The InterWebs were buzzing this morning with an Atlanta Business Chronicle article reporting that IBM is negotiating to buy Silverpop. My only reaction was, What the heck took so long? The other enterprise-level B2C email vendors (ExactTarget, Responsys) have already been bought at wondrously high prices, and every B2B marketing automation vendor I talk to tells me that potential investors are approaching them constantly. So it was a totally safe bet that Silverpop was fielding many offers as well. With $50 million in funding, most of it provided years ago, it was an equally safe bet that Silverpop had some investors eager to cash out.
IBM as an acquirer also makes perfect sense. Although they bought B2C marketing automation leader Unica several years ago, they lack enterprise-scale B2C email engine and B2B marketing automation. This makes Silverpop a perfect fit.
The only surprise in this deal is the price, rumored to be about $270 million or 3x revenue. ExactTarget and Responsys both sold for 6-7x revenue and I would have expected Silverpop to yield something similar. The company has always been very tight with financial information, although client and employee counts they’ve provided for our VEST report suggest recent growth rates of 20% to 30% per year, which considerably lags the industry as a whole. We don’t know anything about profitability, but I’d guess they run close to break even, since they haven’t announced any new investment recently and the slow growth rate would reduce the need for capital. In general, the market seems to reward growth over profitability, so these results may depress their price somewhat.
The company’s mix of B2B and B2C clients may also confuse potential buyers and drive down the price a bit. Plus, there just aren’t that many enterprise software companies who still need what Silverpop is offering: Oracle and Salesforce.com have already made their purchases, Adobe is part of the way there with Neolane, and SAS and Teradata have their own tools and are probably less interested in B2B because most buyers are small or mid-size firms. SAP might be a potential buyer but hasn’t really shown an interest and just announced a deal to resell Adobe’s marketing suite. You could make an interesting case for Marketo as a buyer – to gain market share and some good technology, while leveraging a stock valued at more than 10x revenue – but that doesn’t seem to be part of their strategy.
So we’ll see. I wouldn’t be surprised if someone else offered Silverpop a higher price, but it’s not obvious who that would be. And if the IBM deal goes through, Silverpop will fit nicely into its new home.
Showing posts with label ibm. Show all posts
Showing posts with label ibm. Show all posts
Wednesday, March 26, 2014
Friday, January 18, 2013
IBM Interact Adds Interactions to Enterprise Marketing Management
My continuing tour of real time interaction managers landed with the good folks at IBM two weeks ago, where I caught up with what’s now IBM Interact. The product was originally launched more than a decade ago by Unica as Affinium Interact.*
The concept of Interact has stayed quite consistent over the years, although the underlying technology has been overhauled several times. The general trend of the changes has been closer integration with other components of the IBM/Unica marketing suite. For example, the original Interact had its own flow chart interface, but the system now uses the same segmentation interface as IBM Campaign. The two modules can also share segment definitions, offers, and interaction history. There’s also some integration with other IBM marketing products, notably the Product Recommendation component inherited from IBM’s CoreMetrics acquisition.
Interact's concept is the same as other interaction managers: touchpoints send it data about a current interaction; the system uses rules, models and data to select one or more offers; and the offers are sent back to the touchpoint for delivery. The differences among these systems are matters of nuance: Interact stores its own permanent customer profiles, while some other systems must re-load data from external systems during each interaction. Interact assigns fixed scores to offers within each segment definitions, while other systems use scoring formulas shared across segments (although Interact can do that too). Interact can create self-training predictive models, not all competitors have this option.
A couple of other features seem more or less unique. Interact determines whether customers are eligible for an offer using either qualification rules or Campaign-generated “white lists” and “black lists”; other systems use rules alone. Interact can also assign offers at global, segment, or individual levels, while other systems don’t provide all those choices.
It’s unlikely that any of these differences make Interact significantly more powerful or easier to use than competitors. In practice, the system’s major appeal will be its close integration with Campaign and other IBM products. It is now part of the IBM’s Enterprise Marketing Management (EMM) group, which includes both Unica and Coremetrics, both acquired in 2010. This group supports IBM’s larger strategy of selling systems that use huge quantities of data to run all aspects of large organizations. The company has identified marketing organizations as a major potential market within this strategy and is spending aggressively to both develop that market and take advantage of it.
