B2B Marketing Automation Active Market Map
With new marketing automation vendors popping up every day, we thought we'd help buyers visualize the market with this simple map. You can hover over each logo to read a company overview. Meanwhile, our market commentary is below the map.
The B2B marketing automation software market is on fire, or so it seems if you keep track of new customer announcements, venture capital investments and new entrants into the space.
At the same time, the market is nascent. The total market size is still probably only about $200 million in annual revenue, with the largest player – Eloqua – owning roughly 25% of the market. While leading vendors are gaining market share and mindshare, it remains a very fragmented market. We see the market breaking down into five segments, as detailed below.
- Leader's Circle. At present, we believe that two vendors have achieved leadership status. Our objective measure for entry into this segment was that a vendor should have at least 500 marketing automation customers to be considered a leader. Eloqua and Marketo made the cut. Of course, both of these vendors are leading the market in other ways: product innovation, feature depth and breadth, thought leadership, mindshare and investment. We would expect at least two other vendors to join this segment in 2011. However, we plan to raise the bar for inclusion in this segment later next year. A successful IPO by one or both of these vendors would represent a clear signal of market leadership. We expect that to occur in 2012.
- Focused Contenders. There are a number of pure-play B2B marketing vendors that have been focused on this market for three to seven years, but have not yet reached the 500 customer count. These are solid products with dedicated companies behind them. Manticore and Pardot, for example, have built strong products and loyal customers, but have a lower profile since they chose not to take on substantial venture capital investment. Buyers may find "hungrier" vendors in this segment – those willing to offer lower pricing and more flexible contract terms. At the same time, buyers should evaluate corporate viability carefully. Those vendors that have raised substantial venture capital, but have not built strong momentum, may not make an ideal long-term partner.
- Adjacent Entrants. Long before B2B marketing automation took off, there was a meaningful – albeit sleepy – market for marketing software amongst B2C organizations and the largest, most sophisticated B2B giants. Companies like Unica (now IBM), Neolane and Aprimo got their start in those high-end markets and have built businesses that dwarf most of the current B2B vendors. These vendors are turning their sights on the B2B market and offer considerable expertise and functionality. The challenge facing these vendors, however, is to rationalize their sophisticated feature sets and expensive price points in the B2B market. The majority of B2B marketers will demand extreme simplicity at the expense of functionality, so high-end products may be overkill.
- CRM Gorillas. All of the largest CRM vendors offer some degree of marketing automation. However, best-of-breed marketing automation has not been a primary focus for these gorillas. A marketing department represents far fewer licensable users than a large sales force or customer support organization. Therefore, these large vendors will probably remain focused on battling each other for the larger sales and service deals. Having said that, current customers of these vendors will want to include the incumbent in their marketing automation evaluation. For those buyers with straightforward needs, tight integration may trump best-of-breed functionality. Of note: an acquisition by Salesforce.com of any of the leading B2B marketing leaders would dramatically change the dynamics of this market.
- New Start-Ups. We continue to hear of new marketing automation start-ups every week. In some cases, we're seeing marketing agencies productize the best practices they have been leveraging for years (e.g. eTrigue and Net-Results). Veterans of email marketing are also starting new firms to leverage their backgrounds into the new market for lead nurturing, via email. Meanwhile, the venture capital industry continues to have an interest in marketing start-ups, with new money being raised recently by Act-On and Optify. Buyers should carefully assess any start-up to ensure they have adequate differentiation and viability to be a long term partner. Organizations seeking to experiment with marketing automation may find start-ups offer enticing pricing and do-or-die customer service, but they should remain cognizant that many start-ups don't succeed long-term.
Have strong opinions on our Active Market Map or the market overview above? Comment away! We'll revise this post regularly to incorporate the best insights we receive in the comment stream. Meanwhile, confidential opinions can be shared by emailing Lauren Carlson.