2010 Will Bring New Features to Demand Generation Systems

Summary: the demand generation market will continue to grow in 2010, and it may attract some new, big competitors from outside the industry. But the real excitement will be features that expand the scope of demand generation products to support inbound marketing, better measurement, and more efficient content creation.

2009 was a year of tremendous growth for demand generation systems (a.k.a. business-to-business marketing automation. By some measures, it's looking more mature: buyers are appearing outside the initial niche of software and technology companies; core functionality is well understood and largely consistent across products; vendors are expanding scope to include new users at existing accounts (in particular, sales departments); pricing is under pressure; and companies are starting to specialize in different customer segments.

On the other hand, there are still plenty of new entrants; few pioneering vendors have failed or consolidated; and related software vendors (in this case, CRM, email and Web site management systems) haven’t yet introduced me-too products. Perhaps most important, many potential buyers still don’t understand the value provided by these systems—although vendors are working very hard to educate them. So, on balance, I'd say the industry is still in a fairly early stage: late adolescence, if you will.

What will 2010 bring? Continued sales growth, for sure: that’s easy enough when you’re starting with a small base. We can also be confident that the feature trends I described in my review of 2009 will continue: better support for social media, greater access for sales departments, and more flexible reporting. I do expect vendors to converge on more standard social media features. These will probably combine the content-sharing and activity-tracking capabilities that different vendors now deliver separately.

There’s also a reasonable chance – although this prediction is less certain – that sales access features will blossom into deeper cooperation between marketing and sales in managing prospect relationships. There's no question in my mind that such cooperation will appear: it's inevitable as marketing’s role expands beyond lead generation to long-term relationship management. What I don’t know is how quickly this will happen or whether the sales access tools will be the connection point. One reason they might not is that sales access tools are used by individual sales people, while broad marketing and sales integration is likely to be controlled by senior sales management.

So much for the rear view mirror. Here are some predictions that are larger departures from the immediate past.

- me-too products. It's just a matter of time before CRM vendors (yes, I mean Salesforce.com) and Web content management vendors decide to compete seriously for marketing automation business. Frankly, this is so obvious that I'm almost embarrassed to mention it. But I wouldn't want anyone to say I failed to see it coming.

- inbound marketing. The work of generating Web traffic through search engine optimization, paid Web ads and expanded Web content has so far been performed outside of most demand generation systems. These are important marketing activities and they are a natural extension of demand generation systems, even though they require closer integration with (or replacement of ) Web content management and Web analytics. Note that Webinars and social media, which are also inbound marketing devices, are already being added to marketing automation products.

This type of extension—supporting new tasks for current users—is typical of maturing products once the core functions widely available. It also implies that vendors specializing in these areas will add their own marketing automation features to compete. HubSpot particularly comes to mind, which is a testament to their own marketing skills.

- external data. Many demand generation systems already make it easy to look up data about prospects from sources like Hoovers or JigSaw and to infer the location and company of anonymous visitors from their IP address. Certainly those features will continue to grow. But there’s another trend that's very pronounced in the consumer marketing space, which is using consumer panels and surveys to measure responses that aren’t captured within the company’s own systems. I haven’t seen much analogous activity among business marketers, but think that will change as the technique becomes more common and as business marketers accept that internal data will never provide all the answers they really need for effective marketing measurement. The task for the marketing automation vendors is making it easier to integrate such data and, in cases such as ad-embedded surveys, to generate it.

- content grazing. I'll explain that label in a moment. The idea is to squeeze the most value from existing marketing content, rather than creating new content for each project and situation. This implies two complementary tasks: being able to extract and classify nuggets of information from existing marketing documents, and being able to deliver exactly the right nugget in each situation.

The underlying insight is that there’s so much information available today that people don’t have time to digest large blocks of it. Rather, they want be fed bite-sized chunks that meet their immediate needs. Hence, the term "content grazing": it's like eating appetizers instead of a full meal.

Today’s marketing best practice is the opposite of content grazing: it’s to develop many different campaigns that deliver large volumes of content for different situations. This is expensive and it's exactly what prospects don't want. The alternative is automated systems that extract and classify content from existing materials, including many such as blog posts that would be created for other purposes. Other automated systems would can select and deliver the correct content during each interaction.

Basically this is the challenge of simulating a human conversation. It’s possible that some solutions will be based on automated customer service agents already used for other interactions. I haven’t seen this applied in a marketing automation context, but suspect it’s a path that marketers will be forced to explore as they recognize the full cost of conventional content-heavy approaches, and that buyers don't want them anyway.