This analysis includes:

• A brief history of the CMS landscape
• Tailwinds driving CMS innovation
• European origins of headless CMS
• BCV’s predictions for what’s next

In August 1991, computer scientist Tim Berners-Lee created the very first website, a simple page that displayed content on, fittingly, how to build a website. He unleashed a revolution: today, there are over one billion websites globally and almost two hundred websites are created every minute. As websites have exploded, so too has digital content. Text, imagery, videos, and other forms of digital content have proliferated and grown in sophistication over the past three decades, catalyzing multiple waves of innovation in the underlying content management systems (CMS) that organize the internet’s content.

We at BCV are excited about the latest incarnation of CMS technology defined by MACH architecture (Microservices based, API-first, Cloud-native SaaS, and Headless). Colloquially, the next generation of CMS is still referred to as “headless.” Practically, it is much more than that: not only is it architected to separate website front and backends (hence “headless”), it also introduces novel data storage techniques and workflow tools that dramatically improve a company’s ability to deliver great digital experiences. “Composable” is a more appropriate label for the emerging generation of CMSs than headless, capturing the breadth of flexibility that they enable.

We believe the emerging generation of CMSs built upon MACH principles will not only bring a superior experience to their users, but will also redefine what it means to be a CMS by unlocking new capabilities, such as hyper-personalization. In this piece, we will share a brief history of the CMS market, the tailwinds driving growth in the space today, and our outlook for the future. We at BCV are excited to back the next generation of founders disrupting content management and personalization tools, building upon our history supporting important companies like Optimizely and Bloomreach.

The Evolution of CMS

Starting with the creation of the traditional monolith CMS in the 1990s (“monolith” referring to coupling of the frontend and backend of the CMS) and proceeding with the rise of headless CMS in the past decade, the fundamental role of the CMS has been to store and render content online. Headless CMS platforms, which decouple frontend presentation from backend content management, allow businesses to store, manage, deploy, and reuse content across any end interface. Traditional CMSs were built with a static website in mind; they were not designed to publish and reuse dynamic content across web, mobile, and other devices. Omnichannel publishing and increased content velocity have driven businesses to seek out more modern web development stacks.

While first-generation CMS platforms were primarily developer tools, newer platforms have differentiated themselves by targeting various end user personas, including both technical users and business users (often marketers, but also designers), to allow for increased collaboration and efficiency in publishing content.

Four major waves have defined the evolution of CMSs:

Wave 1: Monolith CMS

In the early days of the web, monolith CMSs emerged to manage and publish content, an advancement relative to static website builders that stored content in HTML files. These platforms provided an all-in-one solution that combined frontend user experience and backend administration. Monolith CMS pioneers are WordPress (an open source CMS released in 2003 that now underpins an astounding 42% of all websites), Drupal, and Joomla.

Wave 2: Digital Experience Platform (DXP)

As the mobile web developed and enterprises placed larger emphasis on digital experiences for deeper customer engagement, DXPs arose as full-stack enterprise suites combining multiple products, such as CMS, Digital Asset Management (DAM), Customer Data Platforms (CDP), and Business Intelligence (BI). DXPs’ value proposition was to leverage customer data to deliver omnichannel marketing and personalized, content-driven experiences. Leaders of the DXP wave include Adobe Experience Manager, Optimizely, Acquia, and more.

Wave 3: Headless CMS

In the past decade, omnichannel demands, content proliferation, and publication frequency revealed weaknesses in existing solutions. As monolith CMSs struggled to provide the speed and agility valued by modern companies, and DXPs catered to enterprises with complex needs, headless CMS platforms like Contentful and Contentstack emerged to provide a superior technology experience to a broader array of customers.

Initially, headless CMS players found product-market fit with SMBs who were nimble enough to adopt this new technology. Gradually, enterprises became interested in the headless trend too. By migrating from monolith or DXP to a headless approach, enterprises could choose best-in-breed point solutions while maintaining an agile, streamlined process with shorter implementation times and lower costs. The adoption of headless CMS accelerated as companies of all sizes realized the importance of delivering high-quality digital experiences across multiple endpoints. Headless CMSs have steadily gained share as they have displaced monolith CMSs and DXPs.

Wave 4: Modern CMS (Headless + Composable)

As Contentful and Contentstack gained traction and began serving enterprise customers, they became proficient at supporting complex organizations with a fully-featured product and pricing model that reflected their upmarket positioning. Other segments of the market, especially those too modern for legacy solutions and too small to pay enterprise price points, felt underserved by their CMS alternatives. Somewhat counterintuitively, however, the fourth CMS wave is not characterized by price disruption or purpose-built platforms for SMBs.

