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The most exciting Marketing Tech areas for early-stage investment in 2021

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After new year celebrations, and as our 2020 predictions finally have played out, OpenOcean again takes stock of what will be hot in Marketing Tech (MarTech) in the new year.

OpenOcean is one of Europe’s more active early-stage investors in MarTech with investments in fast-growing and category-leading marketing tech and consumer data companies like Leadoo, LoopMe, Personalyze, Supermetrics, Tapdaq (acquired by Tapjoy, Inc), Truecaller, Unacast, and Verto Analytics.

2020 and 2021 in review and preview

The turning of the calendar is always a time to look ahead, but before we do that, it is also useful to take stock of the year that passed. How did our predictions for last year hold up and what did we overlook?

One thing we clearly missed was the rapid growth in social enterprise activities. Those will certainly accelerate in 2021 as businesses increasingly think about whether or how much their activities have a positive impact on the world, while also trying to maximize their profit. The most direct effect of this thinking is on marketing budgets and activities, but it spills over to everything that enterprises do. Assessing that impact is beyond the scope of this particular blog, but we may return to the subject in the future. 

As for our other 2020 predictions, we will briefly reflect on how they played out as a part of our new predictions below.

Technology’s continuously growing role in marketing

Technology has become a significant part of the budgets of chief marketing officers, accounting for about 25 percent of total spending. As noted last year, chief marketing officers now spend more on technology than chief information officers, according to Gartner. Though the pandemic put a damper on overall marketing budgets in 2020, Gartner predicts that spending will continue to increase on marketing technology and digital channels, while spending on mobile marketing, digital commerce technology and customer data platforms will decline. OpenOcean believes much of the growth will focus on MarTech automation and privacy enhancement solutions, and that much of this investment will continue to  be for optimizing and automating the existing technology stack.

Unquestionably, what is driving these changes is that the role of the chief marketing officer has expanded in recent years to include privacy risk management, compliance, and customer engagement. Data sharing that requires collaboration across functions and business units was for a long time out of reach for companies due to increasing regulation and consumer privacy demands. In the last few years, privacy enhancing technologies have helped enterprises address the privacy challenges of the new data economy and provided opportunities to better understand and engage with their customers and audiences.

Robotic process automation kicked into hyperspeed in 2020, with most investment going to tools for marketing automation. In 2021, we expect that type of investment to continue as companies put more resources into organization and cross-functional teams working on projects with rapid rollout schedules that use cross-functional datasets. In turn, that will drive even more automation investment as marketers seek to become more agile. 

What’s hot: artificial intelligence, augmented reality, privacy related software, and much more automation

Here are our picks for the most exciting and lucrative areas for early-stage investments in 2021:

Artificial intelligence for profiling and targeting. Datasets and ML algorithms continue to evolve rapidly, which should make this a fertile area for innovation over the next few years, particularly for services that are based on the creation and delivery of personalized marketing. We made such a prediction last year, but now AI is also becoming a key ingredient in the development of automated marketing. Two areas that stand out in 2021 are automation of creative copy using AI and personalized messaging. E-commerce experts know that 72 percent of shoppers only react and engage if the communication is personalized for them. 

Augmented reality/virtual reality/mixed reality. Another prediction that we made last year was in this area of technology, though we were a bit underwhelmed by the number of new augmented reality experiences in 2020. Still, we continue to believe that this area is ripe for growth and that it will take off particularly in enterprise applications for advertising and conversational marketing. Gartner has said that 70 percent of enterprises will experiment with immersive technologies by 2022, further enhancing the value of their customer datasets. 

Automation of marketing. Just as we predicted, this was a big area of investment in 2020 for work execution and across datasets and systems, for both large and small companies. As businesses froze other investments and cut marketing costs, they focused on getting more out of their existing infrastructure. For the coming year, marketing automation will continue to be a big focus. We are already beginning to see the first (partial) solutions where AI provides holistic planning and execution instructions to marketing decision makers and automagically executes the most clear-cut use cases. In B2B, customer support, digital-first programming of webinars and digitally guided selling tools are some of the first areas where this type of AI use will become commonplace. 

Enterprise privacy enhancement and management solutions. This area is our most important new prediction for 2021. As noted earlier in this post, enterprises have started making significant investments in this area. The evolution of privacy concerns and regulation has created an increased need for privacy risk management, compliance and customer engagement data solutions. The explosion of data sources and the amount of data – now accessed by data scientists, data engineers, data analysts, and business analysts – along with the fragmentation of data storage across cloud and on-premises servers (on multiple sites, in multiple data lakes and databases, and sometimes with different rules) has generated an enormous demand for new tools enabling better data unification and data visualization. 

Implementing solutions to manage this wealth of information, while remaining mindful of privacy issues, will help businesses gain a multidimensional understanding of their audience and customers. Fresh data complements businesses’ first party (customer) data, minimizes knowledge gaps about users, and significantly improves customer profiling. This kind of valuable and usable data has perhaps been available, at least technically, in the past, but it was prohibitively difficult to access or use, particularly across multiple platforms and for multiple parties. In 2021, collaboration and data unification tools, when available via secure sources and in compliance with regulations, will have a significant impact on the work of chief marketing officers, particularly given their enhanced responsibilities. 

And one more thing … Mobile app developer-related IPO(s)

On the heels of the astounding public market valuation of Unity last fall (which has held strong so far), we think that Applovin is poised to have a smashing IPO in the first half of this year. That should light a fire under some smaller peers of Applovin to go public, in turn leading to a flurry of mergers and acquisitions. A few players of scale will arise both pre- and post-IPO. OpenOcean certainly hopes that one or two of our MarTech portfolio companies will be “victims” of this wave!

Dear entrepreneurs and potential co-investors, if you are moving forward with companies ready for fast growth and within OpenOcean’s areas of interest, please do let us know at tom@openocean.vc

Featured image credit:  Paul Skorupskas @ Unsplash

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