VEST Report: Competition in B2B Marketing Automation Isn't About Features

Yesterday I released the mid-year edition of the VEST Report on B2B marketing automation vendors, thereby meeting my self-imposed deadline of July 31. Look here for more information or to make a purchase.

Updating the report gives a nice overview of recent industry developments. Here are some observations:

- market positions are pretty stable. The only new vendor to make a splash recently has been SharpSpring, which went from zero to 500 agency clients in the past year. This puts them among the top 3 leaders in the small business sector. Otherwise, the top players have remained the same: Infusionsoft, HubSpot, Act-On, Salesforce Pardot, Marketo, Oracle Eloqua, and Adobe. Maybe RedPoint has crept up to a leader position, but they don’t share enough business information for me to know. Open source vendor Mautic has some interesting potential but it’s too soon to see any actual impact.

- products are pretty stable, too. The VEST entries showed very little change in the features reported by the various vendors since the last report. This isn't bad: it's simply that the standard features are now widely understood and vendors have had time to add them. The only major changes captured in the new report are the custom table abilities added by Marketo and Ontraport.

- the real action is outside the products. Probably the most interesting trend is integration of marketing automation with retargeting and display ad vendors, which has been announced in various forms by Marketo, Oracle, and Adobe. That, of course, relates to the convergence of martech and ad tech into “madtech” that I've written about before. The other big trends are systems for marketing agencies (either focused products like SharpSpring or added features and partner programs by the major vendors) and education programs for users (something that major vendors have long done but that others like Autopilot* and Mautic are also expanding). Both agencies and education are ways to support industry growth by overcoming the lack of marketers who can effectively use marketing automation systems.

- the really real action is elsewhere. Lest you think I’m just plain cranky, be assured that I see lots of exciting things happening in predictive analytics, data aggregation and enrichment, automated intelligence, and other areas. Even B2C marketing automation is showing some interesting new life. But even though B2B marketing automation revenues are still growing nicely**, the industry itself is looking pretty stable these days.

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*Not in the VEST by their choice.
** I'm estimating 40% in 2015, although it’s now harder to know because so much revenue is hidden inside companies like Oracle, Salesforce, and IBM that don’t report it separately.

The Biggest Gap in Marketing Software Selection Isn't Product Information

There’s a reason I’m not a professional copy writer, which is that I’m bad at it. But, as with the press release I described yesterday, each new edition of the VEST report also requires me to write a promotional email for my house list. My solution today was:

Dear [First Name],

A friend of mine who is building one of those "wisdom of the crowd" software review sites tells me her research shows that what buyers want most is "apples to apples" comparisons of product features.

Duh.

I'll spare you my rant on why crowd sourced recommendations are a bad idea (hint: when you're sick, do you go to a doctor or ask a bunch of random strangers which treatments worked for them?) Suffice it to say that Raab Associates' B2B Marketing Automation Vendor Selection Tool (VEST) is written by a professional analyst (me) who has assembled 200 rigorously defined points of comparison on 25 marketing automation systems, allowing buyers to quickly find vendors who meet their needs. At a time when the marketing automation industry is more confusing than ever -- and when 25% of marketing automation buyers are unhappy with their results*-- it's essential to have solid, detailed information to make a sound decision.


That’s not terrible, at least by my pitifully low personal standards.  But it did leave me feeling a bit uncomfortable about bashing the crowd-sourced software review sites. The problem was the doctor analogy: although it does express my fundamental objection accurately, it doesn’t tell quite the whole story. It’s true that random strangers can’t accurately diagnose you or prescribe a treatment. But random strangers can indeed provide useful information about whether a doctor is good to deal with and how well they their recommendations worked out. Similarly, crowd-sourced sites can provide valid information on how easy it is to use a piece of software and how well the company does at customer support. This is much closer with the kind of information you’d get from consumer view sites like Yelp.  Customers don’t need to be technical experts to tell you whether they’re happy.

