Martech boom sets off arms race for retailers

Advertising and media specialists WARC and accountancy firm Moore Stephens estimate the US and UK martech industry is worth $34.3 billion a year. Their research also found brands are now spending 16% of their marketing budgets on martech and this figure is expected to rise further.  

Adtech is a relatively established term within marketing circles, whereas martech is more of a fledgling umbrella term for new technologies impacting on the marketing space.  

Amy Rodgers, research editor at WARC, says there is a “lot of debate” around the difference between adtech and martech.

“At the simplest level, I see adtech as a subcategory of martech that focuses just on technologies for the management of advertising, whereas martech encompasses a whole swathe of technologies across the broader marketing discipline,” says Rodgers.

Such marketing technologies include tools for managing email, the most common type of martech, alongside tools for social media, CRM, and optimisation and collaboration tools.

The latter set of tools are expected to rise in popularity significantly within the next year. Artificial intelligence firm Sentient is one such company that is providing optimisation tools for retailers.

Sentient’s Ascend tool, which allows marketers to use AI to test unlimited website layout changes, helped US-based lingerie firm Cosabella increase conversion rates by 35% in one month.

Guido Campello, chief executive and creative director at Cosabella, says the success of the Ascend technology has meant the retailer is looking to invest in other marketing technologies.

“After the success of Sentient we’ve become much more aggressive in searching for, and evaluating, cutting-edge technologies that could let us stay ahead in a very competitive marketplace,” says Campello. “Currently we’re focused on customer relationship and personalised shopping experiences; but rather than make decisions based on what segments a customer might be in we want to target the individual to give the very best experience possible.”

Sentient was founded a decade ago but only in the last couple of years has it entered the martech space after spotting the commercial opportunities available.

Jon Epstein, chief marketing officer at Sentient, says the company’s AI-based tools were used for stock trading and optimising food production, and were adapted to martech when the firm saw the “real gap between what retailers were trying to achieve in terms of getting to better user experiences and higher conversion rates and the solutions available”.

Martech for email

The power of martech can be seen in email, its most common area of use. Research from martech provider Adestra and research firm Econsultancy found email drove an estimated £29 billion in online retail sales last year in the UK alone.

Adestra’s technology uses historic and predicted shopping behaviour to personalise emails, and Adestra claims the implementation of the tech by pet product retailer Pets Pyjamas resulted in a 1000% increase in revenue per email.

Henry Smith, managing director at Adestra, believes martech “is a huge growth sector both in terms of the investment brands are making into it, but also the growth in the sheer number of martech providers out there in the marketplace.”

A complicated landscape

The return on investment for some martech can be massive but the difficulty lies in finding the right solution to suit the client’s needs.

“Martech has offered a lot of value and new ways of doing things for retailers but at the same time it has made the world of the marketer much more complicated,” says Epstein. “There are too many systems, too much data, too many dashboards, it is very hard to ultimately make sense of all this data.”

Rodgers adds that one of the biggest barriers to increased uptake of martech was a “lack of understanding of the technology available”.

“A second reason is cost,” adds Rodgers. “These technologies can come with a hefty price tag, and part of the job of marketing teams now is to decide which of the long list of tech they ‘need’ should be given budget priority above the rest.”

Rodgers believes the question of whether there has been an underinvestment in martech until now is a difficult one to answer.

“There are big claims by tech vendors as to the gains from using their technologies, but for emerging media channels there isn’t yet a wealth of solid cases for effectiveness, particularly in the long term,” says Rodgers. “Despite uncertainty existing, and issues of transparency, viewability and ad fraud very much front of mind, the level of investment is significant and growing.”

Early results indicate martech can yield a very impressive ROI and in an ever more competitive environment retailers are exploring all avenues to give them the edge.

Martech offers much potential and while that is the case the sector can expect heavy investment from retail.