More often than not, at least one of my weekly briefings centers on significant financing for a disruptive marketing-tech company. (I usually skip the pure advertising plays.) I’m already at quota this week, and it’s only Wednesday.
The motivation is pretty simple: Chief marketing officers already spend a lot of money annually, and they are apparently eager to spend way more in the case of clarity. The amount dedicated to technology will grow by tenfold over the next decade, according to various market research forecasts. One projection, from Foundation Capital, puts the figure at $120 billion by the end of that timeframe.
Marketers are evolving from “mad men” to “math men,” said Foundation Capital general partner Ashu Garg, when we chatted about this phenomenon several weeks ago. He noted: “There is an inflection point that is being driven by consumer behavior. … That nature of the dialogue has been one way, but we’re moving from dictation to conversation. Marketers tell great stories, but consumers expect the stories to be backed by data, facts and research.”
Naturally, Foundation Capital has an interest in this topic, one that it outlines in its recent analysis of the category, “The Decade of the CMO.” The VC firm’s current portfolio includes retargeting company AdRoll, “viewer experience” platform Conviva, app marketing play Localytics, and lead intelligence company InsideView. Prior investments include Responsys, which was bought by Oracle (ORCL) and Tealeaf, which is part of the IBM (IBM) family. The names I’ve mentioned aren’t all-inclusive.
In Garg’s mind, there are several factors that favor the rise of mar-tech startups. In particular, CMOs are seduced by the best-of-breed message. “Very few of them will put their spend in one place, or with one vendor,” he said. They also appreciate cloud services that can be flipped on or off at will. “Marketers can easily try and use the best software for their particular problem.”
Generally speaking, there are five sorts of marketing technologies on Foundation Capital’s radar:
- Software for measuring campaign effectiveness
- Tools for automating media buys programmatically, even for offline properties
- Platforms for distributing “authentic” content
- Software for reaching “infinite segments of one”
- Predictive sales and lead generation technologies
“Innovation is so rapid that incumbents can’t keep up,” Garg said.
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