The modern CMS is defined by a focus on product usability and flexibility. Emerging players cater less to size segments and more to end user personas – developers, marketers, designers – who live in the platforms day-to-day. Storyblok, for instance, has introduced an industry leading, intuitive visual editor, empowering marketers to edit websites without consuming developer resources. Similarly, Builder.io enables drag-and-drop functionality on a permissioned basis so that business users can modify components as needed. Sanity espouses a “content as data” framework that provides a single source of truth for every data element, allowing maximum flexibility from a development standpoint. Open-source platforms like Strapi and Payload allow for unconstrained developer customization as well. The idea of composability – making web design a true blank canvas – is the throughline of the modern CMS players.  

We believe modern CMS players are well positioned to gain share as they compete against first-gen headless CMSs and DXPs. Meanwhile, complementary innovation in other parts of the web development stack is fueling the momentum of headless CMSs. The popularity of Vercel, a platform for frontend developers that allows for efficient, developer-friendly deployment and hosting, and Commercetools, which empowers companies to create highly customizable online commerce experiences, reinforces the benefits of migrating to a modern architecture.

Why Now?

Taking a step back, headless CMS is still in the early stages of its adoption cycle, representing only 20-35% of the CMS market today. There is significant runway to penetrate its most directly applicable industries, namely e-commerce, media, and entertainment, before expanding in slower-to-adopt verticals like healthcare and government.

While headless CMSs have steadily gained traction over the past decade, we believe that several trends will fuel growth in the coming years. Some of the tailwinds driving growth in the overall headless CMS space include:

• Proliferation of content, channels, and data: The same factors that led to the initial creation of headless CMS – growth of content, channels, and data – are intensifying and contributing to the inflection in the space. Content has become a core pillar of corporate marketing strategy. A 2022 SEMRush survey of marketing agencies and businesses found that 84% of organizations have a content marketing strategy, while Technavio expects global content marketing to grow 16% annually through 2025. As content has grown, so have delivery channels. Content has expanded beyond websites to apps, a growing variety of social media platforms, email marketing efforts, SMS outreach, and more.
  
  As companies have multiplied their customer touchpoints, they have also improved their data tooling, and in doing so are collecting larger quantities of detailed customer data. Companies’ ever-growing customer datasets can enable more targeted outreach and content efforts, but are challenging to manage and leverage. In the face of this multi-vector growth, companies are hitting the limitations of monolithic platforms and legacy CMS tools, which are not agile in their ability to incorporate new channels or data integrations, and can slow when content scales. Companies will increasingly explore microservices, and headless CMS tools specifically, to meet the demands of modern content, channel, and data expansion.

• Rising complexity & personalization of digital experiences: Simple, static content is increasingly a relic of the past, as companies shift towards enriching their websites and digital channels with varied, dynamic content that is timely and relevant to a viewer. On the complexity front, VR and interactive elements, such as virtual showrooms and product-related quizzes, are gaining traction on websites. In terms of personalization, companies increasingly leverage demographic and behavioral data to tailor digital experiences to visitors. For instance, if a potential customer in New York visits a page that displays small-batch pretzels, a retailer might display text and page suggestions for small-batch popcorn, or might choose to target that individual with emails or social media ads about artisan snacks crafted locally.
  
  Content teams aspire to convert and grow customers through such rich, memorable content experiences, but they are beyond the capabilities of many monolithic tools. In contrast, personalization is a core capability of headless CMS tools. Nearly every user we spoke with cited personalization as a selling point for headless CMS – for instance, the marketing director of a public company mentioned that he grew conversion rates from 4% to 20% by leveraging personalization capabilities. As companies feel pressure to compete in terms of quality, diversity, and relevance of content, they will increasingly reach for headless CMS infrastructure.

• Heightened importance of website speed: Website speed has become more important than ever, as companies seek to optimize SEO and meet customer expectations for digital performance. Google’s SEO algorithm makes load times an important factor for search rankings. As a result, companies using headless CMS can benefit from higher prominence in search, as decoupled front and backends allow for lower storage bandwidth and faster webpage load times across channels.
  
