Based on my conversations across the marketing technology landscape, we’re at saturation. Net new deals are dwindling, with the market resembling a stagnating pond instead of a dynamic ecosystem.
The industry’s growth, once fueled by a relentless drive for innovation and differentiation, now sputters as most companies have what they need (and if they don’t, they’re making do). Average marketing budgets have fallen to 7.7% of overall company revenue in 2024, down from 9.1% in 2023, according to Gartner’s latest annual CMO Spend Survey. CMOs are living in an era of less.
When they make purchases, it’s more about adding a dash of flavor than a fundamental shift. What’s a martech vendor to do in this landscape, where a martech solution purchase is like buying condiments? Let’s explore.
The current state of martech: A saturated market
The martech industry exploded over the past decade, ballooning from a few hundred solutions to over 14,000 products in 2024, according to Scott Brinker and Frans Riemersma’s 2024 State of Martech Report.
This ongoing explosion in martech empowered businesses with tools for every conceivable need — from customer relationship management (CRM) and marketing automation to data analytics and personalization. But the expansion has also led to a point of diminishing returns.
Many companies now boast a robust martech stack tailored to their specific requirements. The result? A market where the appetite for net new deals has significantly chilled.
The condiment phase: Incremental purchases over major investments
New purchases in today’s martech landscape are less about fundamental changes and more about incremental improvements. Businesses seek solutions that enhance or optimize their existing stacks rather than replace them. Think of these as the condiments that add extra flavor to a well-prepared dish:
- Integration enhancers: Automation and integration tools that improve interoperability between existing systems.
- Performance optimizers: Testing and optimization solutions that fine-tune campaign performance or analytics capabilities.
- Niche innovators: Specialized tools like conversational and video marketing that address specific needs or gaps.
These purchases, while valuable, represent a shift from the era of sweeping martech transformations to one of careful, targeted enhancements. Gartner’s survey revealed that while paid media investments grew to 27.9% of the budget in 2024, spending fell across martech, labor and agencies.
Technology investments continue their downward trend, reaching the lowest level in a decade. On the other hand, another study shows the opposite — martech spending is rising. What’s a martech vendor to do?
The martech vendor dilemma: Strategies for survival and growth
For martech vendors, this shift presents a substantial challenge. How can martech platform and tool vendors thrive when the market for net new deals is drying up? Consider these back-to-basics strategies.
1. Focus on customer retention and expansion
Nurturing existing customer relationships is paramount, with net new deals becoming scarce. Invest more in customer success teams to ensure clients get the most value from your products.
Upsell and cross-sell opportunities within your current customer base can be more lucrative than hunting for new clients. But for the love of 14,000 martech solutions, be consistent in your communication — don’t just call them when you want to sell them something.
2. Innovate with purpose
While the market may be saturated, there’s always room for genuine innovation. Identify pain points that your current solutions don’t address and develop new features or products that can seamlessly integrate into existing stacks.
Emphasize these innovations’ unique value to the customer’s business, positioning them as must-have condiments that elevate the entire martech meal. AI is a key area for innovation, as noted in the 2024 State of Martech report, with new generative AI startups rapidly emerging. But a word of caution regarding AI — start with an appetizer, not a full meal.
3. Embrace the ecosystem approach
Build partnerships and integrations with other martech vendors — “coopetition.” A cooperative ecosystem where different tools work together seamlessly can provide added value to customers.
By joining a broader, interconnected martech environment, you can enhance your offering’s attractiveness. Do it. It’ll pay off big.
4. Offer customization and flexibility
One-size-fits-all solutions are increasingly less appealing to most marketers who’ve been around for a while. Offer tailored solutions that cater to the needs of different industries or business sizes. Greater flexibility in pricing and deployment options can also make your products more appealing to a broader range of customers.
5. Invest in education and thought leadership
Position your company as a thought leader. Provide valuable insights, research and best practices that help customers navigate the uber-complex martech landscape. Becoming a trusted advisor can strengthen customer loyalty and attract new prospects looking for expertise.
The 2024 State of Martech report highlights the importance of composability and open architectures for tailored solutions. The approach isn’t without its challenges, but from my vantage point, you ain’t going back once you go composable.
6. Leverage data and AI
Harness the power of data and artificial intelligence to deliver more predictive and prescriptive analytics. Implementing solutions that report on past performance and provide actionable insights can offer a significant competitive edge.
Up to 64% of CMOs lack the budget to execute their 2024 strategies fully, according to the Gartner CMO survey. However, generative AI presents an opportunity to extend the impact of the marketing function far beyond its budgetary constraints. As mentioned in the second point, proceeding purposefully and with a healthy dose of caution is advised.
7. Hire martech-savvy sales talent
In a sea of 14,000 solutions, your sales team needs to deeply understand your customers, their challenges and how your product uniquely solves them. Invest in hiring experienced salespeople who can articulate your key differentiators and value proposition with the clarity of a Tibetan singing bowl.
Mandate ongoing training on your product’s features, updates and integrations so they can confidently showcase how your solution stands out from the crowd. At least teach them how to log in and use the platform. Knowledgeable, customer-centric salespeople will help you build trust, close deals and foster long-term relationships in this highly competitive battle for martech supremacy.
Adapting to the new normal
While the era of shooting-fish-in-a-barrel net new deals may be declining, the need for continuous improvement and optimization remains strong. Martech vendors can navigate this condiment phase successfully by focusing on customer success, purposeful innovation and strategic partnerships.
Embracing this new reality with agility and foresight will be key to thriving in a market where everyone already has what they need but still seeks that perfect finishing touch. In this new normal, it’s not about selling the next big thing. It’s about adding the right flavor at the right time to make your solution indispensable.
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