Marketing automation (popularly referred to as MarTech) refers to the tech-driven applications and tools used to enhance digital advertising and marketing functions.
Technological developments that have created new digital customer touchpoints have brought about new and varied forms of marketing. Enhancements in AI and machine learning (ML) have also broadened the scope of marketing automation tools—replacing or complementing marketing functions previously done exclusively by humans.
These developments together with shifting consumer preferences toward personalized experiences and online activities, firms of all sizes have turned to MarTech for their marketing needs.
Planned marketing budget allocation, as a % of total revenue, slashed to 6.4% in 2021 (compared to a seven-year average of 11%)—a record low.
While marketing automation is expected to continue to account for the highest allocation on the marketing budget (26.6% in 2021), tighter budgets mean that firms would be more vigilant in their spending.
Campaign automation, marketing management platforms, and CDPs are less likely to be impacted, given that they represent the underlying marketing infrastructure of a firm.
AdTech as well as marketing analysis and intelligence tools are expected to be more acutely impacted, as they may be deemed as “non-essential” and discretionary spending.
Separately, the shift towards digital channels has accelerated as a result of the pandemic, with digital marketing accounting for 72.2% of the marketing channels budget for 2021, which benefits marketing automation.
AdTech and Marketing Campaign Automation remains the most active pieces of the MarTech Stack, while Data & Analytics have witnessed accelerated growth
AdTech and Marketing campaign Automation are the most established parts of the MarTech stack with search engine optimization (SEO) and email marketing remaining staple tools for marketers. With respect to AdTech, while investor interest in SEOs and search engine based marketing has been relatively muted with respect to fund raising activities, adTech tools such as account based marketing (ABM) and ad personalization tools have witnessed growing demand.
In addition, the Marketing Data & Analytics segment, in particular the CDP subsegment, has been experiencing an accelerated growth in response to the challenges brought about due to new regulations surrounding customer data privacy.
In contrast, disruptors activity is comparatively low in the marketing intelligence & management segment which typically faces competition from incumbents. Most incumbents position themselves as an all-in-one marketing solution, with a few disruptors compete in this space offering a cheaper and flexible alternative.
The majority of startups focus on a specific segment of the MarTech stack, offering specialized tools to compete with the more general 'all-in-one' marketing cloud solutions offered by most incumbents. The largest startups in the space are at a growth stage with a number of them going on to be publicly listed. At the same time, there is a steady flow of early startups entering the sector, offering increasingly niche and specialized marketing automation tools.
Criteo is a digital advertising firm based in France, providing solutions to marketers, brands, and retailers for creating awareness and driving sales. The firm offers an 1) AI-powered self-serve ad platform for managing and analyzing advertising campaigns across a variety of channels, 2) a retail media ad platform, a demand-side ad platform (DSP), and 3) an AI engine for ad personalization. As of June 2022, 22,000+ firms and 100+ global retailers were using Criteo’s services across a variety of industries including the top five holding companies as well as ~50% of the top 25 retailers in the US and EMEA which include brands such as Bloomingdale’s, Deliveroo, and Lowe’s Canada.
Criteo specializes in commerce media, leveraging commerce data to target customers through their shopping journeys. Its dynamic ad retargeting product can analyze customer activity and provide targeted product recommendations in real time and accounted for 72% of the firm’s revenue in Q3 2021. However, in recent years, given the growing challenges due to privacy concerns over the use of third-party cookies, the firm has been transitioning its clients towards its retail media platform. The platform contributed to the growth in its retail media solutions, which experienced a 58% YoY revenue growth in 2021 and added new clients during the year, including Lowe’s, Walmart Canada, Best Buy, Target, and Nordstrom.
In line with this, the firm has made a number of acquisitions in order to further develop its retail media ad platform, the most recent being 1) IPONWEB (ad marketplace platform) purchased for USD 380 million (December 2021) and 2) Mabaya (ad monetization tool for retailers) acquired in May 2021. The firm also partnered with Bluecore , a retail-specific marketing campaign automation platform to allow Sitecore’s users to leverage Bluecore’s customer predictive models (February 2022). Leveraging on its acquisition of IPONWEB, the firm launched a demand-side ad platform (DSP) for enterprise marketers specialized in retail media.
Funding and financials
In 2021, Criteo recorded ex-TAC revenue (net of traffic acquisition cost) of USD 921 million (a 12% YoY growth) and an adjusted EBITDA margin of 35%. As of Q3 2022 , the firm expects to achieve ex-TAC revenue growth of +10% to 11% in constant currency terms and an EBITDA margin of 28% to 29% in 2022. During Q3 2022, the firm secured a 5-year revolving credit facility of EUR 407 million (~USD 397 million).
In August 2022 it was reported that Criteo faces a potential USD 65 million fine from France’s data protection authority due to GDPR consent breach suite for the firm's suite of tracking techniques and data processing practices. The firm was also the subject of an investigation from the French Competition Authority. The firm stated that it had achieved a favorable decision from the authority and that the latter would restore Criteo’s partner status and partner access to Meta’s ad inventory globally.
Marketing intelligence & management:
Marketing campaign automation:
Global enterprise resource and planning (ERP) services have been extending the capabilities of their cloud computing platforms to include marketing solutions. Most of these platforms have been pieced together by both in-house developments and acquisitions, offering customers an all-in-one marketing solution. Most firms focus on business-to-business (B2B) solutions while some firms, such as Adobe, Oracle, and SAP, have extended their capabilities into the business-to-consumer (B2C) marketing space. ERP firms tend to have an edge over pure-play MarTech firms (particularly in the B2B space), given their ability to offer an integrated platform that connects to a firm’s sales, operations, accounting, and other functions provided by the ERP.
Popular customer relationship management (CRM) services, such as Salesforce, HubSpot, Sugar CRM, and Zoho, have also introduced solutions specific to marketing. As the unification of sales and marketing roles is a growing trend, CRMs (popular among sales teams) help bridge the information gap between the two teams via a single platform, giving such firms an edge.
Search engine operators such as Google and Bing (Microsoft), in addition to providing ad placement services, also offer their data analytics platforms. These have access to large customer data reserves for marketing teams. Meanwhile, ecommerce firms like Amazon and social media sites like Facebook have been improving the data analytics capabilities of their products to offer a more complete package.
A note on ad and marketing agencies: Ad and marketing agencies are external firms specializing in providing professional marketing services and have been mainstays in the marketing landscape for decades. Traditional marketing agencies (agencies that focus on traditional media channels and are typically owned by large holding companies) have witnessed a slowdown in their performance, while marketing automation has complemented the services of digital marketing agencies rather than completely replacing them. Many independent digital marketing agencies have positioned themselves to provide complete marketing solutions by developing their in-house marketing automation tools or partnering with marketing automation startups; others specialize in providing strategic consultancy services for marketing. A case in point is the marketing agency 3Q Digital, which provides complete digital market management solutions and strategic consulting.
Another service offered by marketing agencies is the implementation and training of marketers in the use of marketing automation, which has grown in complexity, while firms have cited a lack of know-how as a barrier to implementation. Adswerve is one such agency, offering a licensed marketing automation platform as well as implementation and onboarding services.
As such firms do not directly compete with the services offered by startups in the marketing automation space, we have excluded them as incumbents.
No investor data is available