The Next Wave
As with everything, COVID-19 has acted as both a transformer and accelerant with platforms and technologies retooling on the fly to address consumer shifts.
After a particularly challenging Q2 in 2020, M&A activity in AdTech/Martech was able to rebound nicely and left many feeling particularly optimistic about the long-term prospects for the space. As we push further into 2021, the expectation is that we should see even more M&A activity. Could it be that we are on the precipice of a third “golden age” for Martech?
I discussed this idea with the CEO and founder of LUMA, Terry Kawaja, a long-time friend and colleague. We both felt that a “third golden age” for Martech was indeed possible but that it required a combination of focus and adaptability to find and exploit those explosive growth opportunities in what has emerged as a radically altered and fluid marketing landscape thanks in no small measure to COVID-19.
“The AdTech / Martech ecosystem seems to be managing well through COVID,” says Kawaja. “So far we’ve seen a V-shaped recovery in ad spend with the worst impact in Q2 in 2020.”
As with everything, COVID-19 has acted as both a transformer and accelerant with platforms and technologies retooling on the fly to address consumer shifts. Yet, despite the pandemic (or, maybe, because of it) there exists suddenly a wealth of opportunities for marketing technologies as more and more major brands turn to platforms that help them make sense of this new landscape. There are other factors at work, as well.
“The sector is undergoing unusually high dynamics with the coincidental forces of privacy regulation and technology changes (Chrome cookies and IDFA deprecation) that are wholesale changing the way identity works”, adds Kawaja, “I believe we will continue to see bifurcated outcomes and the winners (few) are separated from the losers (many) in a rapidly consolidating landscape.”
So, given the convergence of these extraordinary forces, what sort of startups and growth companies will be the big winners this year and beyond? Here are 3 areas where companies are primed for both growth and success because they are addressing these external forces while also helping enterprises employ an omni-channel approach to receive real-time/consumer-level data, better serve their customers (wherever they are) and continue to own the customer relationship.
eCommerce
eCommerce platforms have been transformed in the age of COVID (for the better), and there is little reason to think we’ll ever return to anything resembling the previous “normal” when it comes to how we buy and consume goods. Technologies that help navigate the big selling platforms like Walmart, Amazon and Instacart are in the best position to succeed in 2021. Enabling brands to optimize ad spend on eCommerce sites like Amazon will only become more important as the pandemic stretches onwards and our new buying habits become more ingrained. Expect those technologies enabling top-tier selling platforms to experience hyper growth in 2021 as the engines of eCommerce take on greater and greater market share. In addition, platforms powering the backend of the eCommerce experience — from Try-At-Home technologies to Consumer Insurance — are also primed for future success. Lastly, the rising tide of eCommerce is also impacting ancillary sectors like Fintech where companies have rushed in to support areas of need (such as securing credit checks, fraud prevention, cross border payments, etc.) within the growing eCommerce trend.
Content at Scale
As with many marketing technologies, content creation and management solutions have been around for a while. Yet, they’ve perhaps never been more important, particularly when considering the amount of content brands now need to address the velocity at which customers consume content. Given consumer habits around short-form content and the fact that audiences are dispersed across myriad platforms and locations, today’s content marketing is all about catering to those eyeballs. Consider how long most content lasts today. Content created for blogs lasts on average 2 years, whereas it lasts 4 months on Pinterest. On Youtube content lasts for 20 days on average compared to just 1 day on Linkedin. When you drill down into Facebook and Instagram, content lasts 21 hours and 5 hours, respectively. On Twitter content expires after just 18 minutes.
Not only do big brands need more content than ever, they need platforms that help manage all of these assets. From tagging to refreshing to analyzing, brands need platforms capable of managing creative deployment and tracking content seamlessly and at scale. That’s a big theme going forward in 2021.
Unique Data Platforms
What loomed as a year of transformation for the advertising industry — particularly around how brands targeted consumers — received a course correction of sorts as the pandemic changed media habits and imminent privacy changes were put on hold. While the jury is still out as to whether pandemic-induced media habits will become permanent, those previously delayed privacy changes that will come about as a result of legislation and/or platform directives will be a dominant feature of the 2021 advertising landscape. Platforms and technologies that help brands make sense of these changes are well positioned.
Data is still the “new oil” and will remain vital to brands in 2021. Those solutions and platforms that refine and create unique, blended data sets to help marketers dramatically increase engagement and drive bottom-line ROI will be in high demand.
“When you consider that (i) more media is becoming addressable (e.g. CTV) and (ii) marketers are demanding performance (e.g. DTC), the importance of attribution and identity becomes greater,” says Kawaja. “Data entrepreneurs that can sort solutions for this revamped, large and growing ecosystem will win big.”
These three areas represent only the tip of the iceberg in Martech. The greatest opportunities exist for those companies that best understand this new landscape and are helping brands adjust. Startups and growth companies have to be hyper-focused on identifying those areas in the stack that have yet to be exploited or have suddenly (because of the pandemic) become ripe for exploitation.
“My advice is guided by the adage: go where the money is,” adds Kawaja. “That’s CTV, identity, mobile app monetization and audio.”
This is where marketers at top tech-forward businesses will be focusing as we get deeper into 2021 and is largely why there still exists a great deal of runway for the next wave of marketing tech solutions. This is what will certainly drive the next wave in M&A activity in the space and — perhaps — usher in a new golden age for Martech.