  Further, modern website visitors have become accustomed to seamless digital experiences and near-instant load times, so lags in website performance can significantly decrease visitor retention and ultimately result in lost revenue. Based on a study conducted by Google, a website’s bounce rate – or the percentage of users who leave the site after viewing only a single page – increases by 32% if page load time increases from 1 to 3 seconds, and increases 123% if load time increases to 10 seconds. Likewise, a Deloitte study found that 0.1s improvement in load time improves retail site conversion rates by 8%, and order values by 9%.
  
  Companies recognize returns to digital performance yet struggle to maintain high performance as content and products proliferate. Pressure to meet customer performance expectations will drive companies to consider shifting towards headless CMS solutions, which support faster load times by decoupling content from product and other website inputs.

• Developer cost & scarcity: Companies face challenges to hire the technological talent required to meet the growing demands of digital content.  An IDC study estimated that the global shortage of developers will increase to four million by 2025. Where they are available, skilled developers are expensive, with the median US software developer salary surpassing $120K in 2021. Within companies, marketing and content teams anecdotally struggle to receive adequate developer resourcing, as technical teams focus on product development, and marketing and content leaders are hesitant to allocate their own budgets towards devoted technical employees. Companies must therefore scale content quality, complexity, and frequency at a faster rate than they can scale developer support for content teams. This supply and demand mismatch for technical resources acts as a demand driver for headless CMS tools, which empower business users to update digital content autonomously. Particularly as macroeconomic conditions worsen and companies face pressure to scale at lower costs, leveraging headless CMS in order to use technical talent more efficiently is a compelling value proposition.

Modern headless CMS tools are well positioned to gain share in the CMS market as a result of their:

• Shorter implementation cycles: Pervasive developer resource bottlenecks mean that companies will increasingly value speed and ease of implementation when selecting a CMS solution. While early headless CMS tools can be implemented more efficiently than DXPs, they are still relatively complex solutions that require significant time and resources to deploy. Seeking to stand up a headless tool quickly, with minimal expense of developer time, companies will be drawn to modern headless CMS tools, which often can be implemented in a matter of days or weeks.
  
  The faster, less resource-intensive implementation of modern headless tools becomes yet more of an advantage when we consider the “land and expand” nature of headless CMS adoption at the enterprise level. Many large companies dip their toes into the waters of headless CMS with smaller-scale projects, rather than immediately transitioning their core website to headless architecture. In the context of agile projects, quick implementation is even more attractive, so modern headless tools are well positioned to win small projects, and eventually scale through the enterprise.

• Attunement to specific end user personas: While early headless tools seek to adequately serve both technical and marketing teams as decision makers and users, modern headless CMSs are increasingly orienting themselves towards either developers or marketers.
  
  The developer-oriented tools differentiate in their ability to handle complex data schema and to optimize data storage, while the marketer-oriented tools focus on ease of use and UI/UX. Developer-oriented tools can support rapid load times and content deployment, and promote developer efficiency by catering workflows towards technical users.
  
  On the other hand, marketing-oriented tools provide intuitive editing interfaces so that business users can update content without requiring developer assistance, reducing the load on developer resources. Faced with pressure to develop varied, high-quality content quickly and with minimal developer effort, companies will increasingly favor one or the other of these approaches, rather than the “middle of the road” option that does not optimize either developer or marketer experience.

• Pricing: Companies will be price sensitive when selecting new vendors under current macro conditions, and CMSs are no exception. Particularly in the context of the “land and expand” motion described above, in which companies begin using a headless tool for a defined, smaller-scale project, decision makers may not have large budgets, and may not be in positions to commit to enterprise contracts. Modern headless CMS tools, which are less expensive and generally offer more flexible plans, are positioned to win in evaluations in which cost is a factor, or in evaluations for smaller scale projects that might lead to enterprise adoption down the line.
  

Today’s companies are recognizing a need to deliver complex, personalized, dynamic content across a growing array of channels, without sacrificing speed and without making outsized demands on scarce developer resources. As a result, we believe that the shift towards headless CMSs will accelerate, and that modern headless CMSs will gain disproportionate share. 

