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

Otto Eovaldi

Martech and Other Software Landscapes

In excess of the 11 many years that I’ve been publishing the martech landscape, as it mushroomed from ~150 options to ~10,000, I’ve observed several people today react to it as an anomaly. “What is it about advertising and marketing that spawns so numerous computer software applications? Definitely no other profession has to deal with these kinds of sprawl!”

To which application evaluation site G2 responds in this report, “Hold my beer.”

Although there are unquestionably dynamics distinct to marketing and advertising that feed the frenzy of new martech startups, the fact is that martech is merely a component of a substantially larger sized software package revolution. Marc Andreessen referred to as it “software feeding on the entire world.” I simply call it The Excellent Application Explosion. Software package is all over the place (and, increasingly, every thing is software package).

But exactly how quite a few commercially packaged software package apps are there in The Wonderful Application Explosion?

Let us choose video games and buyer-oriented applications off the desk. We know there are tens of millions of these kinds of apps for mobile products on the Apple Application Shop and Google Enjoy Shop. It is truthful to say which is a unique kettle of fish than B2B computer software, these kinds of as martech.

Effectively, at least today. Frankly, purchaser and organization software applications are driven by considerably of the similar underlying technologies. And you see increasing cross-pollination between all those domains. The consumerization of IT stays a major movement underway. I individually see similarities concerning creators on shopper platforms and “makers” within organizations leveraging no-code instruments. And if you think the hype of the metaverse — which will just one day increase from the trough of disillusionment — the convergence of business and shopper encounters will blur even further more.

But for now, let us stick to a narrow interpretation of how numerous business enterprise program applications are there in the globe?

The respond to: at the very least 103,528.

That is the variety of program solutions profiled on G2’s site as of previous 7 days. It’s not a theoretical guesstimate. It is an empirical count — like the martech landscape, but spanning all small business software package classes.

I emphasized the phrase “at least” in entrance of that number for two factors:

First, G2 acknowledges that they have not uncovered all of the small business software applications out there nevertheless. My impression is that specifically in markets outside of North The united states, there’s a ton nonetheless to learn. Consider of China and Japan, for instance.

Second, new computer software startups keep staying released. (You could possibly be mumbling less than your breath, “Let’s see what the recent economy does to that merry-go-spherical.” Place a pin in that caveat for a moment – I’ll appear back again to it.)

In other words, that 103,528 variety is a reduce bound of the B2B computer software product or service universe. The real quantity is absolutely larger, and likely substantially increased. 150,000? 200,000? Much more?

G2’s database is definitely nevertheless escalating, incorporating on ordinary 945 application products and solutions for every month.

What about consolidation, you say? These quantities from G2 are inclusive of the truth that they’ve managed more than 760 merger and acquisition circumstances because January of this 12 months. So, sure, consolidation is going on. But the paradox of simultaneous consolidation and enlargement in software marketplaces holds legitimate. It’s not just martech.

Speaking of martech, the people at G2 also shared with me the counts of 9,365 martech items and 1,488 adtech items in their database. Merged — which is how I’ve normally thought of them — that is 10,853 madtech applications in full. Far more than what Frans and I arrived up with in our 2022 martech landscape launch in May well.

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

Is 2023 the 12 months of the Martech Cataclysm?

But let us get back again to that issue about the economy I dodged earlier.

No sugarcoating it. This upcoming yr or two is heading to exert a ton of pressure on the existing martech landscape. Funding will be more durable to arrive by, and at considerably extra modest valuations. Advertising departments are heading to have tighter budgets and develop into considerably more durable consumers when it arrives to looking at and negotiating martech buys. This is the 1st time in more than a decade of exponential martech advancement that the market is experiencing a genuinely formidable financial environment.

Certainly, this will end result in numerous far more acquisitions of smaller martech fish by even larger martech fish, as well as the personal equity crowd betting on the other facet of this cycle. But additional painfully, there will be an increasing range of early-phase martech ventures that merely call it quits right after failing to possibly secure their following funding spherical, discover a ready acquisitor, or rebalance their operations to profitability.

My very best guess? Up to 20% of the existing martech landscape could churn prior to 2024.

But it’s only the churn rate of current martech suppliers that I have a dark prediction about. As significantly as collective market profits goes, I believe that martech is likely to go on to develop for the foreseeable potential. Probably not as fast as it has been for the up coming couple of many years. But in the major photo, nevertheless rather quick. For one uncomplicated motive: the electronic transformation of promoting is significantly from in excess of, and it remains one particular of the best levers just about every business on the world has for winning and retaining prospects.

Particularly in the hard times in advance, great martech will be crucial to survival success.

Growth of the Software Industry (Revenue)

Forget about valuations for now, which have been the semi-delusional yardstick of measuring martech ventures these earlier number of several years. Revenue is the floor real truth of sizing an market. And I’m 99.9% particular martech income will improve 12 months-above-calendar year for the rest of this 10 years.

And to repeat the mantra of this submit: it’s not just martech. The full program field has massive development in advance of it. The inspiring chart over from Battery Ventures (with my two annotations in orange) is both of those an accurate look-back again at software program profits development about the previous five many years, but also a relatively conservative extrapolation of average compound yearly advancement of application earnings for the following two a long time.

Two items pop out promptly from that chart:

Initially, holy cats, the size of what the software business is possible to grow to by 2050 dwarfs exactly where we are right now. “Software taking in the world” is software taking around far more and extra of each and every side of the economic system. Around the globe GDP in 2020 was ~$85 trillion. By 2050, it’s envisioned to be ~$165 trillion. It is actually not that insane to feel of computer software creating up a mere $6 trillion of that, or ~3.6% of complete GDP.

Second, the Dot-Com Bubble Burst in 2000 and The Excellent Economic downturn in 2008 barely sign-up as tiny dents in the upward slope of this mountain. Which is not to trivialize the problems so several faced in those people many years. But placing individuals hurdles in standpoint of the very long activity, the all round trajectory of the application market has not been derailed by the ups-and-downs of macroeconomic small business cycles. I assume which is heading to continue to be correct for this era and most likely the upcoming.

All of which potential customers me to conclude that The Good App Explosion will carry on by these subsequent couple of years. And on the future wave of recovery and enlargement, the advancement in new software applications might really well hit mild speed ludicrous pace.

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