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.
Magnite is the world’s largest independent sales-side ad platform (SSP) specializing in premium ad content for the connected TV (CTV) market. Formerly known as Rubicon Partners, Magnite was launched in June 2020, subsequent to its merger with Telaria (SSP for premium video ad content). As of September 2021, Magnite’s clientele consisted of more than 150,000 marketers, 2,100+ publishers, and 150 demand-side ad platforms (DSP), including Google Ad Manager, Verizon media, and MediaMath.
Magnite’s solutions for ad sellers allow content publishers to showcase their content in an invitation-only marketplace while providing real-time insights and customer identity solutions. For ad buyers, Magnite’s platform provides access to 100+ sources of live streaming content and insights on audience activity, where it leverages first and third-party data solutions from its data partners, which include Salesforce, Adobe, Oracle, and LiveRamp.
Magnite’s competitive edge lies in its wide reach, given the number of premium publishers in its network as well as its omnichannel capabilities, which include CTV as well as direct-to-video (DTV) channels such as video, mobile, display, and digital out of home (DOOH). As of September 2021, the firm claims to have a market share of 20%–25% in the CTV market, which it plans to grow to more than 30% within the next five years.
Magnite recorded GAAP revenue of USD 221.6 million (a 42% YoY growth) and an adjusted EBITDA margin of 20% in 2020. As of Q3 2021, the firm’s long-term targets are, 1) YoY revenue growth: 25%+ and 2) adjusted EBITDA margin: 35%–40%.
In March 2021, Magnite raised USD 400 million in Post IPO debt funding. The funding was to aid with its acquisitions of SpotX (video advertising platform for CTV) for USD 1.1 billion (February 2021) and Spring Serve (video ad serving tool for OTT) for USD 31 million (July 2021).
In December 2021, it was reported that Magnite may have been considering a strategic deal with one of its DSP partners MediaMath. Such a deal would result in the creation of an end-to-end advertising platform and represent a significant consolidation move in the AdTech space.
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.
Oracle’s cloud enterprise platform offers a marketing cloud (launched in 2014) that offers marketing and ad campaign management, audience segmentation, as well as customer and content marketing. This has been developed via several key acquisitions over the years, including 1) Eloqua (B2B marketing automation platform acquired in December 2012), 2) Responsys (B2C marketing automation platform acquired in December 2013), 3) Compendium (content management platform acquired in October 2013), and 4) Bronto Software (tools for personalization and automation of marketing campaigns across email, social media, and mobile; acquired in April 2015 for USD 300 million). In September 2021, Oracle added “Fusion Marketing,” an AI-driven tool that aims to rationalize the marketing process by automating lead generation in order to streamline marketing and sales. As of October 2021, its customers included Disneyland Paris, Panasonic, Broadcom, and Cisco.
In July 2016, Oracle acquired Netsuite, an ERP system targeted at small and medium-scale firms, for USD 9.3 billion. Rebranded as Oracle Netsuite, it functions as a business unit of Oracle, offering its marketing platform and a more affordable alternative to the enterprise-level solutions provided by its parent company. Through the Netsuite CRM platform, firms have access to many marketing automation features: 1) the ability to conduct personalized marketing campaigns across channels including email, direct mail, or social media; 2) integration with Netsuite CRM platform through which customer details are updated in real time and routed to sales; and 3) real-time performance measurement tools.
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