Monday, May 21, 2012

Experian Buys Conversen Marketing Automation to Strengthen Its Offerings

Experian Marketing Services yesterday announced its acquisition
 of marketing automation vendor Conversen. This is the third marketing automation acquisition in the past month, following Intuit’s purchase of Demandforce and FICO’s purchase of Entiera.

Conversen is somewhat similar to Entiera in offering sophisticated multi-step campaigns, although its main differentiator is multi-channel dynamic content that makes it relatively easy to deliver different messages to different segments across multiple channels. See my review from February 2010 for a more detailed explanation. But while Entiera was selling directly to marketers, Conversen's clients were mostly ad agencies and marketing service providers who offered it to their own customers. When I last spoke with Conversen about a year ago, they had more than 35 partners with more than 150 end clients. That’s a respectable installed base for this type of product.

Experian’s stated rationale for the acquisition is to allow more sophisticated cross channel marketing dialogues than its existing tools provided. The transaction is part of a larger drive for Experian to revitalize its Marketing Services group, which has been investing in new people and technologies over the past couple of years.

Like the Entiera acquisition, the Conversen deal removes another independent player from the ranks of large scale consumer marketing automation systems. Marketing service providers looking for a system to license will be particularly unhappy, since they already had few choices and won't like licensing from a competitor. Experian hasn’t said it will withdraw Conversen from existing partners, but its main goal is clearly to use the system for its own massive client base.

Conversen will be a key component in a larger digital marketing suite from Experian. If there’s a real trend in the recent acquisitions, it’s that a handful of large companies are building digital marketing suites and either offering them as software (IBM, Teradata, SAS, Oracle, SAP) or combined with marketing services (FICO, Experian, maybe Harte-Hanks). I’ve argued forever that big integrated suites will ultimately swamp products that specialize in one field such as email, Web content management, or online advertising. The scope of the suites makes it hard for specialists to compete, especially as ever-tighter integration becomes necessary to meet customer expectations for seamless service across channels. Experian, which already has huge businesses in online advertising, email and social marketing, is one of the few service vendors with the resources to build and update its own systems rather than purchasing from third-party vendors.

As someone who views things mostly from a marketers’ perspective, I'm not thrilled at this development. Fewer competitors make it harder for buyers to get a good deal and big suites tend to be less innovative than small specialists. Of course, there are still plenty of small marketing automation vendors, but the gorillas will  attract many of their clients and scare away potential investors. It’s probably no coincidence that the recent acquisitions have been small companies, not the better known marketing automation players: the buyers have wanted technology, which is hard to develop, more than market position, which they already have. Nor is it surprising that acquisitions have been consumer marketing systems rather than B2B marketing automation: there’s ultimately more money in consumer marketing and the vicious dogfight in B2B marketing automation in the past few years has made profitability almost impossible for anyone. There’s little reason for an outsider to buy in such an unpleasant neighborhood.

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