The global digital marketing software market size was valued at USD 49.43 billion in 2020 and is expected to expand at a compound annual growth rate (CAGR) of 18.2% from 2021 to 2028. The growth of the market can be attributed to the growing preference among individuals for mobile devices to obtain information on the go and subsequently the continued transition from desktop PCs to smartphones. The growth can also be attributed to the proliferation of smartphones, which has triggered the consumption of digital media and is prompting marketers to push more online ads on social media and other digital platforms for a larger exposure and more visibility.
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The outbreak of the COVID-19 pandemic, which triggered a paradigm shift in the way individuals use different apps, has had a positive impact on the market growth. As such, app developers have been particularly reviewing their advertising set-ups and improving their capabilities to push for more accountability and transparency with partners in the wake of the outbreak of the pandemic and the subsequent economic downturn. For instance, in September 2020, HubSpot, Inc. of the U.S. announced the introduction of new updates and features to its platforms for helping businesses in meeting the challenges posed by the outbreak of the pandemic. The additional features include enterprise sales CRM, expanded personalization functionality, and scalable contacts pricing models.
The continued shift from wired communication to wireless communication and subsequently the growing adoption of wireless communication devices, which is expected to trigger the consumption of digital media, also bodes well for the growth of the market over the forecast period. Advertising companies are increasingly following digital marketing channels and providing publishers with advanced advertising capabilities. As the smartphone penetration rate continues to increase, advertisers are looking forward to collaborating with social media digital marketing platforms for promotional activities and are eventually switching from conventional marketing channels to digital marketing channels.
The increasing penetration rate of smartphones and the continued rollout of high-speed mobile networks are encouraging advertisers to opt for mobile advertising. Retailers are particularly emphasizing the adoption of location-based advertising services and providing shoppers with personalized updates on products, offers, and discounts, thereby driving the demand for digital marketing significantly. Location-based advertising envisages visitors automatically receiving messages on their mobile devices notifying them about various discounts and offers upon entering malls or shopping centers. In other words, the growing usage of smartphones has opened new opportunities for marketers to engage and strengthen their relationships with customers.
The increasing internet penetration rate is encouraging marketers to adopt digital marketing solutions to expand their geographical footprint and subsequently strengthen their customer base. Some of the latest digital marketing tools include interactive chatbots, a computer program based on Machine Learning (ML)and Artificial Intelligence (AI) for simulating human conversation; tools based on AI and blockchain technologies, which can help marketers in tracking their target customers and increasing customer engagement; and influencer marketing, which envisages marketers choosing an influencer to share product experiences through social media.
Continued digitalization has revolutionized the way organizations are operating and executing their business strategies. Digital marketing software has particularly provided companies with an effective tool to connect with various stakeholders in the market through multiple channels, including email, instant messaging, and social networking. The unabated rollout of high-speed data networks and the growing popularity of social media are encouraging companies to spend aggressively on digital marketing, thereby driving the adoption of digital marketing software. Companies can leverage digital marketing software to enhance customer engagement through multiple channels, such as instant messaging, social networking, and mobile apps, among others. Digital marketing software also allows companies to integrate various digital channels and analyze advertising campaigns in real time.
However, concerns over data security and privacy protection are expected to restrain the growth of the market. Malware injections, use of insecure Application Programming Interfaces (APIs), phishing attacks, and social engineering attacks are some of the major issues surrounding cloud-based digital marketing software. As enterprises have a large data repository of business and customer data, any of the above security issues could lead to events, such as data theft and identity theft, and culminate into major losses.
The CRM software segment accounted for the largest revenue share of over 18% in 2020.CRM software provides various benefits, such as the ability to manage customer interactions at optimum levels, and the capability to handle large volumes of business and client information. The strong emphasis enterprises are putting on automating processes, such as sales, customer retention, and customer acquisition, is further expected to drive the growth of the segment over the forecast period. The continued integration of CRM suites with neural networks to allow companies to arrange unstructured contact data in the form of discussions, connections, and potential customers is also expected to drive the growth of the segment.
The growing usage of social media platforms, such as Instagram, Facebook, Snapchat, Twitter, and Pinterest, by the incumbents of the e-commerce industry to promote products is a major factor driving the growth of the social media segment. The growing popularity of social media has particularly transformed the channels organizations prefer using to build and strengthen relationships with customers. The continued integration of the latest technologies, such as big data analytics and AI, into social media platforms is also driving the growth of the segment. For instance, Chatbots are being used aggressively to collect, analyze, and visualize customer-related data, such as responses to particular products and services.
The professional services segment accounted for the largest market share of over 60% in 2020. The growing need for skilled and accomplished experts holding expertise in installing, managing, and troubleshooting software is anticipated to drive the demand for professional services. Professional services allow organizations to ensure better utilization of resources, reduce administrative expenses, and augment profitability. Professional services also help organizations in improving resource management by enhancing efficiency through increased collaboration, better planning, and integrated knowledge management, thereby driving the growth of the professional services segment.
The managed services segment is anticipated to emerge as the fastest-growing segment over the forecast period. The growth of the managed services segment can be attributed to the additional features, such as remote monitoring and cost-effective management of IT infrastructure through subscription-based pricing models, which are offered as part of managed services. Moreover, as the adoption of IoT-based solutions continues to gain momentum, retailers are increasingly getting concerned over the security of data and protection of privacy and are hence opting for managed services to maintain their expanding databases. The growing need for cloud-based managed services and the increasing dependence of organizations on IT assets to enhance their business productivity is also emerging as a major factor contributing to the growth of the segment.
