Disruptive innovation in the marketing technology business

marketing technology landscape 2016

I find Clayton Christensen’s theory of Disruptive Innovation to be quite interesting and applicable to the marketing industry, which has gone through a series of disruptive innovations of its own. The latest disruptee was Oracle and their customer management applications business unit, then by Salesforce. Today, Salesforce is at the risk of being disrupted, by Hubspot (though their product Pardot has somewhat tackled that and is growing at a fast pace). But now, Hubspot (and Pardot) are at the verge of moving upmarket and being disrupted by incumbants at the lower market tiers.

Hubspot was a disruptive technology when it first entered the market. The product was not nearly as capable as some of the other products in the market, notably Eloqua or Siebel Marketing. It did, however, open up a whole new market to a new way of marketing – by giving marketers the ability to drive traffic, capture that traffic, and nurture through very simple (pre-defined) nurturing workflows, Hubspot started capturing the small business markets. As with all disruptive technologies, this market was not large enough to be interesting for the big companies like Salesforce or Oracle.

The market grew, however, and Hubspot evolved. Today, it is clear that Hubspot (and other players, such as Pardot) is going upmarket. The product has capabilities and features that solve larger and larger companies’ need, and with more and more complex marketing applications. Hubspot is on a path of sustainable technology growth. But it has started overshooting some of its earlier customers’ needs. And this has created an opportunity for new disruptive innovations.

And those innovations are looming.

One market that Hubspot has not captured – and is likely not interested in – is the solopreneur market. The internet growth hackers out there working with disparate systems to build their online authority in their defined niche markets, grow their lists, and earn money by either selling to or advertising to their followers.

This market is currently satisfied by – from Hubspot’s perspective – disruptive technologies such as WordPress-based website builders that make it easy to build an authority website, front-end website tools that make it easier to engage your website visitors, simple list building and lead nurturing tools to market to your followers.

But it is clear that these technologies are all on a sustainable technology trajectory that is improving faster than these solopreneurs’ needs. It is just a matter of time before the technology surpasses those needs, and the only viable option is to go upmarket. Upmarket means Hubspot’s current (previous?) market, which is small businesses.

These technologies are attacking the solopreneurs’ needs from different angles, and growing into SME’s needs from those angles.

  • Copyblogger’s business has evolved from content marketing training to software making it easy to do content marketing through a simple to use website, to an increasingly advanced full-fledged marketing automation platform.
  • Thrive Themes has evolved from an easy to use website builder optimized to capture leads to a platform with increasingly advanced capabilities to integrate with various email and marketing automation solutions and has recently started making foray’s into lead management with capabilities such as dynamic content based on previous behavior and content delivery.
  • Active Campaign is basically version 2 of the popular list nurturing platforms such as Constant Contact, Mailchimp and Aweber. It is not yet as advanced as Hubspot and the like but there is no question that it is easier to use, and its technology trajectory is aimed at customers who feel that Hubspot has become “too big” for them.

It will be interesting to see which of these approaches (website to marketing automation, website to platform, list nurturing to marketing automation) will be the one that finally goes upmarket to take the small business segment from Hubspot (which it will be quite happy to leave, as it will continue chasing medium and large size businesses – in turn continuing to disrupt the likes of Eloqua).

But I believe that we will see a completely new type of player that disrupts everybody, including the ones mentioned above. There is a huge problem out there in the market today, and the problem is growing. That is the problem of fragmented features that customers need to tie together, vs. a complete marketing package. Even the solutions out there (such as Hubspot) who claim to be an all-in-one marketing solution aren’t enough. There is just too many things that you can do, which is not possible for one platform to satisfy.

So I see the need for a new type of solution that doesn’t merely add functionality, which traditional players have been doing. Instead, I believe this new type of solution will tie existing solutions together, by introducing a common database and a set of rules that can be applied to that database. The execution of the rules, however, will not be carried through by this solution itself. Instead, the purpose of this solution will be to tie existing solutions together into its common database and ruleset, and those solutions will execute on the rules.

And I believe the business model for this solution for the consumer will be free, and the consumer will instead pay for the various functionality based vendors that tie into the common ruleset (the vendors mentioned above). The existing players will be very happy to co-operate with this new type of player, since the better they play together, the more customers this new player will provide for them.

In the end, though, this new player will emerge as the master. Because executing functionalities will, in the future, be a commodity – and owning the data will be where the real value is.

This new player will disrupt Salesforce, Hubspot and all the other players from the bottom-up as the true owner of the customer data and what you can do with that data.

I look forward to seeing this solution start emerging. And as always with disruptive innovation, the first mover advantage in this case is huge.


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About the Author

Yusuf Young

Yusuf helps companies use Marketing Automation to grow B2B sales. In his role as a Marketing Automation consultant implementing systems such as HubSpot and Salesforce, he discovered the need for better services at a lower cost. Today, he runs FunnelBud to make the fruits of sales and marketing technology available to businesses worldwide.