Our just-released update to the B2B Marketing Automation Vendor Selection Toolkit (VEST) shows that client counts grew just over 50% over the year ending in June, compared with nearly 100% growth for the year ending last December. That’s a marked decline, and the pattern is consistent across individual vendors: although some grew faster than others, each grew slower than during the previous period.*
You might think the slower rate is expected because each period starts from a larger base. But it turns out that even the absolute number of new clients fell: about 6,100 were added during the recent period, compared 7,000 during the earlier year. I’ll say that again: fewer new B2B marketing automation systems were sold during the past year than the year ending six months earlier. Ouch.
Here’s the actual data:
|Year-Earlier Client Count||Change|
in Client Count
These figures come from eight vendors including all the industry heavyweights: Infusionsoft, OfficeAutoPilot, HubSpot, Pardot, Marketo, Eloqua, Manticore Technology, and Genius. The report actually covers 17 vendors, but the others either were not in the January edition or didn’t provide accurate year-earlier information. The eight companies account for more than 90% of the total installations, so the exclusions are statistically insignificant.**
One obvious question is whether different segments of the industry are growing at different rates. The new report sheds light on this as well. We now ask vendors to estimate their client counts based on four segments:
- micro-businesses, under $5 million in revenue;
- small businesses, $5 to $20 million revenue;
- mid-size business, $20 to $500 million revenue, and
- large business, $500 million or more revenue.
The micro-business segment is concentrated among three vendors: Infusionsoft and OfficeAutoPilot, which serve micro-businesses almost exclusively, and HubSpot, which estimates 50% of its clients are micro-businesses. The remaining five vendors in my data (Pardot, Marketo, Eloqua, Manticore Technology, and Genius) have 69% of their clients in the small and mid-size segments.
The slowdown in growth rates applies to the both sets of vendors, although the small and mid-size group is slightly stronger. Client counts show the same pattern: the absolute increase in the most recent period was lower for the micro-business vendors (4,777 vs. 5,650), while it was essentially flat for the small and mid-size business vendors (1,315 vs. 1,340).
|Year-on-Year Growth Rate (Client Count)|
|Year Ending:||Infusionsoft, OfficeAutoPilot, HubSpot||Pardot, Marketo, Eloqua, Manticore Technology, Genius||All Vendors Combined|
So, what does this mean? Is the marketing automation bubble about to burst?
Not necessarily. Year-on-year growth of 50% is nothing to sneeze at, and, as I mentioned earlier, some vendors are growing much faster. Also bear in mind that several vendors have recently received large infusions of funding, which they'll spend on sales and marketing to further accelerate growth.
But it’s still worth sounding a note of caution. Business plans predicated on the industry continuing to grow exponentially now look more dubious than ever. B2B marketing automation could still stall – as B2C marketing automation did – as a niche product for an elite group of sophisticated marketers. It's fine for vendors to expand their product scope, as several are. But they shouldn’t let this distract them from the more fundamental task of growing the base market through promotion, education, and training.
I like irony as much as anyone, but if the demand generation industry failed to generate demand for its own product, no one would be laughing.
*As best we can tell. Some vendors provided partial information, so we had to do some interpolation. And the data flowed in over a two month period, so it doesn’t all align precisely with the January and December time-frames. But the pattern is so strong and so consistent that the general conclusions seem reliable.
**There a few mid-sized vendors who didn’t make the report at all, including Act-On Software and ActiveConversion, which have about 300 clients each. I’d guess these and other vendors add 1,000 to 2,000 to the total client count.