Tuesday, February 22, 2011

SAS Acquires AssetLink: Great for Enterprises, But What About the Rest of Us?

Summary: SAS's purchase of AssetLink ensures it's a viable alternative to IBM/Unica and Teradata/Aprimo for integrated marketing management. The real question is whether mid-size firms will be able to afford those systems.

SAS today announced its acquisition of marketing resource management vendor AssetLink. The move makes perfect sense: the other big MRM vendor was Aprimo, and once they were acquired by Teradata, SAS and AssetLink had no alternative partners in the enterprise marketing space.

Let me make clear that when I say “enterprise”, I mean “enterprise”, as in big business. Our friends at Gartner have recently proposed replacing “enterprise marketing management” with “integrated marketing management” as the general term for, um, integrated marketing management. Makes sense. But AssetLink told me their 50+ clients are all big companies. SAS’s marketing systems are also sold mostly to big firms. So we’re really talking about the “enterprise” market here. Once you starting considering mid-size businesses, there are other players, most notably MarketingPilot for MRM and Alterian and Neolane for business-to-consumer marketing automation.

Naturally, SAS and AssetLink don’t intend to limit themselves to enterprise buyers. Like IBM/Unica and Teradata/Aprimo, they hope to sell integrated marketing systems to mid-size firms too. This may be easier for the other two vendors: IBM and Unica certainly have more mid-size marketing clients than SAS and AssetLink, and although Teradata is mostly a big-company vendor, Aprimo has a broader client mix and a relatively new “Marketing Studio On Demand” product that was designed for smaller buyers. Still, we can expect SAS to try.

I'll admit to being skeptical that enterprise-oriented firms like IBM, Teradata, and SAS can successfully sell their products for the mid-market. The transition faces some technical roadblocks, mostly about hiding complexity and reducing the need for customization. But those can be solved. The larger challenges are rooted in corporate culture and require changes in areas like pricing and sales compensation. To put it more bluntly, enterprise firms like to sell big deals.

In fact, I think big deals are exactly what have attracted IBM, Teradata, and SAS to focus on marketing systems. They all seem to have adopted the grand vision of integrated marketing automation as a centrally-managed, analytically-driven process to coordinate customer contacts across all touchpoints. This requires integrating the marketing system with sales, customer service and Web systems. While I also love that vision, I suspect that only a few large firms will have the resources to implement it. This could mean that, in practice, integrated marketing management is limited to enterprise buyers.

This leads to another question: What are Oracle and SAP up to? They’re the other big enterprise software vendors and they’re surely interested in offering integrated marketing automation to their own clients, both to increase revenue and to block account penetration by competitors. Both vendors do have some marketing automation products but these don’t have much of a public presence. If integrated marketing automation really takes off at enterprise accounts, I suspect we’ll see Oracle and SAP pay more attention to this market, either through acquisition or enhancement of existing products.

You’ll notice I haven’t said much here about the SAS/AssetLink deal itself. That’s not due to any lack of enthusiasm: it’s just that the pairing was so obvious that it doesn’t require much explanation. It ensures that SAS’s marketing automation suite remains a viable alternative to IBM and Teradata, by giving it the scope that those other vendors possess. Of course, there are still substantial differences among the products, so buyers who are free to choose any of them will need to dig into the details and match them against their requirements. But I suspect that many companies will have a strong predisposition towards one vendor or another, depending on what other systems they have in place. In that case, there may be fewer truly competitive deals than we saw in the past, when marketing could choose its system without the rest of the company really caring all that much.

My bottom line, then, is that this deal doesn’t reshape the market, but it does clarify its structure and ensure that SAS continues to compete. My real concern is whether mid-size companies will be able to participate or integrated marketing automation will remain the preserve of enterprise marketers.

1 comment:

Unknown said...

Hi David,

2 things stand out (to me) in your post; and I want to add two points that are dear to me.

The first is that the acquiring enterprise software vendors are clearly aware of the huge ROI (for them and their clients) from integrated marketing management (IMM) systems - otherwise they wouldn't be making acquisitions. The reason why is simple: IMM improves marketing results. Our colleague Kim Collins VP and Analyst at Gartner recently wrote that firms that adopt (IMM) could increase their return on marketing investment by at least 50%. Those of us who have seen how direct marketers have made staggering amounts of money using data to make marketing decisions realize that bringing these same quantitative practices to digital marketing (where they can be executed with far less cost), will be a bonanza for those who implement marketing automation. To a firm such as Apple that spends more than a billion a year on marketing, this should translate into a lot of IMM software and services revenue for the vendor that they choose for IMM. IMM is to Marketing what CRM is to Sales – if you don’t have one, you’re not in the game. It may take a while, but every successful company is going to have IMM.

In your post you raise the issue that "While I also love that vision, I suspect that only a few large firms will have the resources to implement it. This could mean that, in practice, integrated marketing management is limited to enterprise buyers". This is a reasonable concern as one observes the M&A at the high end of the industry. However there is no reason why vendors can’t develop easy to use and deploy cloud-based IMM systems for mid-sized marketing organizations(as we are at MarketingPilot). While smaller marketing organizations may not be able to invest in the advanced modeling and data analysis that large enterprises can, they can still hugely benefit from automated marketing campaigns and an ability to make decisions based upon ROMI rather than gut.

One also must not forget that most marketing is in fact done by agencies working for corporate marketing departments. At my firm we are seeing more and more agencies adapt to the new 'digital' order and adopt integrated marketing management and campaign automation technologies. These adaptive agencies are growing rapidly and are moving their clients to use more and more digital media instead of traditional print and broadcast channels. These agencies are also providing many of the new analytical skills and technologies to their clients, big and small.

My last point is this: one of the ‘premises’ of IMM is that marketing investment decisions are ROMI based. To be able to calculate ROMI you must be able to track spend and results. In a digital world tracking results can be quickly and relatively easily automated. Tracking and allocating the spend is another story; the critical enabling technology here is marketing resource management. It’s no surprise (to me) that IBM, Teradata and SAS all sought out acquisitions that provided strong MRM.

Ken Kornbluh
MarketingPilot Software