by Scott Brinker and Frans Riemersma Sponsored by: Authors Scott Brinkeris the editor of the chiefmartec blog, covering theintersection of marketing and technology for over 15 years. He servesas the vice president of platform ecosystem at HubSpot. He is alsothe author of the best-selling bookHacking Marketingand co-authorofThe New Automation Mindset. He jointly produces the MartechMapmarketing technology landscape with Frans. Frans Riemersmafounded MartechTribe, a company specializing inMartech research and benchmarking. With 30+ years in consultancy,he combines qualitative expertise with quantitative Martech dataon stacks, vendors, and requirements in a proprietary Martech DataWarehouse. He is the author ofA Small Book on Customer Technologyand co-author ofMarketing Tech Monitor,Customer Technology SectorTrends, andHello Firstname. In collaboration with Scott, he also co-produces the MartechMap, an overview of the marketing technologylandscape. Sponsors This report is sponsored by GrowthLoop, Hightouch, MetaRouter,Progress, and SAS. Content Introduction 1 1. How AI is Reshaping the Marketing andMartech Environment6 GenAI Boosts Martech Growth in 5 SegmentsThe First 3 Segments: Indie Tools, Incumbent and ChallengerPlatformsThe 4th Segment: Instant SoftwareThe 5th Segment: Service-as-a-Software7101725 292. Foundations for an AI Strategy The Evolving Universal Data LayerThe (Underdeveloped) Universal Content LayerAPI Composability as AI Agent Building Blocks293336 3. How Marketers Are Using GenAI Today43 Popular Martech GenAI Use CasesNew AI Tools vs. AI Embedded in Current Martech ToolsFrequency of GenAI Tool Usage by Use CaseGenerative AI Policy and Impact on UsageDemographics of Survey Respondents4449545962 Five Perspectives on Martech for 202564 GrowthLoop: End-to-End Marketing on Your Data Cloud with AIHightouch: Why the Next Wave Beyond CDPs is AI DecisioningMetarouter: A CDP’s Best Friend: “Shifting Left” Data QualityProgress: Lessons of Composability for Marketing OperationsSAS: Filling the Gaps in Governance for Generative AI64748693101 Introduction We are absolutely at a place where, if AI developmentcompletely stopped, we would still have 5-10 yearsof rapid change absorbing the capabilities of currentmodels and integrating them into organizations andsocial systems. I don’t think development is going to stop, though. –Ethan Mollick, The Wharton School Is AI overhyped? Yes. Is AI a massive disruptor? Also yes. The logic to that seeming paradox isAmara’s Law: we tend tooverestimate the effect of a technology in the short run and underestimateits effect in the long run. Pets.com and Webvan, epically failed dot-com businesses from the late1990’s, overestimated e-commerce in the short run. At the peak of thedot-com boom in 1999, worldwide e-commerce transactions totaled~$100 billion, a mere 0.3% of the world’s GDP. But by the end of 2018, global ecommerce totaled ~$25.6 trillion1— B2Band B2C combined — a whopping 29.7% of the ~$86.2 trillion2global GDP. Amazon went from being a $5 billion company in 2001, its future deeplydiscounted by Wall Street, to now being the 5th largest company in theworld with a market cap of $1.8 trillion. How many of you, back in 1999 expected Amazon to reach that scale?Did you invest? Did you hold on to your investment through the dot-comcrash? And if so, are you reading this report from your boat with a shoddyconnection in the tropics, three months after we published it?3 That’s Amara’s Law. Amara’s Law has repeated itself time and again throughout the historyof technology. Grand expectations when a new innovation first appears,quickly hyped to an extreme. Disappointment when those expectationsfail to materialize quickly. But steadily the technology grows, improves,and is adopted in more and more applications. Until one day, years later,its scale and impact far exceeds the grandest expectations that wehoped for at its beginning. If you were to visualize Amara’s Law on a graph, it would look a little like— or a lot alike — Gartner’s famous Hype Cycle: The Hype Cycle The thing to remember about the Hype Cycle, of course, is that it’s ameasure ofhype— not a measure of the underlying technology. Whilethe hype bobs wildly up and down, the technology behind it steadilymarches forward. The Hype Cycle and Technology Development The only difference with Amara’s Law is that “Plateau of Productivity”isn’t the summit. It’s a stop along the way, followed by another climbupwards — often with its own squiggly hype curve — followed byanother, and another, and so on. That ascent over decades took usfrom the 3-ton mainframes of the 1960’s to having 10 million times morecomputing power in the palm of your hand with today’s mobile phones. As you’ve no doubt surmised, this is the journey we’re on with AI. But there are a couple of key differences this time. First, the rate of change is much, much faster. In previous reports,we described this as the compressi