Thursday, June 27, 2013

Adobe Buys B2C Marketing Automation Leader Neolane: One Gap Filled, But Where's CRM?

Adobe today announced plans to acquire Neolane, the largest remaining independent B2C marketing automation vendor (excluding email-focused providers like Responsys and Silverpop). Price was $600 million, which is roughly in line with the 8x revenue paid for ExactTarget and Eloqua recently.  (Neolane announced $58 million revenue in 2012 and has been growing around 40% per year, which would yield about $80 million 2013 revenue.)

The deal is not particularly surprising. Adobe was on everyone’s list of potential buyers, and Neolane was ripe for acquisition or an initial public offering. It reinforces suspicions that Adobe was the mystery bidder for ExactTarget mentioned last month by  Indeed, my take on the ExactTarget deal explicitly mentioned an Adobe/Neolane possibility. That frankly didn’t take much insight, but I’ll brag a bit more about having pegged Adobe as needing to add marketing automation as far back as this post in 2009 and again in 2010.

Neolane is more of a mid-tier solution than an enterprise product, which may be a slight mismatch with Adobe.  I’d say that reflects a lack of enterprise systems available for Adobe to purchase, more than any particular desire to target the mid-market.

Predictable or not, this deal does fill a gaping hole in Adobe’s marketing cloud. It still doesn’t put Adobe on equal footing with Oracle, Salesforce, SAP or Microsoft, since they all have major CRM platforms which Adobe does not. Adobe obviously has a leadership position in content creation, although I’ve never felt that does much good in selling customer management systems. (To be more precise, content creation COULD give Adobe an advantage if it very tightly coupled auto-personalized marketing treatments with content creation, but that doesn't seem to be happening.)

More important, Adobe also has an unmatched position in Web analytics, Web advertising, and Web content management. In fact, adding Neolane gives it a profile very similar to IBM, which also has strong Web and marketing automation products but not CRM (and which also shares Adobe’s digital-is-everything mono-vision).

Come to think of it, the contrast still comes down to the dueling strategies I described in 2011: Web-plus-marketing automation (Adobe and IBM) vs. CRM-plus-marketing automation (Oracle, Salesforce, SAP, Microsoft). Everything will eventually converge Web-plus-CRM, with marketing automation baked in so deep you can't see it.  But that’s still some way off, except arguably for Oracle, which has all the pieces but hasn’t fully integrated them. In the meantime, we’ll see which approach is more popular – and what becomes of the stand-alone marketing automation vendors who are caught in between.

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