Ad & MarTech Startups Will Struggle with Funding in 2019
By Dan Baum
Forrester research is reporting that investor funding for advertising technology and marketing technology startups is going to take a HUGE hit in 2019– by a massive 75%.
Specifically, the report predicts that funding will drop to $1.8 billion in 2019, down from $7.2 billion in 2018. They caution that these figures could be significantly affected by unknown factors by the end of the year, but nonetheless we can confidently expect significant cuts.
Before we all freak out and run around like chickens to make sure our favorite tools (or maybe our own budding ideas) won’t catch the ax, this might actually turn out to be a good thing for marketers.
Why The Cut Backs?
A big cause for the drop has to do with GDPR taking effect this year.
Big brands are going to shift a lot of their budgets from new projects onto making their current ventures compliant. This means a lot less money to go around for the new kids on the block.
Another reason for the change is the hyper-growth we have seen in the last few years.
We have a bunch of big companies investing in a lot of small companies so that they can fight to be the big fish. The problem is that the pond was a lot smaller than anyone thought it would be.
The VP of emerging technology research over at Forrester’s Carlton Doty put it this way, “It’s a sort of hitting of the pause button on innovation in ad tech.”
Why the Cut is Good for Marketers
Ever since 2010, investors across the globe seemed to put money towards anything, resulting in an incredible surge of marketing and advertising technologies, from mobile apps to SaaS. These great breakthroughs have allowed marketers to more easily and more efficiently target their buyer personas, and keep their customers around longer.
But I think it’s safe to say we marketers are exhausted from sorting through all of it.
Hundreds of different tools have made it nearly impossible to compare and contrast different products in order to make the best purchase for their brands; or to truly invest and fully test our a product.
Now that there will be less of them, we have a great opportunity to focus on finding the right tool and getting those we choose to work together.
We’ve been given the gift of time. Time to consolidate, strategize, and integrate, without dropping everything for the shiniest, newest tool out there.
What Isn’t Being Cut?
I’m definitely not the only one that wants to force every new technology into the marketing or advertising technology category, so we have to be careful as to what is actually being cut.
For instance, voice-controlled tech/apps (like Alexa, Google Home) will see more funding in 2019, along with machine learning and artificial intelligence.
So fear not, some of the coolest things we have seen in 2018 will still be just as prevalent next year, we just have to be more creative as to how we adapt them to our marketing.
Who Will Benefit?
The big guns will, of course, love this shift in the market.
Google and Facebook have their hands in startups across multiple industries, and the slow down of new technologies will help them focus on improving what they already have instead of competing with each other on “who can buy the most companies fastest.”
It will also propel Amazon’s emerging technology division towards even more market dominance with less competition.
The bottom line here is that for 2019, the world of marketing and advertising technology will become much more streamlined, and only those startups that already have the resources to keep up will survive.
We marketers will have fewer “shiny new toys” to play with next year, which will give us a lot more time to make our current tools work better and more efficiently for us.
Wondering where to begin?