Think the martech landscape is big? Here’s the size of the software industry overall

Over the 11 yrs that I’ve been publishing the martech landscape, as it mushroomed from ~150 answers to ~10,000, I’ve found numerous persons respond to it as an anomaly. “What is it about internet marketing that spawns so many software applications? Absolutely no other occupation has to deal with this sort of sprawl!”

To which program critique web site G2 responds in this posting, “Hold my beer.”

Even though there are definitely dynamics particular to promoting that feed the frenzy of new martech startups, the real truth is that martech is simply a aspect of a a great deal larger software package revolution. Marc Andreessen referred to as it “software consuming the globe.” I phone it The Excellent App Explosion. Software is just about everywhere (and, more and more, every little thing is software program).

But precisely how many commercially packaged software program applications are there in The Great Application Explosion?

Let’s acquire video games and purchaser-oriented apps off the table. We know there are tens of millions of this kind of apps for cell units on the Apple Application Retail outlet and Google Perform Shop. It is honest to say that is a distinct kettle of fish than B2B computer software, these kinds of as martech.

Perfectly, at minimum nowadays. Frankly, buyer and small business software program apps are run by considerably of the exact same underlying know-how. And you see increasing cross-pollination among people domains. The consumerization of IT continues to be a huge movement underway. I personally see similarities amongst creators on shopper platforms and “makers” within providers leveraging no-code applications. And if you believe the hype of the metaverse — which will just one day rise from the trough of disillusionment — the convergence of enterprise and client encounters will blur even even further.

But for now, let’s stick to a narrow interpretation of how several small business application applications are there in the earth?

The answer: at the very least 103,528.

That is the quantity of computer software goods profiled on G2’s web-site as of past week. It’s not a theoretical guesstimate. It’s an empirical count — like the martech landscape, but spanning all company software program classes.

I emphasised the phrase “at least” in entrance of that range for two reasons:

Initially, G2 acknowledges that they haven’t uncovered all of the organization software apps out there but. My impression is that particularly in marketplaces outdoors of North The usa, there is a ton however to discover. Consider of China and Japan, for occasion.

Second, new application startups maintain currently being launched. (You could be mumbling under your breath, “Let’s see what the existing economic system does to that merry-go-spherical.” Set a pin in that caveat for a moment – I’ll come back again to it.)

In other terms, that 103,528 range is a lessen bound of the B2B program merchandise universe. The actual quantity is absolutely greater, and perhaps a great deal greater. 150,000? 200,000? Additional?

G2’s databases is absolutely continue to increasing, incorporating on average 945 program solutions per thirty day period.

What about consolidation, you say? These quantities from G2 are inclusive of the truth that they’ve managed around 760 merger and acquisition instances considering that January of this year. So, yes, consolidation is occurring. But the paradox of simultaneous consolidation and expansion in application marketplaces holds correct. It’s not just martech.

Talking of martech, the people at G2 also shared with me the counts of 9,365 martech products and 1,488 adtech items in their databases. Blended — which is how I have generally considered of them — that is 10,853 madtech applications in complete. Extra than what Frans and I arrived up with in our 2022 martech landscape launch in May perhaps.

Our plan is to share knowledge among us and G2 to get a superset of all of them. But it’s good to also have an independent corroboration that, yes, today’s martech landscape genuinely is on the magnitude of ~10,000 products and solutions.

Is 2023 the Calendar year of the Martech Cataclysm?

But let us get back to that issue about the economic system I dodged previously.

No sugarcoating it. This following 12 months or two is going to exert a ton of stress on the present martech landscape. Funding will be harder to arrive by, and at significantly extra modest valuations. Promoting departments are likely to have tighter budgets and develop into much more durable customers when it arrives to thinking about and negotiating martech purchases. This is the to start with time in more than a 10 years of exponential martech expansion that the sector is experiencing a truly formidable economic ecosystem.

Unquestionably, this will consequence in many extra acquisitions of smaller martech fish by greater martech fish, as very well as the personal fairness crowd betting on the other facet of this cycle. But additional painfully, there will be an growing range of early-phase martech ventures that merely connect with it quits right after failing to possibly secure their next funding round, come across a ready acquisitor, or rebalance their functions to profitability.

My ideal guess? Up to 20% of the current martech landscape could churn prior to 2024.

But it’s only the churn rate of current martech vendors that I have a darkish prediction about. As considerably as collective business revenue goes, I think martech is going to proceed to grow for the foreseeable future. Perhaps not as quickly as it has been for the subsequent few of years. But in the significant picture, even now pretty quick. For one straightforward motive: the electronic transformation of advertising and marketing is significantly from about, and it stays a single of the greatest levers each corporation on the earth has for successful and retaining prospects.

Specifically in the complicated instances ahead, great martech will be essential to survival results.

Neglect valuations for now, which have been the semi-delusional yardstick of measuring martech ventures these previous couple of decades. Revenue is the floor fact of sizing an industry. And I’m 99.9% selected martech income will increase 12 months-more than-12 months for the relaxation of this decade.

And to repeat the mantra of this publish: it is not just martech. The full software market has massive advancement ahead of it. The inspiring chart previously mentioned from Battery Ventures (with my two annotations in orange) is the two an accurate look-again at application income progress more than the earlier five many years, but also a quite conservative extrapolation of typical compound yearly expansion of computer software revenue for the subsequent two a long time.

Two issues pop out instantly from that chart:

1st, holy cats, the dimensions of what the software program field is probable to expand to by 2050 dwarfs where by we are these days. “Software eating the world” is software using above additional and much more of each and every aspect of the financial state. Around the globe GDP in 2020 was ~$85 trillion. By 2050, it’s predicted to be ~$165 trillion. It is really not that ridiculous to assume of application earning up a mere $6 trillion of that, or ~3.6% of overall GDP.

Second, the Dot-Com Bubble Burst in 2000 and The Great Economic downturn in 2008 scarcely sign up as little dents in the upward slope of this mountain. That’s not to trivialize the issues so many confronted in those people decades. But putting all those hurdles in standpoint of the extended activity, the all round trajectory of the software market hasn’t been derailed by the ups-and-downs of macroeconomic small business cycles. I feel that’s going to continue being correct for this technology and likely the next.

All of which qualified prospects me to conclude that The Wonderful App Explosion will go on as a result of these subsequent few of decades. And on the subsequent wave of recovery and expansion, the expansion in new application apps may well incredibly very well hit mild velocity ludicrous pace.