MarTech: Tracking the “Customer Journey” to Lots of Market Activity

It feels like every day we hear a new buzzword or phrase associated with “martech” – omni-channel, customer journey, artificial intelligence, social selling, conversational commerce – the list goes on and on.

In the end, marketing organizations have always had one clear goal: to establish and understand the direct link between marketing and advertising spending and consumer/business purchases. This type of information provides CMOs with a true understanding of how to maximize return on investment in marketing.

Historically, disconnects in starts and stops in tech, and siloes within marketing workflows, made achieving this nearly impossible. The inability to prove real ROI has led to even more buzzwords or indirect KPIs that do not measure exact returns — think impressions, shares, intent, time spent …

Today, technology advancements in martech are starting to write a different story. While I don’t buy that true “marketing automation” really exists yet, marketing tech platforms do a much better job providing visibility and actionable analytics around the complete path to purchase. Traditional CRM / database marketing (spray and pray) has evolved into precision marketing that is highly targeted – right time, right place, right channel, right content.

This transition has given rise to (1) a digital first CMO or newly established Chief Digital Officer (CDO) role within marketing organization charts [as seen by Bob Lord’s recent CDO appointment at IBM] and (2) a great deal more investment and consolidation in the martech segment.

We just published our Q3 update on the martech segment which summarizes activity in the space (public market environment, M&A, fundraises, most active acquirers and investors, and more…). From a public market perspective, martech has performed well. Salesforce and Adobe, which I will dub “near full stack pure plays” in the segment, have been on a tear over the past several years, outperforming the market by nearly 2-3x. Hubspot and Shopify represent two venture-backed turned pubco bright spots. Overall, public martech index revenue multiples are up over 50% in the past 12 months, with publicly traded players selling at their highest levels since the beginning of 2014.

On the investment front, more than $12 billion has been plowed into martech companies since the beginning of 2013.  We continue to see an increasing amount of late-stage fundraisings in a number of categories including salesforce productivity (WalkMe, Invoca), social commerce and customer service (Sprinklr, Gigya), personalization (Bloomreach, Takt), and loyalty (Session M, ZenReach). Yes, the line between adtech and martech continues to get more and more blurry, but one thing is clear…many investors have shifted focus to martech given the more predictable recurring revenue model sold into an increasingly tech-conscious CMO (or newly appointed CDO).

On the M&A front, the household names in martech consolidation (Adobe, Salesforce, IBM, Oracle, and others) certainly appreciate that best-of-breed solutions are succeeding in capturing market share. We have seen some very strategic prices paid as a result with multiples reaching 7x revenue or more for businesses with scale.  Newer companies providing cutting edge martech solutions around artificial intelligence and cognitive computing are also attracting very high valuations.

Going forward, we expect to see continued heavy investment in the sector. Not only will we see transformative deals in strategic pockets of martech, but larger growth-oriented private equity funds such as Battery, Vista, EQT and others – will likely embark and expand upon a strategy to roll-up attractive point solutions into platforms with attractive scale. Stay tuned…

Jonathan Lejuez

Jonathan Lejuez

Jonathan joined Mooreland in 2011, and is a member of the Digital Media & Marketing and Enterprise Software teams with an emphasis on marketing and vertical application technology and software solutions. Since joining, Jonathan’s transaction execution experience has included private and public company M&A assignments, corporate divestitures, and equity and debt financings.