I read Lauren Carlson‘s recent analysis of venture funding in the marketing automation space over the weekend. Her main point is:
Basically, it’s go big or go home. Marketing automation vendors that want to own their market, emerge as a cloud computing leader, and earn a ten figure valuation need to invest a lot of capital today to ensure their vision. They have the support of venture capitalists and Wall Street investors. Moreover, there is adequate precedent set by Salesforce, SuccessFactors and NetSuite. Raise a lot of money and execute well.
It’s a good summary that raises some important topics. In her report, she talks about the history of venture capital investment in the space:
The primary recipients of that funding and how effective they might have been at using that funding:
And comparing it to other cloud companies who have achieved a “home run valuation”:
This is interesting and timely stuff. It also feels mostly like inside baseball talk to me. Of course, that’s one of the primary roles of an industry analyst — to speak to and about industry insiders who are “in the know” (And Lauren does it well). But what does all of this mean to the typical marketer?
At Intelligent Demand, we spend the vast majority of our time working as marketing practitioners and with marketing practitioners whose definition of a “home run” is much more near-term (albeit, still related to the valuation home run that Laura speaks of): growing their company’s revenue in a fast, repeatable, and cost effective manner.
On that point, I have been happy to see the sustained marketing and sales investments being made by most of the companies who have received / are receiving this VC funding. They seem to be following the path of the Cloud App Home Run comparables that Laura cites (50+% of their annual revenue). It’s not only required for them to grow their MA software companies, but it’s required for us all to educate and grow the market. As someone who speaks every day with real business people who are personally tasked with growing their companies’ sales, I can tell you that the biggest limiting factor to the growth and success of marketing automation is awareness and education about “marketing 2.0 fundamentals, strategies and tactics”.
Do we need better designed, more fully featured, better integrated MA software platforms? Absolutely! But at this moment, that is NOT the primary issue keeping the typical marketing professional from marching in to their next budget meeting and passionately insisting that their company invest in a well-designed demand generation strategy (that includes marketing automation as a key toolset).
I think the most marketing automation companies know this. Eloqua, Marketo and other leading MA vendors certainly know this. Clearly, a significant portion of their marketing and sales investment is being pumped into educating the wider market about what MA is, what MA does and how it fits into a larger revenue growth strategy and platform. And while there is a lot of “positioning noise” associated with all of the MA vendors jockeying for the title of uber-thought leader, I think that navigating that noise is a fairly small price to pay for the useful education. (Also, that’s where demand generation agencies, consultants and analysts can and do assist by separating the useful knowledge from the marketing hype.)
Helping companies cross the divide from Marketing 1.0 to Marketing 2.0 is certainly at the core of Intelligent Demand’s own marketing and messaging strategy. But I think we can all do a better job of getting the message out to the wider business audience though — for all segments: Enterprise, Mid-market, Small and even what David Raab calls Micro-Businesses. If we fail to do this, we’ll risk marketing automation being another great software tool that is poorly adopted (either not adopted or wrongly implemented).
Want to talk about your future marketing automation projects with the folks at Intelligent Demand? Contact us today!