Do Businesses and CMOs Still Really Need Martech?

Marketing technology (martech) promised to revolutionise marketing when it was introduced in 2011, enabling real-time personalisation, automating complex workflows and providing visibility into customer behaviour.

According to 'McKinsey’s Rewiring MarTech: From cost centre to growth engine' report, much of organisations’ spend on martech fails to deliver on expectations due to fragmented stacks, data silos and an inability to measure ROI.

The research by McKinsey coollates the views of 233 senior marketing and technology leaders, who provided insights on how organisations view and use martech today to drive business growth.

Not one of the Chief Marketing Officers (CMOs) interviewed was able to quantify the ROI of their martech investment, leaving the projected spend of US$215bn in risk of disappearing into a black hole.

But McKinsey believes that AI could transform the technology from a cost centre into a growth engine - if agentic AI is elevated to the C-suite.

The company says that this revival is a critical step towards realising AI’s potential to double activation speeds and boost conversion rates.

Robert Tas, Partner at McKinsey & Company says: “Martech has the opportunity for revival with AI. But only if CMOs eradicate complex martech stacks and anchor it as a strategic priority in the C-suite.

“Only then can brands activate AI-powered customer journeys to realise the potential jump in conversion that AI promises, and see this growth engine in action.”

Elevating martech to the C-suite

McKinsey believes that AI presents an opportunity to redefine the martech space and challenge CMOs to deliver campaigns cheaper, faster and better.

This requires companies to take martech from a collection of separate tools to a business asset that is controlled by the C-suite and implemented by them into long-term strategies.

If utilised to its full advantage it can drive personalisation and create a competitive edge for companies.

The report outlines that the C-suite needs to be martech-fluent - understanding the implications of the technology in an AI-driven future and ensuring every investment is tied to ROI.

It also says that organisations must continually invest in talent and invest in digital-first strategies - encouraging collaboration between marketing, product, data science and technology teams.

Barriers to martech survival

The report outlines several fundamental areas that are slowing down the martech revival:

1. A Chief Experience Officer (CXO) should lead the revival

A revenue-accountable CXO should be put in place to measure total cost of ownership and link investments in the technology directly to the company’s business outcomes.

2. Martech needs to be simplifies

McKinsey reports that martech tools have grown in complexity - 47% of martech decision-makers reported stack complexity and system and data integration challenges as key blockers that prevent the tools’ value.

3. Spending on martech should be scrutinised

Over the next three to five years, 25% of CMOs say they will increase their martech spend. Looking further into the future, 80% say they will in the next five years. McKinsey says that this investment will be wasted if it adds a layer of complexity instead of focusing on AI-powered agents.

4. Organisations need to enhance their martech maturity 

Only 35% of survey respondents reported their firm’s martech to have transformational capabilities - the ability to execute advanced omnichannel personalisation, integrated data platforms and automated workflows.

5. Training and teams’ capabilities need to be prioritised

Over a third of martech buyers report under-skilled teams as a key reason for underperformance, with many organisations still underinvesting in training.

Other areas slowing down martech’srevival include nearly half of decision-makers saying stack complexity is a key blocker for them getting value from its tech tools; and foundational fixes need to be made within data, governance, integration and AI risks.

Kelsey Robinson, Senior Partner at McKinsey, says: “We need to apply the same discipline and focus that long guided media investment to martech.

“By connecting spend directly to outcomes like revenue growth, conversion and engagement, organisations can unlock far greater value.”