You’ll note that I haven’t criticized the crowd-sourced sites for the typical review site problems of fake reviews and biased reviewers. Companies like g2crowd (my main point of reference here, although not my friend’s business) do a reasonably good job at controlling for these by requiring users to verify their identity by logging in through LinkedIn. Of course, smart vendors will still game the system by encouraging satisfied users to post reviews, so the relative rankings will reflect the vendors’ marketing skills at least as much as their actual product quality. There’s nothing unethical about that, but it does undermine the notion that the resulting ranking accurately reflect the relative quality of the products and not just the relative skills of each company’s marketers.

On the other hand, good crowd sourcing sites let users see reviews from companies similar to their own in terms of size, industry, etc., and ask specific enough questions to get meaningful answers. And even the general comments they gather are somewhat useful as indicators of what a (highly biased) sample of users think.

But, now that I’m on the subject, I’ll let you know what I really think: which is that feature comparisons, whether prepared by a not-so-wise crowd or a professional analyst like Yours Truly, are not really the problem. What stops marketers from choosing the right software isn’t a lack of information about product features.  It's a lack of understanding which features each marketer needs. Figuring out their feature needs requires crossing the gap between their business objectives, which most marketers do understand, and the features needed to support those objectives, which most marketers do not.  Making that translation is where industry experts really add value, even more than in familiarity with the details of individual products. I’ve recently been working on a very interesting project to close that gap…but that’s a topic for another day.

New Raab VEST Report: B2B Marketing Automation Will Reach $1.2 Billion in 2014

I’ve just published the latest edition of our B2B Marketing Automation Vendor Selection Tool (VEST), with updated entries on all your favorites and several new entries to boot. This is always a fun project because it gives me an overview of what all the vendors have been up to for the past six months. A few interesting trends stood out:

• revenue growth is accelerating. My data are a little less comprehensive than previously because several of the big vendors are now part of public companies and don’t share detailed information. Those that did provide information showed great growth in 2013, in most cases over the 50% I had predicted for the industry as a whole. Even more interesting, nearly everyone reported faster growth in revenue than in clients: to take one vendor that does provide statistics, HubSpot recently reported  50% revenue growth vs. 25% growth in number of clients. In their case and others, the reason seems to be a combination of larger size deals on new customers and growth in billing to existing customers. Based on this data, I’m projecting a 60% increase in industry revenue for 2014, to $1.2 billion. You heard it here first.

• the hot new feature is…SEO content rating. Yes, there’s continued growth in various aspects of social media marketing and in mobile-friendly content creation.  That’s old news. What I hadn’t realized before is that at least a half dozen vendors had added or improved features to help marketers build content that attracts search engine hits on selected keywords or concepts. I suppose that’s become increasingly important as marketing automation moves beyond its original role in lead management to help attract new leads at the top of the funnel. (Do I get SEO credit for using “top of the funnel”?)

• lots of new vendors. I added four new vendors to the report, all of which have just begun to market their products aggressively. None is very large yet, except for SimplyCast, which won’t release precise data but did say it has 3,000 to 5,000 customers for its multi-channel customer management system (you may recall that I reviewed them briefly last week.) The new systems offer a broad range of configurations, from ultra-simple interfaces with limited functions to elaborate multi-channel workflows that are correspondingly complex.

• agency systems are big. Two of the four new vendors are agency system specialists, and several other vendors have also launched special agency editions. This creates some weird feature combinations, since agencies to serve small businesses need administrative features, such as precise user rights management, that are otherwise only used by big enterprises, . Of course, the reliance on agencies is more evidence that many marketing departments still lack the skills needed to do advanced marketing automation on their own – but you knew that.

• mid-market leadership may be up for grabs. Small but established mid-market firms including SalesFusion and eTrigue have been growing particularly quickly, as has Act-On. This may be because the current mid-market leaders, Marketo and Pardot in particular, have been focusing more on enterprise sales. I had thought that heavy funding would be necessary become a new market leader, which is the way Marketo, Act-On and HubSpot did it. SalesFusion did just take an $8.25 million investment but their revenue doubled last year without it. So perhaps having a good product and being focused will enough for someone new to elbow into a top-three position.  We'll see.

I could go on, but why should David Raab have all the fun? You, too, can uncover exciting industry trends and share them with the world. Just click here to purchase your very own copy of the VEST and analyze to your heart’s content.