Who’s Winning and Losing in Marketing Automation? Fall 2014 Round-up

by Dan Freeman 
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One of the most important metrics in evaluating the ultimate value of any cloud software product is the customer retention rate, a number that encapsulates the value obtained versus client expectations. Retention rate takes into account usability, support, expectations set, and impact on marketing and/or revenue goals. Companies that receive value in excess of expectations generally renew; those that don’t opt out.

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Though a valuable indicator for customers considering an investment in marketing automation, don’t expect marketing automation vendors to divulge much about retention. They sometimes publish the number and growth rate of their customer base but not a single one lets on to retention rate, or its inverse—churn.

Not to worry. Another class of marketing technology companies can shed light on the magic retention metric.

Software tracking company Datanyze scans over 18 million of the world’s most-trafficked websites, hunting for JavaScript embeds and web tags that indicate the presence of hosted software—in this case a marketing automation platform. The chart below shows the total number of websites using selected marketing automation platforms as of 9/1/14.

Note that websites do not equate with customers as a single customer may use marketing automation software on dozens or even hundreds of websites. Nevertheless, website count is a good indicator of success.

But not so fast...

It’s not just absolute website count but rather the changes—the additions and loses over time—that are the strongest indication of platform success in the marketplace.

I analyzed the top 20 firms for which we have data—and which fall roughly into the marketing automation space—and calculated the percent change in websites using their software since January 1, 2014.

Change happens quickly in dynamic markets. Demand for marketing automation software is growing overall but aggregates mask marketplace turbulence. According to the data, only two of the 20 firms—Pardot and Act-On—have increased their website count by more than ten percent since the beginning of 2014. Seven of the 20 platforms have actually lost websites, a few by over 20 percent.

The data also implies that churn is higher than many would believe. For the 20 marketing automation platforms, the aggregate ratio of websites adds to drops for the first eight months of 2014 was 1.08, meaning that for every 100 websites that added a marketing automation platform, 92 websites dropped one.

Note that the Datanyze metrics are an indication only only and are by no means a definitive measure of software presence. A few caveats of this data are in order and can be found here.

Great marketing can generate a steady stream of new customers in a growing market, but only positive customer experiences will result in high retention rates. Caveats aside, one thing is clear; rapid change is ahead in the marketing automation sector.

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Marketing Growth Strategies LLC has been engaged in research, analysis, lead generation, and client implementation in the Marketing Automation sector since 2009 and has recently revised its highly successful 2014 Marketing Automation eBook.

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Caveats to Market Share and Retention Data

I've used Datanyze as an indicator of market share and customer retention among software

companies in the marketing automation sector. However, before readers draw too many conclusions, a few caveats are about the data are in order.

First, Datanyze tracks over 15 million sites, which seems like a big enough number. But keep in mind, there are over 900 million websites. So even the Datanyze Universe represents just small fraction of total active sites. Nonetheless, I believe the 15 million covers an overwhelming portion of total commercial websites that would have the budget to invest in marketing automation.

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Next, the data tracks websites—not customers—so market share headlines should be viewed with some skepticism. A company that installs marketing automation tracking code may put it on single site, or on dozens or even hundreds. That said, as a sanity check, I compared the marketing automation websites tracked by Datanyze with the actual number of customers for several vendors and found the ratio to be within a range of 2.5 - 3.5 to 1. 

Example: Datanyze shows about 33,000 websites using Hubspot. The company said it had 10,195 customers at or near year-end 2013. That’s a ratio is 3:1 websites per customer—a reasonable and believable number. 

There’s also a degree of fuzziness in the data.  

The most significant source of fuzziness in the data may be the use of trials. Since trials frequently don’t convert to sales, vendors that offer free trials (Marketo, for example) may tend to show more adds and drops than those who don’t (Pardot, for example). This can skew the numbers.

Another consideration is that some vendors offer a variety of versions, not all of which should be considered as marketing automation tools. For example, Hubspot has a 'basic' package the includes email marketing and website tracking but not the more salient features of marketing automation such as lead scoring and automated lead nurturing. Nonetheless, these packages will be counted by Datanyze as part of Hubspot's totals.

The last caveat is that in order to identify software packages used, Datanyze analyzes the underlying software code, but there is certainly no foolproof way to find this code and to associate it with a particular vendor. Nonetheless, the company believes they catch the overwhelming majority of instances. 

Caveats and fuzziness aside, the changes in tracked websites over the course of several months or quarters provide valuable insights into which vendors are winning and losing in the marketplace. 

