Considering more than 60,000 companies have deployed CRM solutions, yet less than 4,000 are using marketing automation tools (7%), the marketing automation market size is poised for growth. Venture capitalists realize this opportunity as they’ve invested over $396 million in marketing automation vendors since 1998.
Although marketing automation is ripe for growth, two factors impede the marketing automation market size from exploding – awareness and confusion. For example, the term “marketing automation” alone is confusing. Marketing automation is really just a small feature that’s part of a broader revenue generation platform. It’s a disservice to businesses to name a solution after a feature. What marketer wants to automate their job? If they did, there would be no reason for the market to have a job in the first place! Another challenge is the level of feature adoption. Some companies claim to use marketing automation when in actuality they’re only using email marketing or landing page optimization features. As evidenced by the 7% figure above, lack of awareness also stunts growth. Limited adoption and confusion over what marketing automation really is makes it difficult to gauge exactly how big the marketing automation market size is.
Despite all the confusion, we can focus on a few simple facts to better understand the marketing automation market size.
Here are the data points that serve as the foundation for our calculation:
- Experts estimate 2% to 5% of all B2B firms use marketing automation
- Top four vendors (less Aprimo and Unica) attribute $141M in sales.
Forrester estimates 2 to 5% of all business to business firms use marketing automation. Conversely, Jonathan Block of Sirius Decisions estimated adoption of marketing automation platforms at about 18%. In our experiences, we find this estimate bold and a bit aggressive. It’s realistic to believe Jonathan is referring to an 18% growth rate, which might be a wash with the number of new business startups added to the calculation. Since Forrester’s estimate represents market penetration, not growth, we’ll use their data to calculate marketing automation market size.
Using a penetration rate of 5% means 95% of all business to business companies do not have a solution. To calculate market size, let’s go a level deeper and look at historical sales of marketing automation software. Last year the top six companies in the industry made $321M in sales. Two of the six companies are Aprimo and Unica, both of which have been acquired by large enterprises (Teradata and IBM respectively). Removing Teradata and IBM from the marketing automation market size calculation gives us $141M in sales from the top four companies. Approximately another 20 companies round up the space. Let’s conservatively estimate that each of these 20 vendors generate $3M in revenue. That’s another $60M in sales, totaling $200M in sales of marketing automation software.
In summary, we can conclude the marketing automation market size is about $200M in revenue comprised of about 25 vendors.
With the marketing automation market size at $200M with 5% penetration (best case) there’s plenty of growth opportunity for vendors and businesses.
Opportunity for Vendors
To calculate the marketing automation market potential for vendors we can assume there’s $3.8B in available revenue (5% x $4B = $200M) worldwide.
Opportunity for Businesses
For businesses, marketing automation platforms enable a well planned lead generation and lead management process that helps them connect with customers at the right point in buying process. The net benefit is higher quality leads sent to sales while sales cycles are accelerated – driving more revenue for the business.
However, implementing workflow and business process tools require a time investment. Proper strategic planning and organizational alignment will enhance the value of marketing automation. Avoid making the mistake of using a marketing automation platform purely as an expensive e-mail marketing system.
See how you can prepare your people and process for marketing automation capabilities by creating a Service Level Agreement (SLA). Click the link to get started.
How big do you think the marketing automation market size is? What barriers stand in the way of accelerated growth of marketing automation?
To be alerted of future posts, please click on the RSS button.