You might think that Interact plays a central role in IBM’s marketing ecosystem: after all, real-time interactions are the epitome of data-driven marketing. But just a tiny fraction of IBM’s 2,500 EMM customers use Interact (actual figures are confidential) and most deployments seem to be focused on specific -- dare I say tactical? -- applications in one or two channels. The company’s EMM focus seems to be more on analytics and outbound marketing: for example, its most recent EMM acquisitions were Tealeaf Technology (Web experience analysis) and DemandTec (merchandising analysis) . But it does report increasing interest in Interact among its clients, and high hopes for future growth.
_________________________________________________________________________
*A year’s free AARP membership to everyone who remembers the Affinium brand and can sing the jingle.**
** Okay, just kidding. There never was an Affinium jingle, so far as I know.
The concept of Interact has stayed quite consistent over the years, although the underlying technology has been overhauled several times. The general trend of the changes has been closer integration with other components of the IBM/Unica marketing suite. For example, the original Interact had its own flow chart interface, but the system now uses the same segmentation interface as IBM Campaign. The two modules can also share segment definitions, offers, and interaction history. There’s also some integration with other IBM marketing products, notably the Product Recommendation component inherited from IBM’s CoreMetrics acquisition.
Interact's concept is the same as other interaction managers: touchpoints send it data about a current interaction; the system uses rules, models and data to select one or more offers; and the offers are sent back to the touchpoint for delivery. The differences among these systems are matters of nuance: Interact stores its own permanent customer profiles, while some other systems must re-load data from external systems during each interaction. Interact assigns fixed scores to offers within each segment definitions, while other systems use scoring formulas shared across segments (although Interact can do that too). Interact can create self-training predictive models, not all competitors have this option.
A couple of other features seem more or less unique. Interact determines whether customers are eligible for an offer using either qualification rules or Campaign-generated “white lists” and “black lists”; other systems use rules alone. Interact can also assign offers at global, segment, or individual levels, while other systems don’t provide all those choices.
It’s unlikely that any of these differences make Interact significantly more powerful or easier to use than competitors. In practice, the system’s major appeal will be its close integration with Campaign and other IBM products. It is now part of the IBM’s Enterprise Marketing Management (EMM) group, which includes both Unica and Coremetrics, both acquired in 2010. This group supports IBM’s larger strategy of selling systems that use huge quantities of data to run all aspects of large organizations. The company has identified marketing organizations as a major potential market within this strategy and is spending aggressively to both develop that market and take advantage of it.
You might think that Interact plays a central role in IBM’s marketing ecosystem: after all, real-time interactions are the epitome of data-driven marketing. But just a tiny fraction of IBM’s 2,500 EMM customers use Interact (actual figures are confidential) and most deployments seem to be focused on specific -- dare I say tactical? -- applications in one or two channels. The company’s EMM focus seems to be more on analytics and outbound marketing: for example, its most recent EMM acquisitions were Tealeaf Technology (Web experience analysis) and DemandTec (merchandising analysis) . But it does report increasing interest in Interact among its clients, and high hopes for future growth.
_________________________________________________________________________
*A year’s free AARP membership to everyone who remembers the Affinium brand and can sing the jingle.**
** Okay, just kidding. There never was an Affinium jingle, so far as I know.
Wednesday, June 08, 2011
Coremetrics Offers a Foggy View of Lifecycle Analysis
I stumbled over an Adexchanger interview yesterday with John Squire, the Chief Strategy Officer of IBM Coremetrics. It first caught my eye because the headline read “IBM’s Vision for the Marketer”, which is always a topic of interest. Then I noticed it was touting new reporting feature called Coremetrics Lifecycle, which the company describes as “the industry’s first application geared to enable online marketers to track and understand how customers progress through long-term conversion lifecycles.”
This was intriguing. On one hand, I’ve seen plenty of systems that track customers through the buying process, including Eloqua, Marketo, Leadformix, Clear Saleing, C3 Metrics, and Encore Media Metrics. So the claim to be first is questionable. But, on the other hand, seeing another vendor offer this sort of analysis reinforces the importance of the concept.