The cloud segment accounted for the largest revenue share of over 55% in 2020. Cloud-based deployment of digital marketing software adds to the flexibility and allows enterprises to customize products and services on a large scale. Cloud-based deployment also helps in improving the cost structures and setting up a control center to coordinate, monitor, and arrange various components of the digital marketing campaign. Organizations can also leverage cloud deployment to combine dedicated hosting infrastructure with virtual cloud servers. Eventually, cloud-based deployment can help organizations in reducing the costs associated with the installation of digital marketing software and the overall IT infrastructure significantly.
The on-premise segment is anticipated to register a considerable growth rate over the forecast period. On-premise deployment does not require an internet connection and also facilitates easy customization of the software according to the business processes of the clients. Moreover, on-premise software can be installed directly on the end users’ computers or servers, thereby allowing them to retain the design data on their systems. End users operating in highly regulated industries and industry verticals, such as BFSI and healthcare, are more likely to opt for on-premise deployment, which is emerging as a major factor driving the growth of the on-premise segment.
The large enterprises segment led the digital marketing software market with a revenue share of over 55% in 2020. Large enterprises are typically adopting digital marketing software for efficiently managing the vast databases of customers. Large enterprises are also leveraging digital marketing software to manage various information resources, such as websites, social media platforms, and emails. Large enterprises operating in the automotive, healthcare, and hospitality industries are particularly adopting marketing automation software for customer lifecycle management, and lead generation management, among other activities.
The small and medium enterprises (SMEs) segment is expected to register a significant growth rate over the forecast period. The growth can be attributed to the rising number of SMEs in countries, such as China, India, and Singapore, among others. Initiatives being pursued by various governments to aid SMEs in adopting digital marketing software also bode well for the growth of the segment over the forecast period. SMEs often lack the financial resources required to launch expensive and mass media-driven advertising campaigns. Hence, SMEs are aggressively adopting cost-effective online advertising strategies to remain competitive in the rapidly evolving business environment and to challenge their larger peers in the market.
The BFSI segment accounted for the largest market share of over 20% in 2020. CRM software can potentially provide the incumbents of the BFSI industry with a single, unified view of every individual customer allow them to deliver personalized services for account opening and loan approvals, among others. Furthermore, marketing automation also allows brands to maintain an omnichannel presence by detecting the most favored channels of a customer and sending personalized messages only to those channels. Retail banking and financial institutions are aggressively adopting location-based advertising for enhancing consumer engagement.
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On the other hand, media and entertainment companies are also focusing on developing online advertising strategies as part of their efforts to cash in on the proliferation of smartphones and the continued rollout of high-speed data networks. Media and entertainment companies, such as Netflix, Inc.; Star India; and The Walt Disney Company, are emphasizing the use of social media advertising to acquaint the people with their latest movies and shows. Furthermore, incumbents of the gaming industry, such as Rovio Entertainment Corporation; Activision Publishing, Inc.; and Electronic Arts Inc., are also aggressively adopting social media and video sharing platforms for targeting potential customers. For instance, in February 2019, Epic Games, Inc. signed a contract with YouTube for promoting Epic Games, Inc.'s online multiplayer video game Fortnite on YouTube. These are some of the factors that are expected to drive the growth of the media & entertainment segment over the forecast period.
North America dominated the market for digital marketing software in 2020 with a revenue share of over 40%. North America is turning out to be an important regional market for companies and brands to find a broader target audience, promote their content, and market their products and services online. The growing preference of consumers in North America for online shopping is also opening opportunities for advertisers to market their products online, thereby driving the growth of the regional market. Various associations and organizations in North America, such as the Cloud Native Computing Foundation and the National Cloud Technologists Association, are promoting the use of cloud computing for the deployment of various high-tech solutions, such as CRM, content management, and marketing automation, on cloud platforms.
Asia Pacific is expected to register significant growth over the forecast period. The region is characterized by a high population density, proliferation of smartphones, and continued rollout of high-speed data networks. Moreover, a large proportion of smartphone users in the region is accessing social media through their mobile devices. Hence, the region offers immense opportunities for online advertising. The ongoing promotion of digital marketing software in the Asia Pacific region through events, such as Digital Marking Summit Asia, is expected to contribute to the growth of the Asia Pacific regional market.
There are several companies active in the market, including both established players with worldwide operations and regional and local market players catering to a limited number of clients. Hence, the market can be described as a highly fragmented market characterized by intense competitive rivalry. In response to the intensifying competition, some of the market players are upgrading their existing products and launching new products. For instance, in September 2020, HubSpot, Inc. announced the introduction of new updates and features to its platforms to enable businesses to tackle the challenges posed by the outbreak of the COVID-19 pandemic. The new features include enterprise sales CRM, expanded personalization functionality, and scalable contacts pricing models.
Market incumbents are tweaking their business strategies in line with the proliferation of smartphones and the growing preference for personalized advertising. They are also pursuing various initiatives, such as strategic partnerships and acquisitions, to remain competitive in the market. For instance, in October 2020, SAP SE announced the launch of its SAP Customer Data Platform, which is designed to allow enterprises to redefine the way experiences are delivered across their commerce, marketing, and sales and service solutions. Some of the prominent players operating in the global digital marketing software market are:
2.Hewlett Packard Enterprise Company
4.International Business Machines Corporation
10.SAS Institute, Inc.
12.Hewlett Packard Enterprise Company
14.International Business Machines Corporation
20.SAS Institute, Inc.