As companies continue to increase their digital spending, the next few years look very promising for the adTech and martech ecosystem. Martech investment is expected to account for 61% of the total marketing budget by the end of this year, implying the central role it will play in shaping the future of business and customer touchpoints. In fact, customers have increased their investment in these technologies by a whopping 150% since 2020.
With digital advertising taking center stage, adtech too has emerged as a new favorite among investors. Its market is projected to be valued at $29.85 billion by 2026. Overall, the digital marketing software market size (spanning adtech, martech and the newly merged madtech) was valued at a staggering $56.52 billion in 2021, with a CAGR of almost 20% between 2022 to 2030. In the US alone, the CAGR is expected to be over 16%.
Proliferation of app usage, especially during the pandemic. The ongoing transition from desktop PC to smartphones, mobile devices, connected TVs and “connected everything.” The hyper-growth of social media usage among other digital platforms and overall digital consumption. These are all the factors responsible for unprecedented growth predictions for digital advertising and marketing software, also known as adtech, martech and madtech solutions within our ecosystem.
The market for these solutions is further amplified by the need to simplify customer segmentation and find hyper-accurate audiences for improved experiences across digital platforms. Naturally, adtech and martech investments have collectively emerged as a great proposition for investors and venture capitalists.
Adtech and Martech investment on every investor’s wishlist
In the first quarter of 2021 alone, investors spent as much as $23.7 billion in the adtech and martech ecosystem. Leading venture capitalist firms are leaving no stone unturned when it comes to adtech and martech investments.
As digital advertising continues to take center stage, the Indian adtech ecosystem is also gaining momentum, with the sector witnessing a 4x growth in funding in one year, from $2.6 million in 2020 to $8 million in 2021.
In the age of data democratization, brands are investing in platforms that will bring them in front of a generation of customers whose low attention spans and spending power must be captured. In the US, top VCs are looking to tap into the evolving consumer habits with the spurt of ad platforms in the digital content ecosystem – OTT, podcasts, and CTV, among others. In addition, seasoned advertising stalwarts (like Unilever) and DTC startups (like Allbrands) are deploying performance-based marketing and customer-centric approaches to deliver real-time advertising and engagement.
3 reasons VCs can no longer afford to overlook Adtech and Martech investment opportunities
1. Digital adoption on steroids
Digital platforms have become the new norm where people and businesses do literally everything. As a result, industries across verticals are witnessing digital transformation at scale, as with companies intending to offer hyper-personalized journeys to their customers.
Capitalizing on the combination of martech and adtech, brands get to meet their customers where they are. As a result, they are able to reach customers with the highest possibilities of conversion and develop insights-backed customer acquisition and retention strategies.
Brands have started leveraging AI & ML to anticipate customer behavior, stay ahead of fluctuating demands, and ensure high ROI.
The global digital advertising market is projected to reach $1.08 trillion by 2027. With mobile users expected to make up two-thirds of the total advertising market, enterprises must identify the preferred channels and messaging for individual consumers.
2. All advertising is digital advertising
Digital advertising has grown by leaps and bounds in the last decade and will account for more than 66% of the total advertising spend globally by 2023.
With businesses targeting customers across channels (website, social media, podcasts), traditional advertising approaches are taking a backseat. Advertisers on digital platforms such as Snapchat leverage AR (augmented reality), allowing audiences to interact with the content and enhance UX.
TVs are smart. “Newspapers” have transformed into Twitter and Instagram handles. YouTube vlogs are the new binge-watches. OOH, too, is now DOOH. Every single ad platform now has an element of technology and digital. The number of connected TVs in India is estimated to reach 40 million by 2025.
Digital marketers and planners will continue to use these platforms to communicate with the audiences via screens, measure their ROI, and get advanced reporting insights.
Media planners no longer buy TV spots or ad space but impressions, reducing ad budget by a considerable margin and with a higher assurance of success metrics.
The ad world is not about to return to the age of spray and pray. Instead, targeted digital advertising and immersive brand touchpoints are already defining the current and future of marketing. And with Metaverse, XR, and low-latency internet, these trends will only get more commonplace.
3. Cookieless targeting will be the new normal
Consumers demanded greater control over their data, and regulators and walled gardens are complying. As a result, third-party cookies are on their way out and will eventually be entirely replaced by first-party or second-party cookie data.
Other effective consent-based personalization techniques, such as authenticated or contextual targeting, will take center stage. In addition, AI and ML-enabled advertising with predictive messaging and intelligent algorithms will empower organizations to personalize the advertising experience seamlessly and determine the next action for a more significant ROI.
An ad and marketing ecosystem used to cookies will now look for platforms and solutions that bridge the gap between privacy and personalization. By 2023, this hunt will come to its head. Adtech and martech SaaS startups will be the ones filling that gap. Intelligent platforms such as Rebid will enable them to achieve a 360-degree view of customer profiles and create data-rich segments based on their preferences. Brands will invest significantly in such platforms.
Don’t leave money on the table
With 5G almost here and 6G testing already underway, the low latency promise will democratize the metaverse, AR, and VR use in advertising. It’s all digital – and it promises to stay that way forever. Adtech and martech Investments continue to soar as adtech and martech SaaS companies simplify the complex task of detangling complex customer journeys across numerous platforms to deliver immersive customer experiences. The experiences that modern consumers demand.
The world is going the madtech way as intelligent marketers merge their adtech and martech stacks for even more returns on ad and marketing outcomes. SaaS startups in this space will lead the charge. They will transform to be advertising behemoths replacing the old playbooks and preparing the ad and marketing ecosystem for a new, hyper-effective, and hyper-efficient ecosystem.
You shouldn’t have to stay behind by leaving these potential behemoths out of your portfolio.