The Enterprise Software Powering Digital Marketing

In 2012 Gartner released an oft-repeated prediction that CMO's will spend more on IT than CIOs by 2017. It is a well-founded prediction, as growth in digital marketing has ramped up dramatically over the past few years. Over the next few years, double-digit CAGR in spending on marketing technology is predicted, supporting this assertion.

With all of the activity in digital marketing today, it is crazy to think that Omniture was the only marketing technology company valued over $1 billion just  a few years ago. While no marketing-specific "decacorns" have emerged, several companies have racked up serious valuations in private markets, acquisitions, and IPO's, attesting to the growth in this area.

Marketing automation has led the way, with companies like ExactTarget and Pardot (B2C and B2B marketing automation companies, respectively) being acquired by Salesforce and Responsys and Eloqua being bought by Oracle. I have personal experience selling ExactTarget and Pardot through my role at Salesforce, and experience using Eloqua in my previous roles at Dell and Quest Software.

These technologies make connecting sales and marketing so easy that any company not using these tools (or something similar) is putting itself at a gross disadvantage. For example, using either Pardot or Eloqua, a company can automatically capture inquiries from its website, assign a lead score based on the user's activity (and past history with the company), and route to the appropriate sales rep based on location, size, industry, etc. These tools can also handle things like automated drip email campaigns, freeing up marketing staff from manually managing tasks like this.

Outside of the ego-fueled battle for supremacy in the marketing and CRM technology market between Oracle and Salesforce, many other technologies of great potential are emerging. Newcomers are building businesses on predictive analytics, 1:1 marketing (personalization), and optimizing tracking/targeting.

There is huge potential to leverage these technologies to transform things like customer acquisition cost, customer satisfaction, loyalty, and other key marketing metrics. If I could give any piece of advice of to marketers today, it would be to spend a little less time reading AdWeek and a little more time reading TechCrunch. There's a good chance that tomorrow's headline about a marketing startup landing a Series A could have a tremendous impact on their job in the coming years.



Source: http://techcrunch.com/2015/04/03/theres-a-10-billion-opportunity-as-marketing-hits-the-big-time/

Salesforce to Buy ExactTarget

In surprising news to me, Salesforce.com is going to buy ExactTarget, a digital marketing solutions company, for $2.5B.  This is surprising because I've never heard of ExactTarget and can't believe a digital marketing software company could be worth that much money.  I understand the business model and the growth potential in the industry, but to me the industry seems fragmented with few barriers to entry.  These factors would weigh on me enough that from a financial standpoint, an acquistion of this magnitutde seems like a huge risk. 

This is an all cash bid of $2.5B and a 50% premium to where the stock was trading yesterday, (so the markets only valued the company at $1.25B). 

The combination of the two businesses makes sense, as they have similar business models.  The article states, "Salesforce began as a provider of sales-automation software delivered via the cloud, and built itself into the leadership position in that category, but in recent years it has been directing its investment dollars to tack on a range of marketing software. Like Salesforce, ExactTarget sells its software directly to marketing departments. Its customers include Nike, Coca-Cola and Gap Inc., which use the software to plan and manage digital marketing campaigns and email and SMS communications"

This acquistion will add only "$120 million to $125 million in revenue" to Salesforce.com's fiscal 2014, which closes July 31. 

Paying $2.5B for $125M in revenue?!?!?... Let's party like its 1999.