November 27, 2022


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Think the martech landscape is big? Here’s the size of the software industry overall

Martech and Other Software Landscapes

Over the 11 decades that I have been publishing the martech landscape, as it mushroomed from ~150 solutions to ~10,000, I have seen many people today respond to it as an anomaly. “What is it about marketing that spawns so lots of computer software apps? Absolutely no other career has to offer with these kinds of sprawl!”

To which program overview web page G2 responds in this post, “Hold my beer.”

While there are undoubtedly dynamics particular to marketing that feed the frenzy of new martech startups, the truth of the matter is that martech is just a part of a significantly larger program revolution. Marc Andreessen known as it “software taking in the earth.” I simply call it The Great Application Explosion. Software is everywhere you go (and, more and more, every little thing is computer software).

But exactly how lots of commercially packaged software package applications are there in The Fantastic App Explosion?

Let’s just take games and consumer-oriented apps off the desk. We know there are hundreds of thousands of this sort of apps for cell products on the Apple App Retail outlet and Google Participate in Retail outlet. It is good to say that’s a different kettle of fish than B2B application, these as martech.

Nicely, at minimum currently. Frankly, client and business enterprise software package apps are run by a lot of the exact same underlying technological innovation. And you see escalating cross-pollination involving all those domains. The consumerization of IT continues to be a massive movement underway. I personally see similarities among creators on buyer platforms and “makers” within businesses leveraging no-code instruments. And if you think the buzz of the metaverse — which will one working day rise from the trough of disillusionment — the convergence of business and shopper encounters will blur even more.

But for now, let’s stick to a narrow interpretation of how lots of business enterprise software package apps are there in the entire world?

The response: at the very least 103,528.

That is the variety of software program items profiled on G2’s web page as of very last 7 days. It is not a theoretical guesstimate. It is an empirical count — like the martech landscape, but spanning all business enterprise program classes.

I emphasised the phrase “at least” in front of that variety for two reasons:

To start with, G2 acknowledges that they haven’t uncovered all of the enterprise program applications out there however. My impact is that in particular in marketplaces exterior of North America, there is a ton still to explore. Imagine of China and Japan, for occasion.

Next, new application startups hold remaining launched. (You may be mumbling under your breath, “Let’s see what the current financial system does to that merry-go-spherical.” Set a pin in that caveat for a moment – I’ll occur again to it.)

In other text, that 103,528 range is a decreased sure of the B2B software product or service universe. The genuine number is undoubtedly increased, and most likely much larger. 150,000? 200,000? A lot more?

G2’s database is undoubtedly nevertheless expanding, adding on ordinary 945 software program products and solutions for each thirty day period.

What about consolidation, you say? These figures from G2 are inclusive of the point that they’ve taken care of over 760 merger and acquisition situations due to the fact January of this calendar year. So, indeed, consolidation is taking place. But the paradox of simultaneous consolidation and expansion in software markets holds true. It is not just martech.

Talking of martech, the individuals at G2 also shared with me the counts of 9,365 martech solutions and 1,488 adtech items in their database. Combined — which is how I’ve always assumed of them — that is 10,853 madtech applications in full. Extra than what Frans and I came up with in our 2022 martech landscape release in May perhaps.

Our program is to share knowledge between us and G2 to get a superset of all of them. But it is wonderful to also have an unbiased corroboration that, of course, today’s martech landscape seriously is on the magnitude of ~10,000 items.

Is 2023 the Year of the Martech Cataclysm?

But let’s get back again to that problem about the financial state I dodged earlier.

No sugarcoating it. This next calendar year or two is heading to exert a ton of tension on the present-day martech landscape. Funding will be harder to arrive by, and at substantially a lot more modest valuations. Marketing and advertising departments are likely to have tighter budgets and grow to be much harder clients when it comes to contemplating and negotiating martech purchases. This is the first time in over a decade of exponential martech development that the sector is struggling with a genuinely formidable economic natural environment.

Without doubt, this will end result in lots of a lot more acquisitions of more compact martech fish by more substantial martech fish, as well as the non-public equity group betting on the other aspect of this cycle. But much more painfully, there will be an rising number of early-stage martech ventures that merely call it quits right after failing to possibly protected their next funding spherical, obtain a inclined acquisitor, or rebalance their functions to profitability.

My most effective guess? Up to 20% of the current martech landscape could churn ahead of 2024.

But it’s only the churn fee of current martech distributors that I have a dim prediction about. As much as collective field income goes, I think martech is heading to keep on to develop for the foreseeable upcoming. Possibly not as rapidly as it has been for the upcoming couple of a long time. But in the big picture, nonetheless pretty fast. For one particular straightforward reason: the electronic transformation of internet marketing is far from in excess of, and it stays a person of the greatest levers each individual enterprise on the world has for successful and retaining prospects.

Particularly in the tough moments forward, excellent martech will be vital to survival success.

Growth of the Software Industry (Revenue)

Ignore valuations for now, which have been the semi-delusional yardstick of measuring martech ventures these previous few a long time. Earnings is the ground truth of the matter of sizing an industry. And I’m 99.9% sure martech income will increase calendar year-about-calendar year for the relaxation of this ten years.

And to repeat the mantra of this write-up: it’s not just martech. The entire computer software business has tremendous progress in advance of it. The inspiring chart earlier mentioned from Battery Ventures (with my two annotations in orange) is the two an accurate appear-again at software revenue progress above the past 5 decades, but also a quite conservative extrapolation of regular compound annual growth of software package earnings for the subsequent two many years.

Two things pop out promptly from that chart:

Very first, holy cats, the size of what the program marketplace is possible to increase to by 2050 dwarfs wherever we are right now. “Software eating the world” is application taking more than far more and much more of each and every aspect of the economic system. All over the world GDP in 2020 was ~$85 trillion. By 2050, it’s predicted to be ~$165 trillion. It is basically not that insane to believe of software program creating up a mere $6 trillion of that, or ~3.6% of total GDP.

Second, the Dot-Com Bubble Burst in 2000 and The Terrific Recession in 2008 barely register as very small dents in the upward slope of this mountain. That’s not to trivialize the issues so a lot of faced in all those many years. But putting those people hurdles in perspective of the very long sport, the total trajectory of the software program market hasn’t been derailed by the ups-and-downs of macroeconomic business cycles. I imagine which is heading to continue to be accurate for this technology and most likely the following.

All of which sales opportunities me to conclude that The Wonderful Application Explosion will go on by these future pair of several years. And on the next wave of restoration and expansion, the development in new application applications could incredibly effectively hit light-weight pace ludicrous pace.

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