Think the martech landscape is big? Here’s the size of the software industry overall
Over the 11 many years that I’ve been publishing the martech landscape, as it mushroomed from ~150 solutions to ~10,000, I’ve noticed quite a few persons respond to it as an anomaly. “What is it about marketing that spawns so a lot of software package applications? Surely no other career has to offer with these kinds of sprawl!”
To which computer software assessment site G2 responds in this short article, “Hold my beer.”
Although there are certainly dynamics particular to marketing and advertising that feed the frenzy of new martech startups, the real truth is that martech is basically a section of a much bigger application revolution. Marc Andreessen referred to as it “software having the globe.” I connect with it The Wonderful App Explosion. Computer software is all over the place (and, progressively, almost everything is software program).
But particularly how many commercially packaged program applications are there in The Excellent App Explosion?
Let’s take game titles and client-oriented apps off the desk. We know there are millions of these kinds of apps for cellular products on the Apple Application Shop and Google Play Store. It is honest to say which is a unique kettle of fish than B2B application, this sort of as martech.
Nicely, at minimum currently. Frankly, shopper and enterprise application applications are powered by substantially of the similar underlying technology. And you see rising cross-pollination amongst these domains. The consumerization of IT remains a big movement underway. I individually see similarities between creators on purchaser platforms and “makers” inside of companies leveraging no-code tools. And if you think the hype of the metaverse — which will one day increase from the trough of disillusionment — the convergence of enterprise and customer encounters will blur even additional.
But for now, let’s adhere to a slim interpretation of how numerous enterprise software apps are there in the environment?
The reply: at the very least 103,528.
That is the amount of software package products profiled on G2’s website as of very last 7 days. It is not a theoretical guesstimate. It’s an empirical depend — like the martech landscape, but spanning all organization application types.
I emphasised the phrase “at least” in front of that number for two reasons:
Very first, G2 acknowledges that they haven’t uncovered all of the business software applications out there nonetheless. My perception is that specifically in markets exterior of North The usa, there’s a ton however to explore. Think of China and Japan, for occasion.
2nd, new program startups preserve staying introduced. (You may possibly be mumbling less than your breath, “Let’s see what the recent overall economy does to that merry-go-spherical.” Put a pin in that caveat for a minute – I’ll appear again to it.)
In other words and phrases, that 103,528 quantity is a reduce bound of the B2B software program item universe. The actual range is absolutely higher, and possibly a great deal larger. 150,000? 200,000? Far more?
G2’s databases is absolutely nevertheless expanding, incorporating on common 945 software package products for every month.
What about consolidation, you say? These numbers from G2 are inclusive of the reality that they’ve dealt with above 760 merger and acquisition scenarios given that January of this yr. So, of course, consolidation is going on. But the paradox of simultaneous consolidation and expansion in program markets holds accurate. It is not just martech.
Talking of martech, the people at G2 also shared with me the counts of 9,365 martech items and 1,488 adtech goods in their database. Mixed — which is how I have usually thought of them — which is 10,853 madtech applications in overall. Extra than what Frans and I came up with in our 2022 martech landscape release in May.
Our plan is to share details amongst us and G2 to get a superset of all of them. But it is great to also have an independent corroboration that, indeed, today’s martech landscape truly is on the magnitude of ~10,000 items.
Is 2023 the 12 months of the Martech Cataclysm?
But let us get back to that query about the economic system I dodged before.
No sugarcoating it. This upcoming year or two is likely to exert a ton of tension on the existing martech landscape. Funding will be more durable to arrive by, and at noticeably extra modest valuations. Advertising and marketing departments are going to have tighter budgets and grow to be significantly more durable buyers when it will come to looking at and negotiating martech buys. This is the initial time in about a decade of exponential martech expansion that the sector is facing a truly formidable financial environment.
Unquestionably, this will final result in many extra acquisitions of smaller sized martech fish by more substantial martech fish, as nicely as the private fairness crowd betting on the other aspect of this cycle. But much more painfully, there will be an raising selection of early-phase martech ventures that simply call it quits after failing to possibly protected their up coming funding spherical, discover a keen acquisitor, or rebalance their functions to profitability.
My best guess? Up to 20% of the present-day martech landscape could churn before 2024.
But it’s only the churn level of present martech suppliers that I have a darkish prediction about. As much as collective field revenue goes, I imagine martech is likely to continue on to increase for the foreseeable upcoming. Possibly not as quick as it has been for the up coming couple of decades. But in the massive image, even now fairly quick. For 1 uncomplicated rationale: the digital transformation of internet marketing is much from more than, and it stays a person of the finest levers each and every organization on the planet has for successful and retaining prospects.
Primarily in the challenging periods in advance, fantastic martech will be essential to survival results.
Ignore valuations for now, which have been the semi-delusional yardstick of measuring martech ventures these previous number of decades. Revenue is the floor truth of the matter of sizing an business. And I’m 99.9% specific martech revenue will develop yr-more than-year for the rest of this 10 years.
And to repeat the mantra of this article: it’s not just martech. The complete application field has tremendous progress in advance of it. The inspiring chart earlier mentioned from Battery Ventures (with my two annotations in orange) is both equally an precise look-back at computer software revenue advancement above the past 5 decades, but also a pretty conservative extrapolation of regular compound once-a-year development of computer software earnings for the subsequent two a long time.
Two matters pop out promptly from that chart:
First, holy cats, the dimension of what the software package sector is very likely to grow to by 2050 dwarfs wherever we are today. “Software consuming the world” is software package having around additional and far more of each facet of the economic climate. Worldwide GDP in 2020 was ~$85 trillion. By 2050, it’s envisioned to be ~$165 trillion. It is essentially not that outrageous to assume of software package earning up a mere $6 trillion of that, or ~3.6% of overall GDP.
Next, the Dot-Com Bubble Burst in 2000 and The Fantastic Economic downturn in 2008 barely sign up as little dents in the upward slope of this mountain. Which is not to trivialize the difficulties so many confronted in all those decades. But putting people hurdles in viewpoint of the prolonged sport, the total trajectory of the software package industry hasn’t been derailed by the ups-and-downs of macroeconomic business enterprise cycles. I think that is heading to keep on being real for this generation and likely the future.
All of which leads me to conclude that The Good Application Explosion will keep on through these following pair of decades. And on the upcoming wave of recovery and expansion, the expansion in new software applications may possibly extremely nicely strike mild speed ludicrous pace.
