Vocus Purchased by Private Equity Firm GTCR: This Could Be Interesting

Vocus announced on Monday that they were being acquired by private equity firm GTCR  for $446.5 million in cash, a premium of 48% over their stock market price. It’s still a modest multiple of 2.4 x revenue, compared with the 6 to 7 x multiples paid for ExactTarget and Responsys by Salesforce.com and Oracle and the 14 x that Marketo commands in the stock market. I can think of several reasons for the discrepancy: GTCR isn’t a big software company looking to fill out an existing marketing suite; Vocus sells mostly to small business, not enterprises; Vocus hasn't created enough buzz.  But the main reason is probably that under 15% of Vocus' 2013 revenue came from its marketing automation products.  .

Vocus has been working hard to change its profile. When I wrote about them last July,
they had already created a Marketing Suite separate from their PR Suite. At that time, the marketing product was missing key marketing automation features including lead scoring, multi-step workflows, and integration with Salesforce.com. Those were all added last month.  Based on a preview the company provided me in February, the implementations are more than adequate for the small marketing departments that are Vocus’ core customers.  To give a flavor for the implementation: 

• lead scoring holds separate scores for attributes and engagement activities; can assign activity points based on recency and frequency of email, Web visits, landing pages, and news release activity; and automatically recalculates scores over time.  But it only allows one score per customer.

• workflows are built on a graphical flow chart; support yes/no branching on attributes and activities; can execute next steps immediately, after a specified period, or after an action is completed; and support actions including send emails, add the customer to another workflow, update a list, update a contact record, and remove the customer from the current workflow.  But it doesn't support a/b splits within the flows.

• Salesforce.com synch is bi-directional and works with lead and contact records.  But it doesn't (yet) synchronize opportunities or custom objects.

Email, landing pages, behavior tracking, and reporting were already available in Vocus Marketing Suite, so the new features mean that Vocus now ticks all the major marketing automation boxes. It also still provides the advanced social media monitoring and influencer identification, press release posting, and local directory submission services that most competitors do not.  Plans include an expanded partner marketplace to make third party integration easier, expanded social marketing including social sign-on and social media campaigns, and anonymous visitor tracking without relying on cookies.  The vendor will also increase the sophistication of its core marketing automation functions, adding features such progressive forms, dynamic content, a/b testing for landing pages, and synchronization with additional Salesforce.com objects.

Beyond all that, my February notes include some vague but intriguing mention of automated analytics to help marketers do more effective lead scoring, segmentation, and workflow design. That kind of automation could be the key to expanding the number of marketing departments who can take full advantage of marketing automation opportunities.

To sum things up, GTCR has bought itself a very competitive marketing automation product for small to mid-size companies.  It will still mostly sell the business marketers but the social media, directory listings, and press release functions give Vocus more opportunity to serve consumer marketers than usual. The company now reports more than 8,000 marketing automation users,. expected to yield $40 million in bookings in 2014.  This easily makes it one of the largest stand-alone vendors in the industry. If GTCR allows Vocus to spend more freely on marketing and to continue improving its product, there is a good chance that Vocus can elbow its way to a top position in the hyper-crowded SMB marketing automation universe.