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Is Predictive the New New Thing in Marketing Technology?

It’s an exciting time to be working in marketing. We are amidst an important transformation with data at the forefront and technology steering the course for marketing and sales professionals. In just the past 12 months, almost $200 million in VC funding has gone into predictive marketing and sales software companies. Why all the interest? CRM systems like salesforce.com essentially come as an empty box because they were built at a time of data scarcity and have not kept up with the abundance of data that is now available. It does not yet leverage the power of predictive analytics that could improve a rep’s win rate by telling them which accounts they should focus on. The use of marketing automation technology is becoming the norm in many organizations with adoption rates reaching 80 percent, which leaves many marketers wondering, ‘what’s next for marketing technology?’ With over 900 marketing tech vendors and counting, it is easy to get lost in the options and opportunities. (See the LumaSCAPE, WorkBench and Chief Mar Tech samples.) Meanwhile consumer companies like Amazon, Uber and Netflix have proven the power of using vast amounts of data to make predictions about customer buying behavior. Businesses are demanding and many are already experiencing the same level of innovation – the consumerization of B2B.

Predictive Tech for Business Takes Off

According to CBInsights, just last year over $2.5 billion in venture funding went to marketing and sales technology companies. Looking back over the past four years, we’ve also seen a flurry of activity in the M&A and IPO front, with salesforce.com acquiring ExactTarget for $2.5 billion, Oracle acquiring Responsys for $1.5 billion and Marketo going public. We’ve also seen newer marketing automation vendors like Autopilot, Captora, Act-On and Intercom raise more capital this year. Most recently, Salesforce’s acquisition of RelateIQ for $390 million is a step forward, but it still has a long way to go to offer customers predictive capabilities. The larger automation vendors in general are behind in this area.

The early adopters of marketing automation were some of the savviest marketers, and they are now looking for the next thing in marketing, among the fragmented tech landscape. Many of these cutting-edge marketers are turning to predictive applications, which is why we believe in the growing trend of predictive marketing.

The Rise of Predictive Marketing

Though it may feel foreign to marketers, predictive analytics can uncover fresh insights about your prospects and customers. It can also accurately predict buyer intent, in turn helping you better understand how customers will respond to messages, offers and interactions in ways that were previously not possible. By leveraging data science to make sense of all the data available, the savviest companies are marketing and selling more intelligently. Predictive analytics is emerging as central to the modern marketing organization. DocuSign, one of our early customers, has experienced a 22x ROI and 38% lift in opportunity conversion in the first two months of using Lattice applications to fuel its predictive marketing efforts. As part of a larger initiative to complete reengineer its demand funnel, CA Technologies experienced a 400% improvement in its lead conversion with Lattice.

While the concept of predictive marketing is now emerging as the next frontier, the truth is that the technology has been around for some time. Lattice entered the space back in 2006 and with the market now catching up, some of the best names in venture capital are jumping in and investing in the opportunity. We recently studied the growing landscape of companies utilizing data science to provide marketers with predictive applications. You can see our research in our latest infographic, The Next Frontier of Marketing Tech, originally posted on VentureBeat.

Written by

Brian Kardon
July 14, 2014