What will Salesforce.com's ExactTarget deal mean for marketing?by
Salesforce.com has announced it is to acquire Cloud marketing company ExactTarget for $2.5bn – its biggest acquisition to date, and one that seemingly signals another phase in the development of its Marketing Cloud.
ExactTarget manages multichannel digital marketing campaigns for more than 6,000 clients – including a roster of big-name companies such as Coca-Cola, Gap and Nike.
With the acquisition, Saleforce.com intends to bolster its Marketing Cloud portfolio, which is presently strongly geared towards social media marketing, to create a more holistic marketing proposition.
Saleforce.com will combine ExactTarget’s traditional marketing capabilities of marketing automation and campaign management with its own social capabilities, many of which were gained from previous acquisitions—listening with Radian6, publishing with Buddy Media, and advertising with Social.com.
Marc Benioff, chairman and CEO of salesforce.com, explained that the deal will sharpen the company’s focus on the CMO and hopes to become their platform of choice.
He said: “The CMO is expected to spend more on technology than the CIO by 2017. The addition of ExactTarget makes Salesforce the starting place for every company and puts Salesforce.com in the pole position to capture this opportunity.”
Scott Dorsey, ExactTarget chairman, CEO and co-founder, added: “ExactTarget’s mission is to revolutionize how businesses connect with their consumers using data-driven digital marketing across all channels.”
The deal is expected to close by the end of next month.
Year of the Marketing Cloud?
2013 is shaping up to be the year of the Marketing Cloud - in addition to SF.com's activity, we've had Oracle talking up its Eloqua-powered version of the Marketing Cloud while the topic dominated proceedings at the recent Adobe Summit in London. Meanwhile, vendors such as Marketo and Infor are also circling the space.
The catalyst for this has been forecasts by the likes of Gartner that predict that by 2015 consumer technology companies will have switched one-third of their traditional marketing budgets to digital, while CMOs are expected to outspend CIOs on information technology by 2017.
Salesforce.com's most recent expansion of its Marketing Cloud platform saw the arrival of ad campaign management platform Social.com. The solution builds on Marketing Cloud's social ad capabilties, gained through its acquisition of Buddy Media, by providing a self-serve application for agencies, brands, developers, retailers and advertisers to develop, automate and manage their campaigns themselves.
During its launch, the company described the platform as the first to connect social ads with CRM and social media monitoring tools, the latter technology brought about by the purchase of Radian6 in March last year.
Salesforce.com's Marketing Cloud offering has therefore had a strong social media bent to date, something that the latest acquisition will likely serve to balance out.
CRM guru Paul Greenberg has noted that SF.com will now have something that is more than just a Marketing Cloud in name only. On ZDNet he wrote: "This move is precisely ... what salesforce needed to do. They now have an excellent email marketing suite, a strong upper-end-of-the-small-and-through-the-middle-of-the-mid-market marketing automation suite (via the Exact Target acquisition of Pardot last year) and, as an added bonus, the social comms tool Co-Tweet, which was one of the underutilized gems owned by Exact Target."
So, potentially a very powerful offering for the marketing sector. And one that could spark further acquisitions in the marketing technology sector according to Forrester's Shar VanBoskirk.
Commenting on the deal, she blogged: "By making a bold move into not just automation, but digital media, Salesforce will raise pressure on Adobe, IBM, Microsoft, SAP, and other traditional enterprise application providers to make similar moves, raising the valuations of Responsys, Neolane, and Silverpop."
And she added that this could negatively impact the marketing technology market in the long-term, noting: "We are likely to see further consolidation this year in response, meaning that marketers will have fewer choices overall, and fewer choices in marketing-technology specific providers."
Other potential implications for the marketing sector could include a change in the pricing dynamic that could hamper innovation, said the Forrester expert. "As a large, established vendor, Salesforce will make it easier for marketing departments to convince their IT and procurement peers of adopting ET. If Salesforce chooses to suppress digital media CPM rates, existing ET customers benefit, but Salesforce would make it difficult for (now much) smaller vendors, like Responsys and Silverpop, to compete. In that scenario, all marketers would suffer, as fewer competitors would mean less innovation at exactly the time marketers need more choice."
In the shorter term, VanBoskirk also voiced concerns about the impact of the deal on existing ExactTarget customers. "ET clients told us that service quality waned when ET staffers were "distracted" prepping for the company's IPO in early 2012," she wrote. "We expect an even more pronounced dip now as ET works through terms of the acquisition instead of innovating around its messaging platforms and services."