Sunday, May 13, 2012

FICO Buys Entiera Marketing Automation: Another Independent Option Gone

Three weeks ago, Intuit shook up the low end of the marketing automation universe by purchasing small business marketing shooting star Demandforce. Last week the action shifted to the high end, where FICO announced its purchase of Entiera, one of the few remaining enterprise class products.

FICO, the company formerly known as Fair Isaac and originator of the influential FICO credit score, first dipped its toe into marketing automation services and software when it acquired DynaMark in 1992. Since then, the company has continued to grow its marketing offerings, through acquisition and internal development.  But it sell these largely as add-ons to its core predictive analytics products. FICO statements make clear that Entiera will continue this strategy, both by providing new capabilities for event-triggered to existing clients and by making the full set of FICO products available to smaller companies.

FICO’s backing will certainly allow Entiera to sell to more companies. But, in sharp contrast to the Intuit/Demandforce deal, I see this acquisition as shrinking rather than increasing competition in the relevant market segment. Entiera was one of the few independent vendors still chasing the business of mid-size and enterprise marketing automation buyers. This group had already been reduced with the acquisition of Alterian by SDL last December and of SmartFocus by eMailVision the previous April. Of the firms on my list of B2C options from last September, only a handful (Neolane, Decision Software Inc, RedPoint and ClickSquared are primarily selling marketing automation software. The others are either more oriented to email services (ExactTarget, and I should add Responsys and Silverpop) or have minimal industry presence (MarketingPilot, Pitney Bowes' Portrait Software, Conversen, SmartSource Online, etc.).

In theory, FICO could finance a significant expansion of Entiera’s independent business. With $620 million in 2011 revenue and over $100 million operating cash flow, the company could certainly afford it. But marketing services are clearly just a sideline for FICO. So it’s likely they’ll use Entiera’s technology to support sales of their core analytical products to current customers and perhaps to deliver them more cost-effectively to new customers. That’s great for FICO and for Entiera’s founders. But in a segment where most of the major products are already owned by giant corporations (IBM, Teradata, SAS), marketers now have one less young vendor hungry for their business.

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