My favorite photo from the weekend…
Hugh Scott Douglas
In Part I of our series on the rise of the digital marketing suite we laid out specific categories that the CMO was buying in. We see 6 major buckets that CMOs are looking at spending money in and think most of today’s categorization can be broken down into those buckets. For my second post on the landscape it is important to understand “who are the players that are offering these products to CMOs and trying to access budgets?”
Sticking to our 6 categories:
Analytics – Adobe, Oracle, Microsoft and IBM are constantly involved in the discussion in this category. More independent vendors like WebTrends, SAS Institute, ComScore, AsterData, Yahoo!, Google, Infor, WPP, Nielsen/NetRatings, and Aprimo have also been very active in the category over the past several years.
Content Management (CMS) – Adobe, Oracle, Microsoft and IBM are also involved in this discussion in a big way. Salesforce is a recent entrant into the discussion and independent vendors like HP, Acquia, Drupal, OpenText, Joomla!, Alfresco, WordPress, and CoreMedia are also a part of the conversation.
Social – The big 5 (Adobe, Oracle, Salesforce, Microsoft and IBM) are major players within this area and continue to build scale and depth in the category. Visibile Technologies, Lithium Technologies, and Google are also a part of the conversation as the independent vendors in the space.
Marketing Automation + SEM – Again the big 5 are all active in this category but there are a fair number of large independent vendors that have had success in recent years selling to CMOs including Marketo, HubSpot, Efficient Frontier, Marin Software, Google/DoubleClick, WPP, SearchForce, IgnitionOne, Criteo, Kenshoo, and others.
E-Commerce – Oracle and IBM are involved in the discussion here with the other 3 majors notably out of the conversation to date. SAP, Demandware, eBay, and Shopify are the few other players out there that are also a part of the conversation.
Campaign Management / Email Marketing – The big 5 have a number of solutions in the category as well as independent vendors like YesMail, StrongMail Systems, Constant Contact, Experian/CheetahMail, and Epsilon.
Note that these lists are not exhaustive and are more a display of the world as we see it talking to many CMOs who buy these tools. The list is also not broken out by largest player to smallest player from a customer or revenue standpoint but I plan to do that in a later post as well as touch on some of the most interesting start-up companies in each category. One of the key takeaways is really that there are 5 major companies that have built a huge presence in accessing the CMO, with IBM having the greatest depth of product suite in the category. Now that we have the categories that matter as well as the players that are in it for Part III I will discuss how each of these players got to where they are and how they are positioned.
Within the “subscription sales” group of publics Salesforce, Concur and Ultimate feel pretty attractive relative to growth and peers.
ht to Evercore for the research.
In helping our portfolio companies access new customers and potential revenue opportunities we have seen a lot of excitement from new technology buyers. At first this seems incredible, our companies get excited and then ultimately the lead doesn’t convert. Big company CEOs today know they need to be smarter about technology and this cascades down to the CMO, CTO and CIO level. As a result there is a flurry of activity today in the market. When the lead doesn’t convert we ask ourselves a lot - why did this happen? Did we sell too hard? Did we not qualify the lead enough? Were we talking to the right person? In many cases you are left puzzled as the CXO will be an active participant in the community, speaking at conferences, writing thought leadership, acting the part and generally “talking the talk” about new technology. Recently we’ve had a fair amount of success with a single question that helps differentiate a prospect and tell a founder whether the lead is on a research mission or actually interested in buying new technology.
What new vendors have you worked with in the past year that you are really excited about?
The question is rarely posed but incredibly powerful. You’ll get an amazing point of view of how the company views “new” technology just from hearing about the vendors they are working with. You’ll get a great understanding of why they are excited and what the organizational key needs and pain points are (presumably that this technology is solving). Most importantly you’ll get a high level view of whether they actually are a buyer of new technology tools, totally full of it and just a mouthpiece, or averse to even thinking or talking about new technology. The world is wide open for new business software entrants who want to disrupt traditional models but it is now more important than ever to focus and understand who is actually a buyer and open to new tools and who is a talker and not actually going to change.
At Bowery Capital a major area of focus for us is around the CMO. We talk to about 5-10 CMOs a week, mostly at medium to large companies to both understand the market to invest more wisely but also to help our portfolio companies access more customers. Since 2010 when we were at AOL Ventures we began to seen a flurry of activity around CMO spend from a new company formation standpoint. This has started to generate M&A and IPO events and we believe that 2014 and beyond will be great years for those that play in this space.
Given the amount of questions we constantly get from our portfolio about the state of the state, we thought it would make sense to provide our point of view and research. For my first post, it is important to understand “what are the categories that the CMO is buying?”
We break this down into 6 major categories**:
Analytics - Any tool that combines the power of actionable analytics and audience segmentation with value reporting and analysis.
Content Management (CMS) - This segment usually enables marketers to create, manage and optimize customized online customer experiences.
Social - Encompasses any tool that helps CMOs measure and manage marketing across social media sites, platforms, apps, etc.
Marketing Automation + SEM - Probably the most talked about segment, this combines portfolio and rules based ad management with intelligence campaign forecasting and targeted ad delivery.
E-Commerce - Any platform that encompasses and incorporates commerce for all channels including web, mobile and social.
Campaign Management / Email Marketing - Platforms that deliver sophisticated campaigns via email to reach potential customers and grow existing customer relationships.
There are obviously more categories and sub-categories that one could create but this is how we generally see it at Bowery Capital and many of the CMOs we speak with feel this accurately describes the market from a spend standpoint. When you start to think about your company selling into the CMO, start to think about these buckets. For Part II, I will talk about the major players in the categories to set a competitive landscape.
**Kudos to our friends at Evercore for coming up with these categories
(Source: chrisfabian, via iheartmyart)
Patagonia Environmentalism Essay: The Wolverine Way -
Great article on an elusive animal.
At Bowery we focus a lot on an investment’s ability to generate early sales and customer wins. We are so maniacal about it we singularly focus on helping our portfolio post-investment in this regard. Everything from systems to help entrepreneurs with prospecting, deal pipelines and customer introductions to blueprints for product pitches, customer case studies, pricing models and many other elements is really what we are all about. We literally focus on nothing else. We’ve seen a lot of pitches come through our door and one thing remains certain - the best entrepreneurs in business software have a really strong ability to articulate the value proposition and “why potential customers will care” in pitch meetings.
As a result we have tried to focus on asking entrepreneurs in real time to role play with using us as a potential customer. Sales role playing is nothing new and any great company with a strong sales team has likely gone through more real time role playing exercises than they care to remember. Being able to answer questions like “I am a CTO of a medium sized company, why am I going to take a meeting with you?” or “I am the CMO of a Fortune 500 company, what do you do that all these other vendors don’t do?” or “I am a developer who has 100 ways to spend my $100 budget per month - why you?” or “X company already does this - I don’t understand how you are different?” is, in many cases, more important to us than walking us through a demo of your product.
Selling is one of the major elements in building any early stage business software company. In our view the outlier entrepreneurs show us clearly how, from the first sale, they are going to win customers. A clear articulation of the value proposition, the latitude to maneuver around competition and a real ability to sell a deal in any form can go a very long way to building a successful company. As a result we are more and more asking to role play to understand this in our first meetings. If you can’t convince me why your product matters in the world of vendor overload then how are you ever going to convince a prospective customer or client to purchase your product?