 2% and 5% of B2B firms had invested in full-featured Marketing Automation functionality, and that’s almost 10 years after the first vendors appeared. By 2011 that number had grown to 18%. At this much improved pace one can assume that the adoption is likely to grow to over 50% within the next couple years. That is, if the roadblocks are removed.
Compare these numbers with a recently released report showing that 88% of B2C and 71% of B2B companies currently use email marketing. It is quite a disparity. So that begs the question of why Marketing Automation has been slow to gain such adoption and what the future holds for the industry.
First, let’s take a look at the volume of online searches. By using Google’s Keyword Tool, you can get approximate values of monthly searches for a particular keyword or keyword phrases. The result for the phrase “marketing automation” is approximately 18 thousand global monthly searches and 10 thousand local (i.e. US only) monthly searches. Compare that to “email marketing” yielding over 400 thousand global searches and over 160 thousand local monthly searches and now you can more clearly see which cars are advancing more rapidly and why.
If people are not searching for your product, they won’t find it. Sure, these are only two examples and you can argue that someone searching for ways to automate their marketing efforts will be using other combination of keywords and phrases like “landing page automation” or “email automation”. Go ahead and use the Google Keyword Tool and see the results. The search volume is low, very low.
Educating the Market
So what do you do if people are not searching for you? You try to educate them, entice them and tell them they have a need and you have the solution. And that is why the top vendors have invested heavily in content marketing and in promoting marketing automation branded content so that the concepts of start becoming part of the regular marketer’s vernacular. With the increase in blog posts, tweets, and analyst reports coming out talking about marketing automation, marketers start taking an interest.
But here also lies another problem. As vendors try to differentiate themselves, new acronyms and terminologies are used confusing the market. Even analysts many times don’t use the same terminology and when talking about the market they have different criteria for which vendors to include.
Another point in education refers to the use of the Marketing Automation tool once it’s installed. As a recent Gartner Group report mentioned:
“More than 75% of companies that have invested in automating lead management leverage only two channels, primarily e-mail and Web landing pages”
Forrester’s own research also supports this notion, saying that:
“Most [companies] are still at level 1 or 2 of Forrester’s marketing automation maturity model. Those that have been using the system for a few years have gradually expanded their use… But they have done so in a manner that is fairly simplistic, compared with what is possible”
So companies that purchase those systems are underutilizing it. It also means that unless those systems generate a very clear ROI, companies may be reluctant to exchange their trusty email marketing service providers for a Marketing Automation system if the only thing they will use it for is email and landing pages.
Showing Marketing ROI
Vendors and analysts have been coming out with reports on Marketing Automation ROI in an attempt to demystify the solution and increase marketers’ confidence. Gartner, for example, predicts that 30% of companies using Marketing Automation will increase revenues 5% to 10%. That’s very comforting if you’re among the 30%, but how about the other 70% who are also using a Marketing Automation solution?
A more convincing ROI model came from Sirius Decisions, showing that proper use of Marketing Automation tools can generate 5x more revenue for your company. Now that’s something marketers want to hear!
So why is it that marketers are still reluctant? MarketingSherpa’s research pointed out that although 76% of CMOS report their biggest challenge being “generating high quality leads” only 19% of them have a Marketing Automation software fully implemented and a full 30% of them do not plan on implementing a solution within the next 12 months!
The Fork Along The Road
I believe that the highway that once seemed clear ahead (Marketo reaching 1 thousand customers, Genius doubling new accounts month over month, and Eloqua’s goal of doubling its revenue by year end are good indicators of it) now is presenting drivers with a fork, and to use Yogi Berra’s words, vendors will have to “take it”.
You have two segments of marketers. Those who know what Marketing Automation is but are unsure whether it is for them, and the marketers that either do not know or do not care about Marketing Automation.
The marketers who are aware of Marketing Automation but are still reluctant in forging ahead are a minority. They are the ones doing the Google searches, attending webinars, and consuming the content to educate themselves. A big percentage of this group may indeed convert and implement the system. Part of this group may also be users of a Marketing Automation system they are unhappy with and are looking for alternatives.
The second group is probably the biggest roadblock and the reason why Marketing Automation adoption may slow down a bit in the coming year. It’s those 12% represented in the MArketingSherpa research that have no plans on implementing a solution. They are either too busy or don’t care, and will be tough to reach. If we take a look back at the email adoption numbers, is amazing that at this point in time you still have companies who are not using it as a marketing channel. Marketing Automation, a more expensive proposition in many cases, has not only to find these people but also has to educate them on the differences between just sending emails and their systems (which provide lead nurturing, scoring, etc.). In any case, they have to convince people they have a problem and that will require a lot of effort.
The Finish Line
What we will probably see in the market is MA vendors now establishing partnerships with complementary software solutions. That makes sense, since it helps those vendors reach the same audience in a concerted effort.
The usual suspects for partnerships are likely to be social media, marketing resource management, and even email marketing vendors (one current example is Marketo and ExactTarget). Different angles, messages, and pricing will start being advertised in an attempt to attract marketers to the solution. Acquisitions are also likely to occur, reducing the number of players and showing the market is maturing.
The market for Marketing Automation is still in its infancy, but brings big promises (when IBM bought Unica, it believed the market was worth $2.5 billion and doubling every year). The vendors that are able to effectively differentiate themselves from the competition and are able to convince marketers they should purchase the solution sooner than later will be the ones crossing the finish line. The rest, we may not hear from them again.
About the author: Daniel Kuperman is the Co-Founder and CEO of Aprix Solutions, Inc. An experienced B2B Marketing Executive with high-tech background, Daniel is passionate about marketing technology, and blogs frequently at http://www.effectivemarketer.com and http://blog.aprixsolutions.com.