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If you work in marketing technology or media today, it’s hard to keep track of every investment that’s closed in the last three months. Deals are flowing into marketing technology, online publishers, and everything inbetween. In the time it takes me to write this article, more will receive seed funding while large rounds are becoming increasingly common on both the software and the content side.
Since the beginning of the year we’ve watched more than $100 million in VC-backed deals flood this space. NewsCred ($25M), Percolate ($24M), Sharethrough ($17M), Mashable ($13M), BusinessInsider ($12M), Contently ($9M), TripleLift ($4M), and even Flipboard buying Zite ($60M over time), just to name a few.
Yet the latest LUMAscape for content marketing is already full, with hundreds of companies all tackling the same problems. Something is not right with this picture. Two years ago, content marketing was not even a “thing.”
So why is this category growing like crazy?
VentureBeat studied marketing automation with over 1,000 marketers.
Here’s what they said.
On the one hand, a typical investment paradigm is at play. Investor dollars flow into early category leaders and more companies get started when they see that funding; those seed stage companies then get funded by investors who missed the first boat, which makes the category appear even hotter, and more companies get started.
Another issue at play is market need. Every day, we hear three common challenges from our customers, which include the likes of P&G, Pepsi, and Xerox.
Perpetual connectivity, driven largely by mobile and social, transforms the way people consume and discover content as well as interact with each other.
Consumers expect immediacy. Increasingly, brands need to meet that demand with not just massive ad campaigns, but also the content production, workflow and management processes of a 24-hour newsroom.
Global brands actively seek a way to maintain brand consistency across borders, while also delivering hyper-local relevance.
Ensuring that each geography’s team has the right, approved content at the perfect time (as well as at a great enough volume). In addition to being accessible, easy to deploy, and properly approved, content also needs to be locally relevant, useful, and inspiring. Ensuring all of these characteristics at a global scale often requires a single platform or else things will slip through the cracks.
Great marketing reaches audiences where they are, across all channels and devices. Whether it’s a blog post, an 140-character tweet, a newsletter, or a Snapchat campaign, multi-channel engagement requires brands to completely transform their entire content marketing process.
Brands need a solution for this new problem set as they move budgets away from display to more effective forms of marketing.
Creating content is hard, managing content is hard and distributing content is hard. There is no question that the market pull is real. As a result, businesses that were previously content farms or doing cheap, low-quality copywriting are repositioning themselves as content marketing companies. But no amount of lipstick will help.
Even worse, some of these companies are positioning themselves as software companies. But the DNA required to build software is very different from the DNA required to build an agency.
With these market realities, we’re facing new challenges: the content marketing category is over-saturated. Today, from where we sit, there are simply too many companies fighting for different parts of the content marketing stack (workflow, creation, curation, publishing, analytics), and it’s unsustainable for many reasons.
Some challenges are financial: many of the seed stage companies will never get Series A funding. In addition, those that are only solving for one part of the stack — like aggregating freelancers or offering a shared editorial calendar — are not tackling a large enough market to build a company of real consequence.
The industry needs to simplify.
On the back of all of these deals, we’re definitely going see consolidation and, as a category, it’s desperately needed. We’ll see some companies go out of business too. But CMOs don’t need dozens (much less hundreds) of companies solving similar problems
I see incrementalism as the killer of innovation. It’s great to enter into an industry that has been disrupted time and again like marketing or publishing. But bring a unique (and better) vision, not a minor correction to a complex problem. Just sticking a “content marketing” label to your pitch deck is insufficient (and I’ve seen this!).
Ultimately, my real worry comes back to the customer.
CMOs today have too many options. The fact that there are hundreds of companies on the LUMAscape is proof of this hot mess. I’ll be the first to admit, deal flow is exciting, but while Q1 2014 was one for the record books, it’s important to look at why.
The rising tide certainly makes all boats rise, but my fear is that not all of today’s boats are “ocean-ready.”
By Shafqat Islam, CEO and Co-Founder, NewsCred
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