Brands will spend just shy of $100 billion on marketing technology (martech) this year, with money to fund the expansion being pulled from traditional media activity. That’s a key finding in a new report from WARC and Moore Stephens.

According to the study, “Martech budgets have increased by 44 per cent this year – 23 per cent of marketing budgets are now spent on martech in the UK and North America, giving an estimated global market size for martech as $99.9bn for 2018.”

Amy Rodgers, Research Editor, WARC, said “There has been no discernible sign that the rate of growth within the martech space is slackening. With data volumes continuously increasing, this research shows that data, analytics and automation are key focuses for martech investment globally as marketers look for help with metrics and measurement. “

Rogers also reveals that understanding of the technology available continues to be an issue for brands. “Many planning to move tech in-house over the next year, agencies will have to adapt to a changing, advisory role in the martech strategies of their clients.”

The research suggests spending is focused on email and social media marketing tools, and for more than half of marketers globally, this spend is to the detriment of media spend, who say that increased martech spend has caused their media spend to decrease, say the authors of the report.

And the outlook for further investment looks solid, according to the study.

The study involved more than 800 UK, North American, Asia-Pacific and European brands and agencies.  The result, say the authors, reveals not only a huge existing market, but one that continues to grow exponentially. Brands expect to increase their investment in martech for the year ahead. This is particularly true in the case of Europe (excluding UK), where nearly two thirds (63 per cent) said they expect their budgets to increase.
 
In the UK and North America alone Martech is now worth up to $52 billion. These brands are spending nearly a quarter (23 per cent) of their budgets on martech, up from 16% 12 months ago. Interestingly, brands in the UK and North America are also keen to spend on in-house technology.
 
Over 60 per cent of technology budgets were spent in-house – compared to 44 per cent last year – a figure Moore Stephens believes is driven by a desire from brands to excel in their customer experience, coupled with an element of mistrust in agencies.
 
According to Damian Ryan, Partner, Moore Stephens, “Investment in martech has reached a tipping point over the last 12 months. Established marketers in disrupted industries, such as insurance and financial services, realise they need to invest if they are to future-proof themselves, and view martech as a key area of investment. “
 
“All the while, agencies are struggling to stay relevant. Clearly marketers are seeking to build in-house strength and are set to spend more on martech to remain competitive. Our research finds that this budget is coming from media spend and will have a resounding impact on the value of media-centric agencies.”

Market drivers

The report also investigates specific technologies behind this burgeoning market. “On a global scale, perhaps unsurprisingly, email remains the most likely avenue for martech, used by 79 per cent of marketers. This is closely followed by social media, with 77 per cent currently using the technology with a further 18 per cent expecting to use in the next 12 months.”
 
The most planned for tactic in the year ahead, interestingly, is SEO – an established marketing discipline, but one which continues to change as algorithms develop. The biggest rise, year-on-year for the UK & North American market, was the use of martech for analytics, measurement and insights, selected by 75 per cent – a 19 per cent rise on a year ago.
 
A new wave of martech tools will likely emerge, and when the results are broken down by region, the UK is likely to be the most progressive in terms of voice search, with 36% stating they currently use a tool in this area, and a further 11% planning to do so in the next few months.
 
Ryan said“There is no question the future looks big and bright for the entire market. Voice is a technology we’re watching very closely. In many households, Alexa has evolved from being a source of music and news to become more like a member of the family. Along with being great fun for quizzes and questions – there’s a clear trend towards VAL (voice activated lifestyle), the implications for marketers here are immense.
 
“Though the market is burgeoning, the study also looked at what the barriers are to future investment. Understandably, the number one restriction for 43 per cent of respondents, is marketing budget constraints. Second, however, for over a quarter (26 per cent) was a lack of understanding of the technology coupled with increasing complexity is creating issues for marketers.”
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