But a closer look at Lifecycle itself was disappointing. The product does allow tracking of individual Web site visitors over time, which is the foundation of lifecycle analysis. But, in my opinion, a lifecycle tracking system reports on movement of customers across stages within the lifecycle. That is, it shows conversions from one stage to the next. This implies reports that show the previous stages of customers who enter a new stage (“where they came from”), and show the destinations of customers who leave a stage (“where they went”). These are typically represented as a matrix showing all combinations of previous and current stages, or a flow chart that highlights the most common before-and-after pairs.
Lifecycle does none of this. Rather, it lets users define any number of segmentation schemes and count the number of customers in each segment. It does report how many customers entered each segment during a specified time period, but not where they came from. In fact, there is no requirement for a logical progression from one segment to the next, which to me is what a lifecycle implies.
Lifecycle has some other useful features. It can report on the most common marketing treatments received by people who moved into a segment, giving some insight into treatment effectiveness. It calculates the average number of days and Web sessions that customers spend in a segment, which is a limited velocity measure. It also lets users select segment members and send them messages through Coremetrics’ products for email, display ad retargeting, and Web site personalization, although it's not clear the process can be automated.
But a proper lifecycle analysis tool would go much further. It would calculate the end-to-end completion rates, show the drop-off from one stage to the next, estimate the incremental impact of specific treatments, project future segment counts, and show changes in these measures over time. So while I’m pleased that Coremetrics is promoting the concept of lifecycle analysis, I’m disappointed that its product doesn’t deliver a real lifecycle measurement solution.
Addendum - June 19, 2011
After the original post and IBM's comment on it, I reviewed the Lifecycle product with the Coremetrics team. This uncovered no substantive errors in the original post, although a couple of points could have been stated more clearly.
- the system supports two types of lifecycles, one requiring that customers progress through the stages in sequence and one that does not. Users specify the type when they set up a new lifecycle. In both cases, the stages are defined by selection rules created by the user.
- there is a limit of six stages per lifeycle.
- for sequential lifecycles, the system will warn the user if the selection rules are not inherently sequential. (An inherently sequential rule might be based on the number of purchases made; you can't make three purchases without having previously made two. Other stage definitions, such as downloading a white paper or leaving a comment, might come in any order and, therefore, are not inherently sequential.)
- in a sequential lifecycle, the system will not allow customers to advance outside of sequence even if the definitions would allow it. Nor does it report on customers who would qualify for a later stage but cannot reach it because they didn't qualify for a previous one.
- the system's primary report shows the number of customers within each stage during a specified date range. Think of this as an inventory. A "Migrator" report shows how many customers entered their current stage during the report period: for example, there were 500 customers in stage 3, of whom 200 first entered stage 3 during this period. This gives some sense of movement, but it's not the classic funnel analysis showing the percentage of customers in each stage who eventually move to the next stage.
- users can run the standard reports against "segments", which could be defined as anything including a cohort of customers who entered the system during a specified time period. A Lifecycle inventory report for such a cohort would show how many customers reached each stage and got no further. This is the information needed to build a classic funnel analysis, although users would have to extract the data and manipulate it to produce an actual funnel report. This would be done outside of Coremetrics, because there is no end-user report writer.
- reports show the average number of days and Web sessions it takes customers to reach each stage (i.e., since they first entered the system), not the number of days and sessions spent in each stage, as I wrote originally.
- users do have the option to create a recurring process that automatically selects customers in a particular stage and sends them an email or other message. The system could apply a few rules to this process, such as eliminating people who had been selected previously. But more sophisticated controls would be handled outside of Coremetrics, in the message delivery system.
- the system can profile customers in each stage against many attributes (products purchased, geography, social network membership, etc.) in addition to marketing contents received. But, as I wrote originally, the reporting only shows the percentage of customers in each stage who match a particular attribute: this is far from measuring influence, for reasons I'll explain in a future post.
- we confirmed that the system doesn't do projections of future inventory counts, report on out-of-sequence customer movements, or allow customers to migrate backwards into lower-ranked stages (as might happen if stages were based on recency or ratios).
I'm happy to have clarified these matters but none of this changes my original assessment: Lifecycle is a useful product that falls far short of serious life stage analysis.
