Marketing automation continues to be one of the fastest-growing technologies. Frost & Sullivan expects marketing automation industry sales to grow from the current level of $906.9 million to $14.51 billion by 2020, representing a 74 percent year-over-year growth rate.
This very robust growth comes from both high renewal rates and new customer wins, says Hiral Jasani, digital media industry analyst at Frost & Sullivan.
"Barriers to entry are low, and there is a visible upsurge in demand," Jasani says.
The revenue projections include only subscription, maintenance, and support revenue and not revenue from professional services, which typically account for 15 percent to 20 percent of total revenue at most firms. They also do not include marketing process automation software, such as Adobe Campaign, IBM Unica, Microsoft Dynamics Marketing, and Teradata Marketing Cloud.
Frost & Sullivan defines marketing automation as "tools that automate marketing and sales activities to improve the quality of leads and drive data-driven decisions," according to Jasani. It includes campaign management, lead management, marketing analytics, and sales enablement. Among the vendors of this technology are ActOn, CallidusCloud, IBM Silverpop, Infusionsoft, HubSpot, Marketo, Oracle Eloqua, Outmarket, and Salesforce’s Pardot.
The growing need for cross-channel digital marketing is allowing software vendors to cast their nets further and strengthen the business case for marketing automation, Jasani stated in the report.
Marketing automation has moved beyond email and the Web and evolved into more of a true cross-channel automation platform that is tightly integrated with mobile, social media, display advertising, and search channels, Jasani says.
This has led to what she calls "a phenomenal rise in demand," particularly among companies of all sizes in the manufacturing, financial services, healthcare, and e-commerce sectors.
Jasani also expects to see rapid adoption of marketing automation across global markets, with particularly strong interest from Western Europe, Asia, and the Pacific despite price sensitivity in those regions.
The report notes that a key market driver is a high level of innovation, particularly from new vendors "offering something unique to appeal to their local customers." Among those vendors are LeadSquared, Zift Solutions, Lattice Engines, Right On Interactive, SharpSpring, Lead Liaison, and MindFire Studio, which Jasani says "have established a strong foothold and continue to meet local consumer needs."
"We anticipate more new vendors to emerge as market adoption speeds up globally," she adds.
But with increased adoption comes the risk of greater market consolidation, which Jasani says is a real possibility. "Enterprise software solution providers will acquire smaller, pure-play marketing automation technologies to provide an end-to-end marketing solution," she states.
Product development, Jasani also maintains, has been focused on providing more sophisticated analytics. "The trend is to move away from descriptive/diagnostic types of analysis to more predictive analysis."
Ease of use and expanded multichannel capabilities have also become priorities, with vendors offering solutions that cut across channels and integrate online and offline data from mobile, display, direct mail, SMS, and paid advertising.
The market has also seen increasing vendor partnerships with advertising, content marketing, mobile app analytics, and social marketing providers. "Those vendors that provide better service and offer greater integrations with third-party systems will do better than others," Jasani says. "Out-of-the-box, prebuilt integrations are great for customers."
Still, while the market shows no signs of slowing down, Jasani cautions against complacency. In addition to the ever-looming possibility of acquisitions, price competitiveness will likely remain a challenge, she contends. With that in mind, marketing automation providers must improve their pricing models to achieve economies of scale, especially in emerging markets.
They'll also need to be more aggressive in positioning vertical-specific value propositions to expand into diverse industries and to build partnerships with digital marketing agencies to broaden their presence in different verticals and geographies, Jasani suggests. —Leonard Klie