Blog post

Consolidation Is Not Inevitable — But Hubs Are

By Martin Kihn | April 08, 2014 | 0 Comments


Earlier today, I took to the Adexchanger airwaves to argue that “Digital Marketing Consolidation Is Not Inevitable.” And it isn’t. My main points — couched in some feline-flavored puns that I blame on my new cat, Jerry, — are:

  1. Change accelerates, driven by basic technology
  2. Digital marketing as a system is still relatively immature
  3. Capital and incentives for startups are in no short supply
  4. Big companies (usually) don’t innovate quickly enough

Toss these digital superfoods into a bowl, and what do you get? A marketplace where the end game is not nearly in sight, and where it’s premature to think we know what’s what and who’s who.

Specifically, it’s too soon to declare the impending collapse of a very cluttered vendor landscape into four or five (or two!) “megahubs,” a la CRM or ERP or mainframes, or [insert dinosaur breed here].

I’m not the only guy who sniffs at, say, the 1,800 logos that sit underneath Gartner’s Digital Marketing Transit Map, without smelling the inevitability of a large-scale roll-up. The founder of a well-known ad tech vendor recently told me, “There are maybe twenty deals of any significance in this space each year, but there are two hundred start-ups.”

Likewise, Scott Brinker of Chief Marketing Technologist wrote a widely-circulated piece last month wondering whether 1,000-plus marketing tech vendors is “the new normal.”

And yet. Pause button. We’re all aware of “hubs” coming together that are more than just a stack of paper-clipped deal memos — that are looking more and more like credible, comprehensive tools. Some of these hubs, such as Oracle’s and Acxiom’s, are relatively new. Others, such as IBM’s and Adobe’s, have been developing for a half dozen years and more.

  • Question: Does the obvious momentum of digital marketing hubs mean that the end game is closer than I think?
  • Answer: It’s a trick question.

Why? These are two different topics. In a rapidly expanding market, it is possible to have both consolidation in some places and proliferation, energy and heat elsewhere. It’s what is called a growth phase. (There are losers, of course, but we won’t harsh the ride here.)

Hubs are modular; most customers don’t use every piece. CMOs display a desire to take more power, not less, in the digital realm. The success of tag management systems, developer ecosystems, and open API’s backs this up. All the hubs will change rapidly and rise and fall by their own mojo and executive elan. Any of them could be clipped by a new category, well-funded upstart, or dubious government.

What do you think? Let me know below or @martykihn

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