Who's Winning and Losing In Marketing Automation?

by Dan Freeman 
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Change happens quickly in dynamic markets. Demand for marketing automation software is growing at a healthy clip, but aggregates can mask marketplace turbulence. Behind the 40 plus percent growth rate lies a multitude of customer experiences that determine the ultimate winners and losers.

As businesses struggle to get a handle on the new world of digital marketing, they experiment with new marketing platforms. Marketers try to master this software—to leverage its promise to generate more and better leads, and to streamline marketing processes. For highly competitive products like marketing automation, nuances in product features, and how customers manage to utilize these features can make all the difference. The way a new customer is on-boarded, the support or self-help tools provided, and even the reality of the implementation experience versus the expectations set by vendors can have a major impact on customer retention.

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And in the Software-as-a-Service (SaaS) business model, retention is key. Vendors often lose money on new customers during the first year. It’s not until an annual renewal, or at least a period of several months, that customers become profitable. Vendors tout their success with press releases about new customers and sometime even publish customer counts and growth rates. What’s not revealed are the dropped customers—the churn.

Until now, that is.

Working with the tech data sleuth firm, Datanyze, I looked at websites that added and dropped marketing automation software from January through April of 2014. The results may surprise you. Salesforce's own marketing automation platform—Pardot—dominated the field with a net gain of 2,020 websites.

New Research on Top Marketing Automation Software Platforms

by Dan Freeman 
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Here are the latest marketing automation market share numbers for the Top 1 Million websites compiled by tech data firm Datanze: Hubspot – 21.1%, Marketo – 14.6%, InfusionSoft – 11.9% Eloqua – 9.9%, and Pardot – 8.0%.

But that's far from the full story.

Datanyze has just expanded its coverage of the Marketing Automation sector to include about 11 million websites in what they call the Datanyze Universe. I spoke with Datanyze Marketing VP Jon Hearty to delve more deeply into their data. The company looks the world's most authoritative websites—based on Alexa ranking—and analyzes the underlying source code to reveal software packages used on these sites.

Although 11 million is certainly a lot of websites to analyze, users should be aware that there are over 900 million websites (astounding number but here is my source). So even the Datanyze Universe represents just small fraction of total active sites.

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Still, the data is revealing, as it tells us the actual number of found instances of each of the marketing automation software platforms among the universe of sites tracked. We all know that software companies have a way of, shall we say...embellishing their user base numbers. So this data represents a reality check on vendors' statements and marketing materials, and a touchstone for analysis.

We looked at the leaders in the marketing automation sector and how they changed as the list expanded from the Top 100K, to the Top Million, to the Datanyze Universe of 11 Million, and here is what we found.

Marketing Automation Leaders Among Alexa Top 100K Websites

Among the very largest websites, just over 3 percent had detectable marketing automation code—a notably low number. Among this group, Marketo is the clear leader, followed by Eloqua and Hubspot. It’s also interesting to note that Infusionsoft—designed for the entrepreneur and the very small business market—has a strong presence among the top 100K with a fifth place ranking.

Marketing Automation Leaders Among Alexa Top Million Websites

Expanding the universe to the Alexa top 1 million sites, we see a different result. Although the top players remain almost unchanged (except VisiStat now joins the top 10, replacing VisualRevenue), Hubspot takes the lead, followed by Marketo and Infusionsoft.

Marketing Automation Leaders Among Datanyse Universe (11 Million sites)

Now we turn to the Datanyse Universe, which represents close to 11 million websites. Readers should note that, unlike the Top 100K or Top 1 Million websites tracked by Datanyse, the Datanyse Universe only approximates the top Alexa sites and includes many other sites that Datanyse customers have requested tracking on.

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Most striking is the jump of VisiStat from ninth place to first. VisiStat is not directly comparable to most of the 37 marketing automation vendors included in this data. The company has been in business for nine years and has a large customer base in both B2B and B2C. It’s primary functionality is the ability to identify previously anonymous website visitors through reverse DNS lookup, and to import visitor data directly into its database.

To play with the data yourselves, visit Datanyze. 

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Marketing Growth Strategies LLC has been engaged in research, analysis, lead generation, and client implementation in the Marketing Automation sector since 2009 and has recently revised its highly successful 2014 Marketing Automation eBook.

Are you a marketing automation vendor? Learn about the capturing up to 500 fresh Marketing Automation leads.

Considering implementing marketing automation? Download the 2014 Marketing Automation eBook