McKinsey & Company: AI Could Boost Martech Growth

Marketing technology was introduced in 2011 with the promise to enable real-time personalisation and automate complex workflows. The tools were designed to provide visibility into customer behaviour.

According to McKinsey's Rewiring Martech: From cost centre to growth engine report, much of the spend on martech fails to deliver on expectations. The report attributes this to fragmented stacks, data silos and an inability to measure ROI.

McKinsey collated views from 233 senior marketing and technology leaders. The leaders provided insights on how organisations view and use martech to drive business growth.

Not one of the Chief Marketing Officers interviewed could quantify the ROI of their martech investment. This leaves the projected spend of US$215bn at risk of disappearing into a black hole.

AI could transform martech investment

McKinsey believes AI could transform the technology from a cost centre into a growth engine. This transformation depends on elevating agentic AI to the C-suite.

The company says this revival is a step towards realising AI's potential to double activation speeds. It could also 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."

Campaign execution needs C-suite control

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

Companies need to change martech from a collection of separate tools to a business asset, while the C-suite should implement it into long-term strategies. If utilised to its full advantage it can create personalisation and could give a competitive edge to company campaign strategies.

According to the report, the C-suite needs to be martech-fluent to understand the implications of the technology in an AI-driven future, as well as ensuring every investment is tied to ROI.

The report says organisations must continually invest in talent, digital-first strategies and encourage collaboration between marketing, product, data science and technology teams.

Five barriers to martech survival

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

A revenue-accountable Chief Experience Officer should be put in place. This role would measure total cost of ownership and link investments in the technology directly to business outcomes.

According to McKinsey, martech tools have grown in complexity. The report found 47% of martech decision-makers reported stack complexity and system and data integration challenges as key blockers that prevent the tools' value.

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 this investment will be wasted if it adds a layer of complexity. The focus should be on AI-powered agents instead.

Brand maturity remains low

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

Over a third of martech buyers report under-skilled teams as a key reason for underperformance. Many organisations still underinvest in training.

Other areas slowing down martech's revival include nearly half of decision-makers saying stack complexity is a key blocker. Foundational fixes need to be made within data, governance, integration and AI risks.

Kelsey Robinson, Senior Partner at McKinsey, notes: "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."