Headless CMS’ European Origins

The headless CMS movement originated in Europe. Contentful coined the term “headless CMS” in Berlin, Storyblok emerged in Linz, Sanity in Norway, Strapi in Paris, and Hygraph in Berlin. A few factors might explain why European companies have led the headless CMS shift:

• Complexity of multi-country operations: The demands of European companies’ cross-border operations may have put early strains on monolithic solutions. Anecdotally, retailers using Shopify’s comprehensive solution have had to adopt different instances of Shopify in different countries, increasing cost and operational burden; similar challenges arise for companies using monolithic headless CMS solutions. While US companies can grow to significant scale before operating internationally, European companies generally cross borders earlier, given their smaller domestic markets. As a result of these geographic differences, European companies may have experienced limitations to monolithic architecture early and often, and therefore would have had been incentivized to build more flexible alternatives to enable international growth.

• European talent density in web development: The prevalence of developer talent relative to “big tech” jobs in Europe results in more software developers working in both upper-middle-market companies and in digital agencies, where demand for headless CMS emerged and has grown. As of 2021, there were ~5.7M software developers in Europe, versus ~4.4M in the US. However, many of the largest tech companies are anchored in the US. The largest European software company, SAP, is a fraction the size of US giants. Within web development in Europe, there is also a deep network of web agencies working on the types of content that CMSs support. It’s possible that in Europe, there were more developers experiencing the pain points of building and updating content in less resourced organizations.

• Stricter European digital privacy laws: Historically, US regulation around consumer privacy has been weaker and more fragmented than European regulation. While GDPR has functioned as a universal standard governing data privacy in Europe since 2018, US legislation around digital privacy has been piecemeal and state specific.
  
  Due to the more relaxed regulatory environment, US companies have been able to more easily segment and target customers with outbound motions than their European counterparts. As a result, European companies may have been earlier to recognize the potential in leveraging content to drive sales, because they could not rely on detailed customer data for targeting. An earlier, greater reliance on content in Europe may have fueled demand for more effective content management tools, and thus sparked innovation in the CMS space.

• Widespread US adoption of legacy CMS tools: Four out of the top five website builder tools by market share – WordPress, Shopify, Squarespace, and Joomla – are based in the US (Wix, the third largest, is Israel-based), and these players collectively power ~10M of the roughly ~30M blogs and websites in the US. The market is comparatively fragmented in Europe, where these players have not achieved such widespread adoption. Of the scaled CMS players, only WordPress has significant traction in Europe; neither Shopify, Squarespace, nor Joomla power more than 200k sites in any European country.
  
  Given the prevalence of WordPress and other early CMS tools in the US, many US companies may have felt less urgency to adopt headless CMS during its initial wave because they had a “good enough” website solution. Since many European companies had no existing solution, perhaps they faced less inertia in adopting next generation CMS tools, effectively leapfrogging US organizations in CMS sophistication.

What’s Next?

We expect acceleration in the modern CMS market in the coming years, fueled by the continued proliferation of more complex content, constraints on developer resources, and desire for personalization. Within its initial core industries – e-commerce and media – the benefits of a modern CMS are well understood. Adoption and awareness will continue to snowball outside of these industries, as modern CMS is applicable to any business with a website. Powerful add-on tools that integrate seamlessly into a headless stack will continue to emerge and gain traction, reinforcing the benefits of a MACH architecture. Over time, the market will continue to shift from monolithic to headless to modern architectures as the latter becomes the default. Just as “software” has come to imply cloud, CMS will soon imply headless: the old way will become the exception to the rule.

Modern CMS is not a ‘winner-takes-all’ category. The diverse needs of end customers will translate into multiple winners. Given the size, growth, and nuance of each segment, we believe several players can ride the tailwind and find success in this ecosystem.

As we look ahead to the next chapter in the CMS story, we see a transformative opportunity in hyper-personalized content generation. Targeting has been the most important theme in marketing in the last decade, but the coming decade will be defined by personalization. Web pages will adjust content depending on who arrives at a given site, via which channel, when, and with what intention. First movers in this category – such as Mutiny, a no code web personalization platform that powers higher conversions by catering content to unique audiences, or Ninetailed, an API-first headless personalization tool that similarly fuels conversion through customization – will become important players in the “personalization stack.”

Dynamically personalizing content with AI is a natural extension of CMSs’ core capability of storing and rendering content. On the back of rapid advancements in generative AI in recent months, software companies are racing to layer on AI-powered functionality, unleashing exponential growth in content creation in the process. We believe that modern CMSs have the opportunity to provide the connective tissue between staid content management and the new age of personalization, creating new profit pools for businesses and superior experiences for consumers. 

We would love to learn from other founders, investors, and operators in the MACH community. Please feel to reach out to Merritt, Kristie, Pascal, or Abby if you have ideas or feedback.