TAM, That’s A Big Number!
In the last few weeks, I’ve had a few conversations about my recent report on how money is flowing into design: The Design Industry, 2021. Forrester’s estimate: Current spending is $162 billion — but some have told me our estimate is too conservative.
Let’s look at one part of the report: $35 billion in current spend on design tech. That includes companies like Qualtrics and relevant Adobe offerings as well as 19 other categories.
But Adobe says its total addressable market (TAM) for creative cloud will be $31 billion in 2022.
And Qualtrics CEO Zig Serafin tweeted last month that Qualtrics’ TAM is $60 billion.
Those are complementary tools and total $91 billion. And, of course, as vendors in the market, they’re inclined to be as optimistic as possible.
But is $35 billion too low? Well, $35 billion reflects current spending — it doesn’t factor in the future opportunity — whereas Adobe’s and Qualtrics’ numbers include the potential spend, which means they’re in part about the future. That said, the future could get here quickly: Qualtrics grew 33% last quarter, and Adobe’s Creative Cloud grew 31%. Private companies have shared even higher growth rates with me.
On the other side of the debate, there are also reasonable arguments for why those and the other technologies we included could be considered part of other processes than design in a company — for example, enabling e-commerce or software development.
On the whole, though, the feedback I’ve been getting suggests that readers are finding that it’s a helpful distillation of the key trends that show design will continue to grow fast:
- More digital means more designers.
- New B2C and B2B business models mean design and all its activities increase in importance.
- Higher expectations among users mean more businesses must invest more in design.
- Tech trends enable more design more efficiently.
- AI, 3D, and XR will become more important and require design help.
- Many types of executives now seek out and pay for design expertise.
It’s a recipe for a pretty big market of software, employees, and services with a massive opportunity in front of all of them. Should be fun!