Marketing Automation

Using AI to automate, enhance and optimize marketing activities

Overview

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.

Industry Updates

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Market Sizing

The US Marketing Automation market could reach USD 51.6 billion–105.5 billion by 2027

Conservative case

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Base case

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Expansion case

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Market Mapping


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 fundraising activities, adTech tools such as ad personalization tools have witnessed growing demand. With respect to MarTech, B2B-focused account-based marketing (ABM) solutions has emerged as a popular approach to marketing.

In addition, the Marketing Data & Analytics segment, in particular the CDP subsegment, has been experiencing 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 few disruptors competing in this space offering a cheaper and flexible alternative.

Incumbents
Expansion
Go-to-Market
Minimum Viable Product
Ideation
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GenAI-based Marketing Automation
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Marketing intelligence & management
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AdTech
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Marketing campaign automation
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Marketing data & analytics
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Marketing cloud
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Displayforce.ai
Displayforce.ai
Displayforce.ai
Displayforce.ai
Displayforce.ai
Displayforce.ai

The Disruptors


Disruptors offer 'Best of Breed' solutions to compete with incumbents marketing Clouds

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 expansion 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.

Funding History

Competitive Analysis


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Product Overview
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Incumbents


ERP and CRM giants offer marketing automation as part of their broader offerings

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.

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Notable Investors


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Market Sizing

The addressable market size for marketing automation in the US is estimated at ~USD 337 billion

The total addressable market (TAM) refers to the total revenue opportunity available for a product or service, while the actual market refers to the current market size based on revenue projections of firms currently operating in different segments in the MarTech stack. 
The marketing automation market comprises two broad segments: 1) MarTech; marketing tools that follow a SaaS model and 2) AdTech, advertising tools that follow a “pay-per-click” model. The total addressable market size for marketing automation in the US (includes both segments) is estimated to be ~USD 337 billion (see Appendix below for details). 
The total actual market size for marketing automation in the US is estimated at USD 44.5 billion in 2022, indicating a 13% penetration. This reflects the strong interest generated in marketing automation technologies in recent years. In 2022/2023, growth is expected to slow down due to an anticipated dip in advertising and marketing expenditure due to adverse macroeconomic conditions. However, the shift in preference for digital media marketing is expected to be sustained, while growth is subsequently expected to rebound with the annual actual market expected to reach USD 78.5 billion in 2027 (compound annual growth rate [CAGR] of 12% from 2022 to 2027) and will translate to an aggregate penetration rate of 23% by 2027.

TAM: Marketing Automation

Our conservative case expects the market to grow at a five-year CAGR of 3% to reach USD 52 billion by 2027 (15% penetration). The case assumes a slowdown in activity due to consolidation amongst marketing automation firms, given the large number of firms operating in the segment—some estimates place the number of marketing automation tools at 8,000—as well as digital marketing challenges brought on by changes to consumer privacy regulations and practices.
The expansion case expects the market to grow at a five-year CAGR of 19% to reach USD 106 billion by 2027 (31% penetration), assuming the accelerated shift towards ecommerce, growth in D2C brands, and the reallocation of marketing budgets for marketing agencies into in-house marketing activities. This would drive the growth in digital marketing, leading to faster adoption of MarTech tools and platforms. Enhancements in AI and machine learning (ML) capabilities that can effectively respond to the challenges posed due to consumer privacy regulations are also likely to further support adoption.

APPENDIX: TAM calculation by segments

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