MarTech, short for marketing technology, encompasses the marketing software tools and platforms used to create, execute, manage, and measure the efficacy of marketing campaigns and content across offline and online channels. The collection of platforms and software applications used within the marketing department is commonly referred to as the MarTech stack, which serves as the foundation for driving marketing performance and efficiency. Recent studies reveal that the MarTech market is growing at a CAGR of 41.8%, representing a staggering 9,295% growth over 13 years. The progress of this industry is highly dependent on the recent changes encountered, such as the impact of ChatGPT on how people interact online and the phase-out of third-party cookies by the end of this year. As a result, customers increased their focus on privacy, pushing advertisers to use privacy-friendly tools to navigate this cookieless future. Marketing automation platforms dominate MarTech solutions in companies’ IT stack (88%), closely followed by CRM platforms (84%). With marketers starting to become more cost-conscious, cost reduction is the key factor when evaluating the replacement of an application. In 2024, marketing automation tools, email distribution software, CRM platforms, and SEO tools were among the most replaced technologies.
The most dominant replacements for MarTech applications are commercial solutions, with homegrown applications being rare. This is primarily because the resources required to develop a homegrown application are not always available, and such projects often incur higher costs than commercial alternatives. How can procurement help stakeholders successfully implement a MarTech strategy to enable growth?
As marketing becomes increasingly reliant on technology and the MarTech landscape continues to evolve, the acquisition and implementation of new tools are paramount. Therefore, marketing procurement professionals must become proficient at sourcing automated, cloud-based, and Software-as-a-Service (SaaS) solutions. They must also sharpen their skills at evaluating products and services with critical technology components. As MarTech ecosystems grow and become more complex, challenges related to integration, utilization, and ROI often create significant roadblocks to productivity.
One of the biggest challenges in the MarTech industry is the underutilization of the MarTech stacks. The issue arises from multiple factors, including difficulties integrating tools, misaligned business workflows, inadequate training, and poor purchasing decisions. When existing tools are underutilized, the result will only show poor ROI and decreased operational efficiency.
Addressing underutilization and improving Martech ROI
In 2024, there has been increasing pressure on marketing technology budgets and a growing need to improve ROI. To improve the MarTech ROI, procurement should partner with stakeholders to audit the current stack before making new purchasing decisions, assess the level of utilization, and identify technologies that can be eliminated.
When procuring new tools, robust planning is critical in executing a successful strategy. Key actions to be applied include:
-
Clearly defining objectives for implementing new technology and aligning with stakeholders
-
Identifying users, whether external or internal
-
Understanding the processes the new technology will enable, accelerate, or automate
-
Mapping data sources that need to be linked and integrated
-
Evaluating tool effectiveness using performance metrics such as lead generation, conversion rates, and customer engagement
-
Conducting cost-benefit analyses to calculate each tool’s ROI
-
Performing regular business reviews to ensure alignment and continuous improvement
Regular business reviews are essential for optimizing relationships with vendors and holding them accountable. These reviews also provide opportunities for vendors to share insights on underutilized features and other updates on MarTech tools.
Key considerations for new MarTech purchases
When negotiating a new deal with a MarTech provider, procurement professionals should focus on the following key aspects:
-
Integration
Align with the vendor on the products that your company currently uses and ask the vendor to provide a clear description or process on how their product can be integrated in the existing stack.
-
Data and Ownership
Get detailed explanations from the vendor regarding data collection methods, data types, data ownership, usage rights, and analytics tools.
-
Data Storage
Understand where the data will be stored and who can access it.
-
Maintenance and Support
Ask the vendor to provide information on the available support models and requirements for a managed service team.
-
Subscription Fees and Hidden Costs
Ensure pricing is itemized and transparent. Avoid accepting non-itemized service offerings.
-
Key Performance Indicators (KPIs)
Ask the vendor to provide clarity on the KPIs and how often they are measured.
-
Security
Work closely with the security team to ensure the vendor meets all security requirements for the type of information being handled.
The right MarTech stack can strengthen the relationship between procurement and marketing, aligning efforts with key company goals and improving efficiencies. This collaboration can also be leveraged to analyze and consolidate data that can further refine existing processes, achieve better ROI, and maximize value from business partners.
leverage AI in Marketing Procurement to drive future growth and maximize ROI.