What Hubspot’s IPO Announcement Says About the Future of Marketing

Yesterday, the Wall Street Journal reported marketing software company Hubspot has started IPO discussions with Morgan Stanley after achieving 50% year-over-year revenue growth in 2013 to $77 million. As most already know, Hubspot’s central offering is a suite of software that helps companies manage their inbound marketing, a strategy focused on creating quality content to pull people toward your company’s website and products.

At its core, inbound marketing is a structured marriage between content marketing and analytics, centered around an owned content hub: your brand’s website. Hubspot’s own value creation in this space has come from providing agencies and brands — primarily SMBs — with a system of record for website-based marketing content to drive business leads. Although Hubspot and similar SaaS vendors like Marketo are often designated “marketing automation” software, their true focus is about influencing the customer lifecycle with content, then tracking their progress from prospect to customer.

To me, Hubspot’s recent success — and their decision to now go public — highlights three important trends currently happening in marketing, ones that will have significant influence on what inbound becomes.

1. The marketing funnel now extends well beyond the website. Originally, inbound was a marketing system with the website (and its blog) at the center. But several of Hubspot’s recent product releases — in particular social inbox — tie into a broader theme that social (largely due to mobile) has massively broadened the outer reaches of the marketing funnel. Buyers don’t contact brands until the majority of their purchasing decision process is already complete, and 78% of consumer purchasing decisions are influenced by social. Social platforms are the first place buyers learn about and interact with brands, and its not an owned part of the funnel. The shape and size of the content marketing landscape is changing, and it’s driven by social.

2. Content is a business barrier to entry in web, but not mobile. A major part of Hubspot’s success between 2009 and 2013 came from the simple fact that they produced high quality marketing content at higher volume than their competitors, creating a sustained competitive ranking advantage in SEO. For web traffic, content becomes a true competitive barrier to entry at scale, requiring new entrants to invest major resources in building out their own content ecosystem to compete for a favorable Google ranking to help them get discovered. Interestingly however, this doesn’t hold true in the same way for mobile, where native distribution allows brands to leapfrog browser discovery and compete on a more level playing field for attention and app store share.

3. Value creation in inbound is driven by content creation, management and measurement. Five years ago, practicing content marketing by itself was, in some respects, a competitive advantage. Fast forward and content marketing is now the de facto standard in digital. But with digital content volume growing exponentially, content creation has clearly become marketing departments’ biggest constraint, while organized, central management of content pieces and digital assets has become the largest source of workflow inefficiency for teams. Historically, inbound has organized and measured content at the page level: landing pages, blog posts, etc., but the social post creates a much greater degree of fragmentation around how content needs to be created, customized, tracked and reported on. Hubspot’s recently released COS suggests early recognition on Hubspot’s part that marketer’s needs are changing, and it will be interesting to see how the definition and architecture of inbound evolves for a post-IPO Hubspot.

Hubspot’s IPO is a clear win not only for their team’s excellent work, but the content marketing ecosystem as a whole. It further reinforces that content marketing has crossed over into the mainstream, from small businesses all the way up the enterprise. Finally, the IPO is a snapshot of a marketing world undergoing a large-scale transition from website-centric, to distributed across mobile and social. The marketing technology landscape is turning over, and content is driving the change. Hubspot played a meaningful role in building the foundation of modern content marketing over the last five years; it remains to be seen how their contribution will evolve over the next five.