Thinking About the Marketing Automation Market

It’s that time of year for the salesforce.com Dreamforce conference at the Moscone Center in San Francisco and I find flying to be a great time to reflect. Thankfully, this year’s conference is early enough on the calendar to align with Q4 budgetting and budget cycles, so we expect an ROI in a shorter period of time compared to previous years that occurred around Thanksgiving. The marketing automation market continues to heat up and serves as a good case study for startup founders to think through when analyzing potential markets for their ventures.

Here are a few thoughts on the marketing automation market:

• Small, fast growing greenfield market with less than 2% penetration (which are my favorite)
• Core group of strong competitors that are increasingly distancing themselves from the rest of the market (here’s an overview of marketing automation vendors at Dreamforce courtesy of @marksmithvr)
• Well-funded competitors in the market are spending heavily on sales and marketing helping create market awareness for all vendors in the space
• Software as a service is the accepted distribution model, providing several benefits like recurring revenue, strong gross margins, and predictable cash flow
• Readily demonstrable return on investment (think about candy, vitamins, or pain-killers)
• Complementary eco-systems around leading CRM vendors like salesforce.com, SugarCRM, NetSuite, and Microsoft Dynamics CRM

Startups should think through these categories and others when identifying market opportunities. One of the most important tasks, and most difficult, is timing the market. The marketing automation market is now saturated, but a few years ago it was wide open.

What else? What other thoughts do you have about the marketing automation market?