Summary: Here’s a closer look at revenue per employee and marketing automation revenue in general. I get the same answers as before but now have more detail to back it up.
Some of the comments on last week’s post on the size of the B2B marketing automation industry led me to dig a bit more deeply into the question of revenue per employee. Looking through my files and asking a few questions, here are vendors for whom I have reasonably reliable information:
This gives an average of $171,000 per employee. Given that these are fast-growing companies and the employee counts were based on figures for September or later, the average headcount through the course of the year was lower, meaning the revenue per full-time-equivalent employee would be higher – probably not so far from my $200,000 figure. Indeed, the figure for the three slowest-growing companies (Unica, Aprimo and Alterian) comes to $194,000. That’s pretty darn close to my $200,000 standard. Cool.
These figures also shine more light on the original question of industry size. I don’t know the B2B fraction of Unica, Alterian or Neolane’s revenues, but it’s probably quite low: let’s guess 15%. Aprimo has stated they are 40% B2B, and the rest of those vendors are 100% B2B. Doing that math, you get $160 million total:
But what about everyone else? The other big players in enterprise marketing automation are SAS, Teradata and SmartFocus, but they are almost entirely B2C so far I know. So maybe let’s credit them with $10 million.
This leaves all the other B2B marketing automation vendors. The survey for my up-coming report has employee counts, client counts and minimum prices for quite a few: OfficeAutoPilot, True Influence, Pardot, LoopFuse, Net Results, Manticore, Silverpop, Genius, LeadFormix,TreeHouse Interactive, SalesFUSION, and Marketbright. I can use that to prepare two estimates: one based on number of employees x revenue per employee, and another based on number of clients x minimum revenue per client.
– total employees comes to about 470 (I have to make guesses for a couple of small vendors and reduce the Silverpop total to account for its large B2C business). Since these are also fast-growing firms, let’s use a figure of $120,000 per employee, which happens to be the average for Neolane, HubSpot, Marketo and Infusionsoft. That yields $56 million.
– clients x minimum price is calculated separately for each vendor, of course. You’ll have to trust me that the total comes to $37 million. But that’s a very crude figure: it’s certainly low in the sense that many average revenue per client is higher than the minimum price. On the other hand, we have the growth effect again – those client counts were towards the end of the year, so companies weren’t getting a full revenue year from everyone. For sake of argument, let’s assume the two factors cancel each other out.
So we have one estimate of $56 million and another of $37 million. The good news is that they’re in the same ballpark. Let’s split the difference and figure $45 million in revenue for this group.
Finally, there are a number of other B2B marketing automation vendors who weren’t covered in my survey. These include ActiveConversion, Act-On Software, Genoo, LeadLife, eTrigue, Marqui, and others. I do have client counts and pricing for most of them; some rough calculations yield a figure of $10 million.
Add these up, and you get a total B2B marketing automation revenues for 2010 of $225 million:
Maybe I’ll adjust my original $200 million estimate and maybe I won’t bother. Either way, I do feel more confident that it’s close to right.
David, thanks for sharing this very interesting analysis.
It’s strikes me that if your $200-ish million estimate is correct, that’s not much considering the long list of vendors active in B2B lead management. Time for a shake-out?
I don’t have the exact figure at hand, but I’m pretty sure that investors have pumped in $100M+ to Eloqua and Marketo. I would assume because they think the industry can grow to be large enough to give them a return.
What do you think is the potential size of this industry in say 5 years?
Hi Bob,
One frame of reference is B2C marketing automation, which is a much more mature industry. My figures show that the largest vendor barely reached $100 million revenue and the top 4 (Unica, Aprimo, Alterian, Neolane) total just $250 million. Even if the rest of the industry doubles that, you’re still looking at a $500 million, tops. It’s hard to imagine that B2B marketing automation would be larger.
On the other hand, I see a big distinction between the small business portion of B2B MA and the rest of the industry. The really huge growth is at the bottom (Infusionsoft and HubSpot on my chart; also OfficeAutoPilot in my report). Those vendors are pulling revenue from CRM, email and Web hosting vendors, because they provide all those services. Each of those is a huge industry, suggesting that potential for small business marketing automation is similarly large.
But email, CRM and Web sites will probably remain distinct at bigger companies, so the market for “pure” B2B marketing automation will probably remain pretty limited. I’d be shocked if it ever approached $500 million. Much more likely, the email, CRM and Web vendors will extend their own systems and marketing automation will become just a feature in a larger suite. The pure play vendors will then serve only sophisticated big companies with specialized needs and the budget to pay for them. That’s exactly what happened in B2C.