Think the martech landscape is big? Here’s the size of the software industry overall
About the 11 many years that I have been publishing the martech landscape, as it mushroomed from ~150 options to ~10,000, I have seen several people today respond to it as an anomaly. “What is it about marketing that spawns so a lot of program apps? Definitely no other profession has to deal with these kinds of sprawl!”
To which computer software evaluation internet site G2 responds in this short article, “Hold my beer.”
Even though there are certainly dynamics particular to marketing that feed the frenzy of new martech startups, the real truth is that martech is merely a component of a a great deal more substantial software package revolution. Marc Andreessen referred to as it “software feeding on the globe.” I get in touch with it The Wonderful Application Explosion. Application is everywhere (and, ever more, anything is computer software).
But exactly how many commercially packaged program applications are there in The Good Application Explosion?
Let us consider games and customer-oriented applications off the table. We know there are thousands and thousands of these apps for cellular products on the Apple Application Keep and Google Participate in Retail store. It’s truthful to say that is a different kettle of fish than B2B software, these kinds of as martech.
Perfectly, at the very least now. Frankly, customer and business software apps are driven by much of the same fundamental technology. And you see raising cross-pollination amongst people domains. The consumerization of IT continues to be a large movement underway. I personally see similarities amongst creators on buyer platforms and “makers” inside corporations leveraging no-code instruments. And if you feel the hype of the metaverse — which will just one day increase from the trough of disillusionment — the convergence of business and shopper experiences will blur even even further.
But for now, let’s adhere to a slim interpretation of how several business computer software applications are there in the planet?
The solution: at least 103,528.
That is the quantity of software products profiled on G2’s internet site as of final week. It’s not a theoretical guesstimate. It’s an empirical rely — like the martech landscape, but spanning all business software types.
I emphasised the phrase “at least” in entrance of that quantity for two motives:
Very first, G2 acknowledges that they have not uncovered all of the business application apps out there nevertheless. My impression is that specifically in markets exterior of North The united states, there’s a ton still to find. Think of China and Japan, for occasion.
Next, new application startups keep getting launched. (You may well be mumbling underneath your breath, “Let’s see what the existing economy does to that merry-go-round.” Place a pin in that caveat for a moment – I’ll occur back again to it.)
In other words, that 103,528 number is a decreased sure of the B2B software program product universe. The true amount is surely greater, and possibly substantially larger. 150,000? 200,000? Far more?
G2’s databases is undoubtedly even now growing, introducing on average 945 software package products per thirty day period.
What about consolidation, you say? These figures from G2 are inclusive of the reality that they’ve managed in excess of 760 merger and acquisition instances considering the fact that January of this 12 months. So, of course, consolidation is taking place. But the paradox of simultaneous consolidation and expansion in software package markets holds genuine. It is not just martech.
Talking of martech, the folks at G2 also shared with me the counts of 9,365 martech solutions and 1,488 adtech goods in their database. Mixed — which is how I have often believed of them — that is 10,853 madtech applications in complete. Far more than what Frans and I arrived up with in our 2022 martech landscape release in May possibly.
Our strategy is to share knowledge between us and G2 to get a superset of all of them. But it’s great to also have an impartial corroboration that, of course, today’s martech landscape seriously is on the magnitude of ~10,000 products.
Is 2023 the 12 months of the Martech Cataclysm?
But let us get again to that problem about the financial system I dodged earlier.
No sugarcoating it. This subsequent yr or two is heading to exert a ton of tension on the recent martech landscape. Funding will be more durable to arrive by, and at substantially much more modest valuations. Marketing departments are heading to have tighter budgets and come to be significantly tougher prospects when it comes to contemplating and negotiating martech purchases. This is the initial time in more than a decade of exponential martech advancement that the field is dealing with a truly formidable economic setting.
Unquestionably, this will end result in lots of much more acquisitions of scaled-down martech fish by greater martech fish, as very well as the non-public fairness crowd betting on the other side of this cycle. But far more painfully, there will be an raising quantity of early-phase martech ventures that merely contact it quits soon after failing to possibly safe their next funding spherical, find a ready acquisitor, or rebalance their operations to profitability.
My most effective guess? Up to 20% of the latest martech landscape could churn in advance of 2024.
But it is only the churn charge of existing martech sellers that I have a darkish prediction about. As significantly as collective market revenue goes, I feel martech is heading to continue to mature for the foreseeable future. Maybe not as rapid as it has been for the up coming few of decades. But in the big photo, even now fairly rapid. For a single easy purpose: the electronic transformation of marketing is considerably from more than, and it stays 1 of the best levers every single organization on the world has for winning and retaining prospects.
In particular in the hard situations in advance, good martech will be vital to survival achievements.
Neglect valuations for now, which have been the semi-delusional yardstick of measuring martech ventures these previous handful of several years. Profits is the floor truth of sizing an industry. And I’m 99.9% particular martech income will grow year-about-yr for the relaxation of this ten years.
And to repeat the mantra of this article: it is not just martech. The full software market has enormous growth in advance of it. The inspiring chart above from Battery Ventures (with my two annotations in orange) is both equally an correct look-back again at application income growth over the earlier 5 decades, but also a reasonably conservative extrapolation of normal compound once-a-year progress of program profits for the up coming two decades.
Two points pop out promptly from that chart:
Initially, holy cats, the measurement of what the computer software marketplace is most likely to mature to by 2050 dwarfs the place we are today. “Software eating the world” is program taking about a lot more and much more of just about every side of the economy. All over the world GDP in 2020 was ~$85 trillion. By 2050, it is anticipated to be ~$165 trillion. It is essentially not that ridiculous to feel of computer software generating up a mere $6 trillion of that, or ~3.6% of complete GDP.
Second, the Dot-Com Bubble Burst in 2000 and The Great Economic downturn in 2008 barely sign up as small dents in the upward slope of this mountain. That’s not to trivialize the challenges so many confronted in those yrs. But placing those hurdles in standpoint of the lengthy activity, the total trajectory of the software market hasn’t been derailed by the ups-and-downs of macroeconomic business cycles. I imagine that is likely to remain accurate for this technology and most likely the following.
All of which sales opportunities me to conclude that The Good Application Explosion will go on by these subsequent couple of several years. And on the next wave of recovery and expansion, the progress in new computer software apps may pretty properly hit mild velocity ludicrous velocity.
