The Martech Vendor Dilemma: Battling Privacy, AI, and Economic Shifts
Since 2023, the tech world feels like it's been split into two universes: the AI universe… and, well, everything else.
You can spot companies born into the "AI" world from a mile away. Their websites end with .ai. Anguilla, which happens to own that coveted domain extension, is loving this unexpected boom in popularity!
Then, there are the other companies who simply slap "AI" in front of whatever they used to do. Sound familiar? Any “AI CDP” fans in the crowd?
Let’s take a step back for a minute and investigate why the past few years have been particularly tough for (mar)tech vendors. Three major events have occurred—going through them in the order they popped up:
Privacy: It all kicked off with the announcement of GDPR in Europe back in 2018. But privacy isn’t a "one and done" deal. Since then, we’ve faced a whirlwind of uncertainty (e.g. third-party cookies), technical changes (e.g. Apple ATT), and new or “upgraded” regulations around the world (e.g. CCPA). For vendors, this has meant a continuous juggling act: keeping themselves educated, adapting their products, and, of course, educating prospects and customers along the way.
Macroeconomics: The outlook was sunny as 2020 rolled in… until it wasn’t. Covid threw everything into chaos, but even as money kept flowing in 2021, the party came to an abrupt end when interest rates started to surge. Suddenly, vendors shifted focus away from growth, operational efficiency became the name of the game. Companies cut back on their workforce, budgets shrank, and innovation slowed down. Many vendors stayed focused in their category instead of trying to solve problems beyond their core offerings.
Generative AI: If privacy changes were gradual over the years, GenAI was a lightning bolt no one saw coming. When ChatGPT burst onto the scene, 2023 saw a rapid response of vendors scrambling to pour what little resources they had into GenAI investments. Not easy, especially in the wake of the two challenges we just covered. GenAI is a massive drain on resources, time, and budgets. Plus, let’s be real—it’s complex, requiring a whole new set of skills, and we’re still in the early days. Vendors are pouring money into it, but the path to monetization is still foggy at best.
All these challenges haven’t just hit vendors—buyers are in the same boat, trying to do more and get more with less. Coming full circle to the intro of this post, we’ve seen many organizations shift or open new budgets for GenAI investments. Sure, these organizations are still figuring out when and how GenAI will deliver on its big promises, but this is not a short-lived hype.
🔑 There’s no denying that all these factors have contributed in making the path to innovation and optimization chaotic. And for data stack owners and buyers, it’s become a whole new level of complexity.
Still, I’m finding some interesting trends, emerging threats, and big opportunities in different martech and adtech categories. Stay tuned to dive in these!