In the age of Amazon, which now captures nearly half of consumers' first product searches, it's no wonder that digital businesses seeking to reach customers have been investing heavily in marketing technology.
The rise of new data storage and analytics technologies have contributed to making marketing technology one of the fastest-growing segments in the tech space. But the market has also become flooded with competitors and products: According to VentureBeat, there has been year-on-year triple-digit growth in the number of martech solutions since 2013. There are about 2,000 companies competing in the martech market, offering more than 2,500 products.
To put it simply, there's tremendous confusion in the space, and it may be leading investors to be a bit more selective in the plays they back. VentureBeat says that investors poured $47 billion in funding into 487 organizations in the marketing technology industry in 2014, but that slipped to $17 billion across 313 businesses in 2015.
Show me, don't promise me
"Everyone's moved to Missouri — the 'Show Me' state," says Joelle Kaufman, head of Marketing and Partnerships at BloomReach, a startup built around a personalized discovery platform designed to help their customers make their content and products more discoverable with the help of natural language processing and machine learning. "All the promises sound the same."
BloomReach, founded in 2008 by former Google scientist Ashutosh Garg and Silicon Valley entrepreneur Raj De Datta, has attempted to buck that trend with a capital-conservative business model and strong growth. Even with martech investors becoming more selective, BloomReach Friday announced $56 million in Series D funding from venture capital firms and software-as-a-service (SaaS) companies, including Bain Capital Ventures, Battery Ventures, Lightspeed Ventures, New Enterprise Associates, Salesforce Ventures and a sovereign wealth fund. Marcus Ryu, CEO and co-founder of SaaS provider Guidewire Software, also joined BloomReach's board.
Ryu on Friday praised BloomReach for its strategic clarity and technology lead.
"Equally important for me is confidence in the customer-focused culture and long-term orientation of the company," he says. "I see many of the same values in Raj and his leadership team that were important to my own entrepreneurial journey."
"Ecommerce is a $3.5 trillion market, and marketing technology is a big force driving that — with personalization at the core," Neeraj Agrawal, general partner at Battery Ventures and a longtime marketing tech investor, added in a statement Friday. "And we are just in the fourth inning of the marketing tech revolution. I am impressed with BloomReach's growth and am excited to partner with its management team as the company continues to innovate. In addition, after working for several years with Marcus Ryu at Guidewire, I am thrilled to see him join the board of BloomReach and believe his impact will be significant."
Kaufman notes that investors are responding to BloomReach's fundamentals, especially its strong growth rate and customer retention.
"We're selling into a big market that generates a lot of GDP," she says. "We have good fundamentals and we've always run the company very responsibly from a cash perspective. And we customers that have been committed for years."
What BloomReach does
BloomReach focuses on a single personalization platform that includes its applications for organic search and personalized site search and navigation, along with marketing and merchandizing analytics. It breaks its products down into two families:
- BloomReach Commerce. Commerce includes BloomReach's Organic Search and SNAP (site search, navigation and personalization) applications. BloomReach says it drives 10 to 40 percent lift by algorithmically optimizing site experience.
- BloomReach Compass. Compass's role-specific analytics provide machine intelligence insights, KPI management and action-tracking for marketers and merchandizers. BloomReach says it leads to an average $8,000 in monthly revenue for each action taken.
Taken together, the BloomReach's platform uses a combination of Web-wide and social data, natural language processing and machine learning to provide dynamic categories and results that are unique and individual to users.
For instance, a user might search for "green floral dresses" and dynamically receive a set of results of green dresses with floral prints, even though the retailer's website was not set up with those categories. In addition, past transaction results might indicate that a user has a preference for sleeveless dresses, allowing the system to present sleeveless green dresses with floral prints as the top results.
BloomReach's capabilities in cross-channel optimization are also a significant draw. Shoppers are increasingly turning to the mobile channel for research and comparison shopping as part of the in-store experience. But mobile tends not to be a direct channel. Instead, shoppers frequently complete transactions at home on a PC. Cross-channel optimization identifies anonymous, individual user profiles and determines if customers are likely the same person using multiple devices without customer authentication.
BloomReach's BloomReach Mobile solution can then use these insights to create dynamic categories based on the shopper's on-site web and mobile activity, in addition to presenting the most relevant products and search suggestions.
"At PacSun, we understand that our customers are not only diverse in their affinities for different styles, brands and preferences, but also vary significantly in the ways the connect with our digital channels," Nathan Liu, vice president for eCommerce at BloomReach customer PacSun, said in a statement Friday. "We have thousands of products and 2 million pages on the PacSun website, and it can be a challenge for shoppers to find exactly what they want. With all of the technology options available, it makes better business sense to take a platform approach that works across data silos. We turned to BloomReach's Personalization Platform to help connect each and every shopper with the perfect products."
BloomReach plans to use the new round of funding to continue to strengthen its big data technology and scale its business globally for all digital businesses. It currently has more than 250 employees and plans to grow personnel worldwide.
"It's one of the most significant rounds of funding in the personalization space ever," Kaufman says. "Our intention is to continue to run the company conservatively."
This story, "Marketing tech firm wins $56 million in VC funding" was originally published by CIO.