Nearly 90% of marketers spent more on marketing technology in 2021 vs. 2020. The industry is growing fast, and it's a race to see which martech stacks come out on top.
Whether you're a chief marketing officer or a content creator, the martech stack impacts all internal stakeholders. If you want the right synergy within your organizational structure to deliver the best customer experience, you must make the right martech investments.
Especially if you’re building a business case for a new tool, it's crucial to predict every risk factor that comes with new investments and plan accordingly.
And that's exactly what we'll help you do in this quick guide. Let's go!
What Is Martech?
Martech, or marketing technology, is a broad term for the various technologies marketers use to obtain, analyze and act on data. This can include things like customer relationship management (CRM) software, customer data platforms (CDPs), email marketing tools, social media monitoring and analytics platforms, and more.
Why Is Martech Important?
As businesses have become increasingly digital, the need for effective marketing technology has grown. To keep up with the competition, companies need to track and analyze data to make better decisions about where to allocate their resources. Martech can help them do this.
What Are the Risks of Investing in Marketing Technology?
When it comes to martech investments, there are a few risks you should be aware of before making your decisions. As you build out a business case for your marketing organization, here are five to keep in mind:
- Lack of control or ownership over the technology: One of the most significant risks with investing in martech is that you may not have full control or ownership over the technology. This can be a major issue if the vendor decides to go out of business or changes their pricing model, which could leave you stuck with a technology you no longer need or want. If the tool is central to your martech stack, your marketing team could get thrown into disarray. If it's a solution that helps you manage customer data, your data migration process could be long and costly.
- Vendor lock-in: Another risk associated with investments in martech solutions is vendor lock-in. This occurs when you become dependent on a single vendor for a particular technology, and they hold all the power over your ability to switch or upgrade. If the vendor decides to raise their prices or changes their terms and conditions, you may be forced to pay more or go without the technology altogether. This makes your martech stack vulnerable to competitors.
- Limited scalability: A third risk associated with martech investments is limited scalability. This means that the marketing technology may not be able to handle larger volumes of data or traffic, which could impact your ability to grow your business. Ideally, you want a martech stack that can grow alongside your business, but it can be challenging to do this sustainably.
- Inability to keep up with innovation: Another risk with investing in martech tools is falling behind on innovation. This can happen if the technology you invest in becomes outdated relatively quickly or if the vendor fails to keep up with industry trends. As a result, you may find yourself struggling to keep up with competitors using your current martech stack.
- Unforeseen expenses and delays: The final risk is probably the most obvious: miscellaneous delays and fees. These can include unexpected expenses, installation costs, or even changes that have to be made once the technology is purchased.
How to Mitigate Marketing Tech Investment Risks
So, what can you do to mitigate these risks? Here are a few tips:
Do your research.
Before investing in martech, be sure to do your research and understand the risks involved. This will help you make a more informed decision and may help you avoid some of the pitfalls mentioned above.
Ideally, you can come into contact with a representative from the company. If this isn't possible, you should at least try to read independent reviews.
Have a backup plan:
If you are worried about vendor lock-in or limited scalability, be sure to have a backup plan in place. This could involve having a second vendor lined up in case of an emergency or having contingency plans in place to handle larger volumes of data or traffic. (Make sure you account for these costs if you're developing a business case.)
Stay up to date:
To avoid falling behind on innovation, be sure to stay up to date on industry trends. This means keeping track of what the major players are doing and paying attention to new technologies and platforms.
While it's unwise to shift gears whenever a competitor does, keep an eye out for industry-wide signals.
Ask questions:
If you are unsure about anything, be sure to ask the vendor lots of questions. This will help you understand the technology better and can help you avoid any potential risks down the road.
Remember: you won't regret asking too many questions — you'll regret not asking enough.
Keep your marketing budgets on track:
Look at your past investments in martech and identify the hidden costs that came up before. Allocate enough money in your budget to account for them if they happen again. Pro tip: most martech solutions are software-as-a-service (SaaS), so you might get discounts if you buy annually.
Be realistic: if you have to stretch every dollar just to make one martech solution work, there are probably better options.
Get a complete picture of what you're getting into:
This means reading through all the terms and conditions thoroughly before making any decisions, as well as understanding exactly how the technology works. You also want to make sure that there are no hidden fees or price changes over time.
Master Your Martech Investments Today
By being aware of the risks involved in marketing technology investments, you can make more informed decisions and hopefully avoid any negative consequences. Follow the tips above, and you can minimize these risks and ensure that your investment pays off in the long run.
Want to make sure your martech investment business case is rock solid? Portage Labs can help — contact us today!
Frequently Asked Questions (FAQs)
What is martech strategy?
Martech strategy is the process of planning, acquiring, implementing and measuring marketing technology in order to improve marketing performance and achieve business goals.
What is the difference between martech and adtech?
Adtech is the subset of martech that deals with advertising technology. Adtech includes technologies such as ad servers, demand-side platforms (DSPs), data management platforms (DMPs) and targeting technologies.
How do I know if my company needs martech?
If your company is looking to improve its marketing performance, then you likely need martech. Martech can help you track and analyze data so that you can make better decisions about where to allocate your resources.
What is the best way to invest in marketing technology?
Everyone has their own approach. According to KPMG International Limited,
"A new holistic model for sourcing and managing martech can address the challenges of continuous technology change with the need for alignment with organizational goals" (KPMG Global Organization, independent member firms affiliated).
The core approach is to look at marketing tech investments as not just marketing tools, but software the entire organization can use.
