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

Martech and Other Software Landscapes

In excess of the 11 decades that I have been publishing the martech landscape, as it mushroomed from ~150 options to ~10,000, I’ve viewed several individuals respond to it as an anomaly. “What is it about marketing and advertising that spawns so lots of software program apps? Certainly no other job has to deal with these sprawl!”

To which software overview site G2 responds in this posting, “Hold my beer.”

Whilst there are absolutely dynamics specific to internet marketing that feed the frenzy of new martech startups, the real truth is that martech is basically a element of a much larger software package revolution. Marc Andreessen identified as it “software having the planet.” I get in touch with it The Excellent Application Explosion. Software is everywhere you go (and, ever more, almost everything is software package).

But particularly how many commercially packaged computer software apps are there in The Terrific Application Explosion?

Let’s take online games and buyer-oriented applications off the table. We know there are millions of such applications for mobile equipment on the Apple App Retail outlet and Google Perform Store. It is honest to say that’s a distinctive kettle of fish than B2B computer software, this kind of as martech.

Nicely, at the very least today. Frankly, purchaser and company software program apps are driven by a great deal of the same fundamental technological innovation. And you see raising cross-pollination among people domains. The consumerization of IT stays a large motion underway. I personally see similarities amongst creators on consumer platforms and “makers” inside corporations leveraging no-code applications. And if you believe that the hype of the metaverse — which will a person day rise from the trough of disillusionment — the convergence of small business and buyer experiences will blur even even further.

But for now, let’s stick to a slender interpretation of how a lot of enterprise program apps are there in the environment?

The solution: at minimum 103,528.

That is the range of software program merchandise profiled on G2’s web site as of past week. It’s not a theoretical guesstimate. It is an empirical rely — like the martech landscape, but spanning all business enterprise software groups.

I emphasized the phrase “at least” in entrance of that quantity for two explanations:

First, G2 acknowledges that they have not uncovered all of the enterprise software package applications out there but. My impact is that particularly in marketplaces exterior of North The usa, there is a ton nonetheless to explore. Think of China and Japan, for occasion.

2nd, new software program startups retain staying introduced. (You may possibly be mumbling beneath your breath, “Let’s see what the present-day economic climate does to that merry-go-spherical.” Place a pin in that caveat for a moment – I’ll come back to it.)

In other words, that 103,528 selection is a decrease bound of the B2B program item universe. The true range is certainly greater, and potentially substantially better. 150,000? 200,000? Much more?

G2’s database is surely even now escalating, including on common 945 computer software products for every thirty day period.

What about consolidation, you say? These figures from G2 are inclusive of the simple fact that they’ve dealt with about 760 merger and acquisition scenarios due to the fact January of this year. So, sure, consolidation is occurring. But the paradox of simultaneous consolidation and growth in software program markets holds correct. It’s not just martech.

Speaking of martech, the folks at G2 also shared with me the counts of 9,365 martech solutions and 1,488 adtech merchandise in their databases. Combined — which is how I’ve often imagined of them — which is 10,853 madtech applications in total. Much more than what Frans and I came up with in our 2022 martech landscape release in May well.

Our strategy is to share information among us and G2 to get a superset of all of them. But it’s pleasant to also have an independent corroboration that, certainly, today’s martech landscape truly is on the magnitude of ~10,000 products and solutions.

Is 2023 the Yr of the Martech Cataclysm?

But let us get again to that dilemma about the overall economy I dodged before.

No sugarcoating it. This upcoming 12 months or two is likely to exert a ton of stress on the present martech landscape. Funding will be harder to appear by, and at substantially a lot more modest valuations. Marketing and advertising departments are likely to have tighter budgets and become considerably more durable shoppers when it will come to thinking about and negotiating martech purchases. This is the first time in in excess of a ten years of exponential martech development that the sector is experiencing a truly formidable financial atmosphere.

Undoubtedly, this will end result in a lot of much more acquisitions of lesser martech fish by even larger martech fish, as nicely as the non-public fairness crowd betting on the other aspect of this cycle. But far more painfully, there will be an growing range of early-stage martech ventures that only phone it quits soon after failing to either protected their upcoming funding spherical, discover a prepared acquisitor, or rebalance their functions to profitability.

My very best guess? Up to 20% of the present martech landscape could churn in advance of 2024.

But it’s only the churn amount of current martech vendors that I have a dark prediction about. As far as collective field revenue goes, I feel martech is heading to go on to expand for the foreseeable foreseeable future. It’s possible not as speedy as it has been for the future pair of a long time. But in the significant photograph, even now rather fast. For a person easy rationale: the electronic transformation of internet marketing is much from more than, and it continues to be 1 of the finest levers each and every enterprise on the planet has for winning and retaining customers.

Particularly in the tough periods in advance, great martech will be very important to survival accomplishment.

Growth of the Software Industry (Revenue)

Ignore valuations for now, which have been the semi-delusional yardstick of measuring martech ventures these previous number of many years. Earnings is the ground truth of sizing an market. And I’m 99.9% certain martech earnings will develop calendar year-above-12 months for the relaxation of this 10 years.

And to repeat the mantra of this article: it is not just martech. The full application industry has monumental expansion in advance of it. The inspiring chart earlier mentioned from Battery Ventures (with my two annotations in orange) is both of those an precise glimpse-back at software program income advancement above the earlier 5 decades, but also a reasonably conservative extrapolation of regular compound annual development of application income for the up coming two decades.

Two factors pop out immediately from that chart:

1st, holy cats, the measurement of what the software business is probable to develop to by 2050 dwarfs in which we are currently. “Software consuming the world” is software package getting about extra and a lot more of each individual facet of the economic climate. All over the world GDP in 2020 was ~$85 trillion. By 2050, it’s anticipated to be ~$165 trillion. It is in fact not that ridiculous to consider of software package generating up a mere $6 trillion of that, or ~3.6% of complete GDP.

2nd, the Dot-Com Bubble Burst in 2000 and The Fantastic Recession in 2008 barely sign-up as tiny dents in the upward slope of this mountain. Which is not to trivialize the difficulties so lots of faced in people yrs. But putting those people hurdles in perspective of the prolonged video game, the overall trajectory of the program market hasn’t been derailed by the ups-and-downs of macroeconomic organization cycles. I consider which is heading to remain legitimate for this era and most likely the upcoming.

All of which qualified prospects me to conclude that The Good App Explosion will keep on via these future couple of several years. And on the future wave of recovery and enlargement, the progress in new software apps may possibly really effectively strike light velocity ludicrous velocity.

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