Act-On Buys Marketbright Assets

Act-On Software announced last week that they had purchased the assets of Marketbright, a pioneering marketing automation vendor that has struggled in recent years. Marketbright’s problems have been obvious for months, so that they would vanish is not news. The interesting question is why Act-On made the purchase.

I discussed this last Thursday with Act-On CEO Raghu Raghavan. Part of his answer was because they could: having raised $10 million in June, Act-On can now consider acquisitions of less-well-endowed competitors. Beyond that, Raghavan cited several narrow benefits, including the chance of converting Marketbright customers to Act-On, the business knowledge and skills of key Marketbright employees, and some design features of the Marketbright system. He made clear that the actual Marketbright software will not be merged into Act-On because they are built with different technologies.

In other words, the Marketbright acquisition was a tactical measure to pick up some modest assets at a modest price. It is neither central to Act-On’s current strategy nor a shift towards a new strategy.

That strategy has remained remarkably consistent. It boils down to providing an easy transition between basic email systems and full-scale marketing automation. Raghavan said that Act-On has now deployed a consistent sales process to convince marketers they can benefit from replacing multiple point solutions with a single Act-On installation, even without the major process reengineering or staff training recommended by other marketing automation vendors.

This is clearly a successful argument: Act-On just added its 350th client, and is on pace to triple its total over the next twelve months. Most buyers are small businesses, and many are in financial services, insurance, retail, healthcare, and education rather than high-tech. Installations at large companies are often used by small groups who want an alternative to the existing corporate marketing automation system. The system’s $500 per month starting price and no-annual-contract policy encourage such casual implementations by reducing the financial risk.

In fact, the risk is so low that Act-On has actually reduced its free trial period from 30 days to 14 days and eschewed the freemium offers used by competitors Genius and LoopFuse. Raghavan argues that marketing automation systems are too complicated for freemiums to work well. (For what it’s worth, Genius and LoopFuse seem satisfied with their freemium results. Beyond inducing trial, freemiums can also attract long-term users who will move up to the paying version when their needs expand. Agencies who use freemium versions at small clients may also use the same product for larger clients who will pay for the system.)

If it sounds like my discussions with Act-On have centered more on strategy than product features, that’s correct. Raghavan argues marketing automation vendors' success is now determined less by product features than repeatable, profitable processes for sales, deployment, and support. He said Act-On has developed these processes and can now safely accelerate its growth with predictable results. One change the company plans is to expand its managed services, such as help with deploying campaigns. Some of these services will come from Act-On and others by agency partners.

Although Act-On sells the product as a replacement for existing point solutions, the company says clients do use additional features fairly quickly. The most popular are drip marketing, anonymous visitor identification, sales integration, and Web traffic analysis. Complex nurture campaigns and lead scoring are used much less. Under-utilization of advanced features is common across all marketing automation systems, but it may also reflect Act-On’s sales pitch that clients don't need extensive changes to their marketing processes. Similarly, it's tempting to argue that clients' demand for managed services reflects the company’s deploy-first, change-later approach, but that’s also something that clients of all vendors consistently request.

In short, Act-On is doing quite nicely by ignoring the industry conventional wisdom that process change and planning are necessary for marketing automation success. But that doesn’t mean the conventional wisdom is wrong. After all, Act-On’s main sales proposition isn't about marketing automation: it's about making existing tasks easier. It also helps that Act-On is selling to small, consumer-oriented firms, whose marketing automation needs are genuinely simpler than at larger, B2B marketers. In fact, although Act-On is selling to slightly larger companies than micro-business specialists Infusionsoft and OfficeAutoPilot, its resembles them in several ways.

The real test of Act-On comes after clients have gained experience with it and find they do need marketing automation training and process change. So long as Act-On has the features and services to support this – which I believe it does -- the clients should be happy and renew. But if they find they’ve outgrown Act-On because they need more change more than they originally realized, they’ll have to look elsewhere.