There’s a lot of talk about a new generation of account-based marketing tools on the block. Kaylee Edmonson of DemandLoops and Eric Linssen of Keyplay amongst others have blogged, posted, and commented on this over the past couple of months. Think of this less as hype (okay, okay it is a little bit hype), so much as it’s the classic progression of early adopters pushing the pendulum of new technology towards broader market adoption.
The Foundations and Promise of ABM Tech
Not all that long ago, a group of technology vendors spent a lot of time and money evangelizing account-based marketing as a core go-to-market methodology that was going to become table stakes for success in the form of net new revenue and net revenue retention growth. This ushered in a group of “first gen”, as Eric Linssen labels them, market incumbents. Namely, 6sense, Demandbase, and Terminus.
Theoretically, ABM platforms were the next logical stepping stone in categorical progression of B2B software, which for those who don’t remember or weren’t around, since the early-2000s has gone from (roughly) Customer Relationship Management to Marketing Automation, to Sales Engagement. With ABM, the promise was that any company worth their salt could shift their sales and marketing efforts to be highly targeted, contextually relevant, and perhaps most important – timely.
In other words, I can attract a smaller subset of my ideal fit prospects, converting them to higher annual contract value figures that churn at a lower rate than the rest of my relatively untargeted less than ideal fit customer base. Not to mention worthy of some juicy expansion and upsell opportunities. Plus, because I can control who specifically sees my ads and the exact dollar figure of advertising budget that goes into it, I should reduce my customer acquisition cost. No more wastage of half your budget. Alas, we finally arrived at salvation, right? The end of SaaS history. Well, not exactly…
Meat and Potatoes
The first generation of ABM platforms varied somewhat in their offerings, but they shared 3 common core components:
- Account Identification and Personalization.
- Intent Data.
- Targeted Advertising.
Account Identification and Personalization refers to tying anonymous visitor behavior to specific accounts, and then personalizing messaging on owned assets (website, landing pages, chatbots, etc…) to those accounts.
Intent Data refers to buying signals sourced from accounts that are actively researching pre-determined topics or keywords.
Target Advertising refers to displaying advertisements to contacts across networks within targeted accounts leveraging the aforementioned account identification features.
The nuances between how each platform implemented the features are less of note here rather than tying everything together in a suite. In other words, as a buyer I don’t need to purchase separate pieces of software to personalize my website, pull in intent data, and advertise to a specific set of accounts. I can buy it all at once “off the shelf”. Obviously the appeal is that I don’t have to worry about separate interdependent negotiation processes, contractual commitments, and exaggerated operational implementation headaches.
This product strategy and the go-to-market messaging that came with it encouraged the assumption that to execute a credible ABM program one must purchase an all-in-one tool. If you are drawing parallels to (or maybe having nightmares about) the way that marketing automation platforms tied themselves to inbound marketing, you would be on the right track. Plus, combining functionality should also justify a higher price point, but we’ll get to that in a minute.
Where the Fun Stopped
Theoretically, with my shiny new ABM tool I should be getting signals from my target account list and thus time my cold outreach perfectly to align with when the accounts are seeking new solutions. It is difficult to comment on whether or not the underlying signals were accurate for certain, but I think most would agree that data being at company-level became a key problem.
Let’s assume that my high-ACV opportunity is going to have multiple stakeholders in the buying committee, which for most is a pretty safe assumption. It doesn’t help much if I don’t know who in the buying committee specifically is researching solutions. Practically speaking if I am a business development representative or account executive, I don’t know who specifically to send my outreach to. Sure, I could just blast my message to all the stakeholders, but doesn’t that defeat the premise of narrow targeting and contextual relevancy?
Plus, with the vast majority of employees working from home during the COVID-era, there was fuel to the very much on fire notion that visitors working on a different IP address than their companies could be reliably identified. And so from there the seeds of doubt were in place and vendors were catapulted into the hotseat.
Perhaps the larger issue, though, was that our set of first generation vendors placed a premium on their services. Annual contract values of well over $50,000/year were the norm on the low end, often with a big push for multi-year commitments from the vendor side at the negotiating table. And no, that is not including the advertising budget required to utilize the platform, you have to add or reallocate existing spend for that.
To justify those sorts of prices a vendor must provide irrefutable evidence of value in the form of business outcomes, an exceptionally painful transition process moving away from the product (usually because it has become a core component of day-to-day operations), or a combination two. Unfortunately, given growth has slowed for Terminus and Demandbase the prevailing notion in the industry seems to be that at least 2 or the 3 core first generation ABM vendor incumbents were not able to do that.
Hey, it’s tough for marketers to spend cycles analyzing which half of their ad budget is going to waste when they just assume that all of it is….
ABM 2.0: Back and Unbundled
So what happens when a hot new software category reaches the top of the arc of awareness and adoption? The game of market share musical chairs stops and those caught without a seat get the pleasure of stumbling into a private equity sunset. And the others? Well, the process usually repeats until either they meet the same fate or manage to IPO if they haven’t already. But then the cool thing about established categories is that you also get into the beginning of a new lifecycle, and that’s what seems to be happening with ABM.
My friends over in venture capital like new ideas, absolutely, but I think a lot of people don’t realize much they LOVE disruption. There’s nothing like a hot, new, hype train generation of software to take a category by storm and capitalize on the glacial complacency of incumbents. It’s supposedly less risky when the market (and the underlying pain points) are validated.
We are seeing a slew of platforms like Clay, Instantly, Amplemarket, Common Room, and more take the market by storm. Of course, like any good disruptors they seem to be aiming to add targeting and personalization capacity at much affordable price points. Plus, there’s a lot of variety. Pretty great evolution, right? Nope!
Those elements are exactly what is going to kill the new generation. Well, most of it….
The Smaller Picture
Imagine this: you finally get your stack built, purchased, integrated, and then, log in to good old LinkedIn for a little catch up session. Oh…what’s this about Smartlead implementing a new feature to enhance deliverability for Outlook inboxes? Will Instantly be doing that soon, too? How many people on my list use Outlook, anyway…? What do you mean Amplemarket is now aggregating more signal types? …did I make a mistake going all-in with RB2B? *Frantically calls CSMs!!!*.
I know I’m exaggerating here, but the point is what we are witnessing in the market is nascent and very much an arms race. Just as a lack of selection and unresolved customer pain points kill a market, so can too much selection, even if bits and pieces are truly delivering on their promises. Vendors are competing extremely aggressively right now, and while initially that will benefit the buyer in the form of lower prices and innovation, in the long term it is going to get a lot more painful as feature sets reach maturity and pricing models become unsustainable for feature hungry customers.
Asad Zaman talked about the “Toggle Tax” recently in the Topline Newsletter. Organizational departments are utilizing 73 different SaaS applications as it is, and while the curiosity to find a better way, or a new channel, or a new method of reaching an audience is an important trait, it can cost a lot of time and money chasing unicorns.
The message is not don’t buy into ABM 2.0 right now, by all means go try some new platforms out. Just know that if you are searching you have got to be willing to go deep on research and think critically about where the products are going. Expect that some vendors we are seeing today will fall behind (or perha