Is there room to start another marketing automation company? Why or why not?

I agree with Carlos that there's room, albeit no guarantee of success without strong services that help users first create the processes around which the MA platform will operate.

There are still CRM platforms out there which have started with vertical niches and somehow thrive despite the 800 pound gorilla of Salesforce; perhaps there will be MA offerings popping up that will address specific niches too better than the current solutions.

Joe Zuccaro
Allinio
@joezuc

I believe there is plenty of room for new Marketing Automation vendors to come to market and I fully expect to see many more over the next two years. This is a similar cycle that other technology and platform segments have gone through from CRM, ERP, SCM, ECM, DBMS etc.

I believe new MA vendors will challenge existing players to innovate and deliver platforms that make it easier to do marketing and require less hands-on administration and technology expertise. However, MA platforms are process enablers and the challenges around building and implementing an effective demand generation workflow will remain regardless how "easy" a platform is to use. Similar with other segments I would expect some new players to focus on verticals instead of a scattergun all-things-to-all-B2B-marketers approach.

I also predict that the major CRM vendors will acquire and build out more MA capability into their platforms. SFDC is doing this now. There will be a convergence of sorts as CRM and MA come closer together and some enterprise customers will want one throat to choke. When that happens, who knows but I am certain it will.

As the MA segment moves from early adopter to pragmatic stage, customers will need to cut through the noise and conduct a thorough evaluation to ensure the vendors they consider and select have a reliable platform, credibility AND business viability.

Brian Hansford
http://www.Zephyr47.com
@RemarkMarketing

Pete, love this last point you raise. What defined the marketing automation space today? And will that be what defines it tomorrow? From my perspective, I think the overall positioning of the space will evolve to more of a marketing workbench that spans the management of all the digital channels.

I agree with Joe and Carlos that, regardless, the tool is going to have to be wrapped in services that deliver business outcomes. I don't, however, see room in the space for another me too product. If there is going to be a vertical differentiation, you will have to be HIGHLY differentiated. For example, I could see a play towards a highly regulated space like pharma.

I've recently done some research into the marketing automation landscape and which vendors have received funding and when (http://bit.ly/gCVgfn).

You can see that most investment was made within the past 3 years of so and the majority of the vendors came to life within the past 5 years. This industry is in such an early stage that is hard to predict what will happen. I agree with Brian 100% and so I see the following:

- Low barriers to entry: is easy today to start a software company, SaaS especially. New vendors appear every time, so there's nothing really preventing new companies from entering the market.

- Crowded space: this refers to the barriers to entry. There are a lot of vendors that have very similar characteristics fighting for the same chunk of the market.

- Price erosion: vendors offering free versions of their software (freemium model) are emerging and prices are falling. While this is good for the consumer, it lowers margins for the existing companies and new entrants will only add to the mix.

- Market education still needed: yes, the big guys have been spending a lot of money on reports, webinars, and other educational campaigns to tell everyone and their moms about marketing automation but there is still a big percentage of the marketing population that has no idea what marketing automation is about. As Pete's question says, the definition of marketing automation may vary and different vendors have different takes on it, not helping much to educate the market.

- Consolidation: Aprimo and Unica's acquisition may point to the beginning of consolidation, but not for the small players... those two companies were well established with solid customer bases. If you're a new entrant to this space, acquisition is probably not a good exit strategy. Consolidation also means the reduction of players and possibility of going back to higher prices.

So in conclusion, yes there is room to start another marketing automation company but only if you are not following what the existing players are doing. Do something different, unique, or focus on a specific niche market and you have a chance.

@carlos
How refreshing to hear this for I'm starting my own company, Keystone CTI, in a very niche place in the marketing automation space. Also a nice reminder that my company can't be about technology alone, I tend to geek out.

Now be as it may I'm riding the 800 pound gorilla and making a specific tool which as of now only integrations with the beast. What advise would you have for me since it's a bootstrap model, I can't focus on the many.

Pete, I would love to hear more about it. joe -at- allinio -dot- com

This may be a dumb question, specially since I'm in it, what are all the aspects of "Marketing Automation." See Wikipedia (http://en.wikipedia.org/wiki/Marketing_automation) and is this really what it is? Is there anything more to it and if not doesn't that beg to say how much growth can there be?

I agree with everyone that there's still room to enter, because the market is barely penetrated and now growing outside of its original core in tech companies. But at this point a new entrant is a late follower. This means that (a) their product is unlikely to be substantially different from existing products and (b) they need a large amount of capital to invest in marketing so they can make their presence known.

Historically, late followers tend to be large companies in related fields. So, for example, Microsoft might extend its CRM to encompass marketing automation; so might Oracle or Salesforce.com. All highly likely. Someone like Intuit or Constant Contact might do the same. In the micro- and small-business sectors, we're also seeing some interesting noise from American Express with other types of marketing systems, which could easily be extended to marketing automation. Google could leverage AdWords in the same way. Late followers generally use their existing customer relationships and reputations to position themselves as a "safe" purchase, and then spend a lot of money on marketing to make their presence known. They can easily purchase a smaller company to jump-start the process, as IBM, Oracle and Teradata have already done.

The other side of this is it will be hard for a small, independent start-up to succeed today. They just won't have the deep pockets to make their presence known. Buyers tend to stop looking after they've found a couple of options. So once a couple of firms are well enough known to be easy to find, it's hard for other companies to elbow their way onto the consideration lists.

Yes and No.

Sorry for hedging my bets. Here's why...

YES: Marketing Automation is a fairly cludgy early attempt at applying technology to the business generation process.

In doing so, it took the situation which was there at the time and embedded it in the process. That meant push marketing and sales people frightened of any technology which didn't involve a phone or a car.

The end result is marketing trying - often woefully badly - to replicate in software what salespeople do as part of a consultative sale.

Eloqua had been ploughing a lonely furrow for years. The only reason it suddenly took off is that the internet and social media totally changed buying and people needed to do something - it was all there was.

We are now at a stage where, now the hype is dying down, we can look beyond Marketing Automation and what we really can do with technology. We can also let sales people bring their skills to the table.

There is massive scope to improve on current Marketing Automation capabilities and build a really powerful Technology Aided Prospecting (TAP) engine. But it requires a much better understanding of the business model and what really happens in a B2B buying process than any of the current vendors have demonstrated.

NO: The market is severely distorted by IPO hype and Investment capital, all chasing a quick return. That means ridiculous monies spent by some players on marketing and a distortion in the market as a result.

This will all end in tears and we are seeing the start of the end game with Marketo's deal with Exact Target. There will be massive consolidation as the investors realise there aren't enough juicy deals to go round and the business plans were just hype.

We may see an AOL/Time Warner situation as New kids take over established email players based on hyped valuations, or we may see MA vendors purchased to put a "With it" gloss on old fashioned companies.

Confucius curse comes to mind: "May you live in interesting times".

should i dear to expand based on the fact that a Sales Automation system is another management system that tries to help a business to generate revenue and lower costs.... so that there would a room for another SA, ERP, ECM, BI,.... ?
is it wise to claim that definitions have become vague since each day is reshaping businesses to something different due to technology advancement ( e.g social web), political economical issues (e.g wars and economic melt down) ?