Martech (marketing technology) refers to any technology or tool that helps optimize or identify marketing efforts. Marketers rely on these tools to automate or streamline processes, collect and analyze data, and help engage with customers. The full suite of these interconnected tools is known as the martech stack.
Last year, the number of martech suppliers grew to 8,000 (and counting). To help clients make smart choices, Venable attorney A.J. Zottola has examined the rise of martech and offered guidance on procuring tools and negotiating contracts with vendors.
Martech should align with goals
When considering the use of martech technology, focus on the marketing objective. Martech tools fall into several categories, depending on the particular objectives they are used for:
- Management tools
- Commerce and sales tools
- Content and experience tools
- Advertising and promotional tools
- Data tools
- Social and relationship tools
The martech landscape
Martech as an industry has experienced exponential growth, and a significant portion of marketing department budgets go to martech.
The growth of martech raises potential issues regarding how to implement and integrate tools into existing systems and applications. Thoughtful planning during the procurement and renewal phases can mitigate many of these issues.
Recommended process flow
Some of the most important decisions occur before a contract is signed.
- Consider whether to build martech internally or to buy it from a third-party source. Martech comes at a high cost, so examine the potential value of using these tools.
- Analyze and evaluate your existing martech stack and your proposed needs. This helps you avoid many of the issues that can arise after you select a vendor. Visualize this as a diagram to see how the pieces fit together and create a team of stakeholders who understand the technology and integration process.
- If you are constructing a stack from scratch, plan how the tools and solutions will work together, focusing particularly on data flow. If you're adding to your existing stack, review its capabilities to ensure that your tools are optimized and determine which resources and technologies are lacking. Often existing stack resources have additional or underutilized features or resources that you don't need to pay extra for. If necessary, talk to existing vendors about ways in which you can further utilize their tools.
Do not rush these initial steps. Have clearly defined objectives, and a clear understanding of how the new martech will be integrated into your existing stack.
Some initial questions during this planning phase should include:
- What are you trying to achieve with the new technology?
- How will you measure the success of the implementation and the use of the new technology?
- Who are the users going to be, internally and externally?
- What processes will the new technology enable/accelerate/automate?
- What data sources will need to be linked and integrated?
Selecting a vendor
If you don't have one vendor in mind, consider using an RFP. You may include your company's contract terms and conditions with the RFP and request that the vendors redline the terms. Think about your non-negotiables, such as particular contract clauses that all vendors of your organization must include, and use these to narrow down your list of vendors.
When you're evaluating the vendor's tools, examine their road map. Tools are constantly evolving, and it's more important to know that a tool will still be useful years down the road. Request to speak with a vendor engineer to discuss how their tool will integrate with your existing stack. It'll be apparent early on whether interoperability is going to be a problem.
Points that should be discussed with the vendor during the selection process include:
- Data use and ownership: Ask for a detailed explanation of how data will be collected, what type will be collected, who will own it, what rights you will have to use it, and what analytic tools will be used.
- Maintenance and support: What are the support models available for the tool(s)? Is a managed service team typical or required?
- Data storage: Where will your data be stored? Who will have access to it?
- Integration: Describe the products you currently use and ask the vendor for a detailed explanation of how their product can be integrated into your existing stack.
- Subscription fees and hidden costs: Never accept pricing that isn't itemized for the product/service offering.
- Key performance indicators (KPIs): What KPIs are collected/offered? How often are they measured?
- Security: Is security adequate, given the type of information the vendor will be handling?
Consider your relative bargaining power with the vendor. Are you dealing with a startup or a market leader? With market leaders, it's much harder to negotiate changes, as they often use forms that cannot be altered. If possible, negotiate from your own contract form. Don't be surprised if you receive an order rather than actual contract to review. Focus on things you can control when presented with inflexible vendor terms.
Use a term sheet only if it will help clarify initial positions. Consider bolting on or utilizing existing master service agreements or enterprise-level agreements, particularly within larger corporate structures with multiple department touchpoints.
Integrate the new tool quickly to avoid gaps in your martech stack. If necessary, purchase additional consulting hours from the vendor to assist with the implementation. Your vendor might not tell you that you will need those extra hours and that it will likely be a separate charge above and beyond standard support maintenance that's available.
Consider using tiger teams to disseminate knowledge regarding the new tool. Your team should include both marketing professionals and IT staffers, so they know how to provide support when the time comes. Training should occur no more than two weeks prior to receiving the tool; otherwise people are likely to forget what they have learned.
To hold vendors accountable and optimize the relationship, there should be open communication throughout the contract term, not just during the initiation, renewal, or termination. Using the criteria and objectives you created during the initial phase, evaluate how well the tool has met your expectations.
Consider the following when evaluating the tool:
- How well has the tool been integrated into your company?
- How many people are using the product and how often are they using it?
- Is the tool meeting the initial ROI you calculated?
Regular reviews will also provide a good opportunity for the vendor to share features of the tool that you may be underutilizing and other news regarding martech tools.
You should additionally evaluate the vendor's performance regularly. Consider creating a scorecard, including how many open items you have with the vendor, response times, and any additional issues you may have. Having a record of this is a great way to assess your vendor and can be valuable when it's finally time for a renewal or renegotiation.
Renewals provide an opportunity to bring existing issues with the tool to the vendor's attention and to hold vendors accountable for the expectations of what a tool is supposed to accomplish. You will have the most leverage during renewal periods.
- Discuss the vendor's and tool's business reviews and whether each has met expectations.
- Use the business reviews to negotiate better terms during renewal (such as lower fees or additional free products).
- Don't be afraid to walk away if a tool is not performing well.
To learn more about martech and how Venable attorneys can help you, watch this webinar and learn more about our Advertising and Marketing, IP Transactions, and Technology, Media, and Commercial practices.