This was intriguing. On one hand, I’ve seen plenty of systems that track customers through the buying process, including Eloqua, Marketo, Leadformix, Clear Saleing, C3 Metrics, and Encore Media Metrics. So the claim to be first is questionable. But, on the other hand, seeing another vendor offer this sort of analysis reinforces the importance of the concept.
But a closer look at Lifecycle itself was disappointing. The product does allow tracking of individual Web site visitors over time, which is the foundation of lifecycle analysis. But, in my opinion, a lifecycle tracking system reports on movement of customers across stages within the lifecycle. That is, it shows conversions from one stage to the next. This implies reports that show the previous stages of customers who enter a new stage (“where they came from”), and show the destinations of customers who leave a stage (“where they went”). These are typically represented as a matrix showing all combinations of previous and current stages, or a flow chart that highlights the most common before-and-after pairs.
Lifecycle does none of this. Rather, it lets users define any number of segmentation schemes and count the number of customers in each segment. It does report how many customers entered each segment during a specified time period, but not where they came from. In fact, there is no requirement for a logical progression from one segment to the next, which to me is what a lifecycle implies.
Lifecycle has some other useful features. It can report on the most common marketing treatments received by people who moved into a segment, giving some insight into treatment effectiveness. It calculates the average number of days and Web sessions that customers spend in a segment, which is a limited velocity measure. It also lets users select segment members and send them messages through Coremetrics’ products for email, display ad retargeting, and Web site personalization, although it's not clear the process can be automated.
But a proper lifecycle analysis tool would go much further. It would calculate the end-to-end completion rates, show the drop-off from one stage to the next, estimate the incremental impact of specific treatments, project future segment counts, and show changes in these measures over time. So while I’m pleased that Coremetrics is promoting the concept of lifecycle analysis, I’m disappointed that its product doesn’t deliver a real lifecycle measurement solution.
Addendum - June 19, 2011
After the original post and IBM's comment on it, I reviewed the Lifecycle product with the Coremetrics team. This uncovered no substantive errors in the original post, although a couple of points could have been stated more clearly.
- the system supports two types of lifecycles, one requiring that customers progress through the stages in sequence and one that does not. Users specify the type when they set up a new lifecycle. In both cases, the stages are defined by selection rules created by the user.
- there is a limit of six stages per lifeycle.
- for sequential lifecycles, the system will warn the user if the selection rules are not inherently sequential. (An inherently sequential rule might be based on the number of purchases made; you can't make three purchases without having previously made two. Other stage definitions, such as downloading a white paper or leaving a comment, might come in any order and, therefore, are not inherently sequential.)
- in a sequential lifecycle, the system will not allow customers to advance outside of sequence even if the definitions would allow it. Nor does it report on customers who would qualify for a later stage but cannot reach it because they didn't qualify for a previous one.
- the system's primary report shows the number of customers within each stage during a specified date range. Think of this as an inventory. A "Migrator" report shows how many customers entered their current stage during the report period: for example, there were 500 customers in stage 3, of whom 200 first entered stage 3 during this period. This gives some sense of movement, but it's not the classic funnel analysis showing the percentage of customers in each stage who eventually move to the next stage.
- users can run the standard reports against "segments", which could be defined as anything including a cohort of customers who entered the system during a specified time period. A Lifecycle inventory report for such a cohort would show how many customers reached each stage and got no further. This is the information needed to build a classic funnel analysis, although users would have to extract the data and manipulate it to produce an actual funnel report. This would be done outside of Coremetrics, because there is no end-user report writer.
- reports show the average number of days and Web sessions it takes customers to reach each stage (i.e., since they first entered the system), not the number of days and sessions spent in each stage, as I wrote originally.
- users do have the option to create a recurring process that automatically selects customers in a particular stage and sends them an email or other message. The system could apply a few rules to this process, such as eliminating people who had been selected previously. But more sophisticated controls would be handled outside of Coremetrics, in the message delivery system.
- the system can profile customers in each stage against many attributes (products purchased, geography, social network membership, etc.) in addition to marketing contents received. But, as I wrote originally, the reporting only shows the percentage of customers in each stage who match a particular attribute: this is far from measuring influence, for reasons I'll explain in a future post.
- we confirmed that the system doesn't do projections of future inventory counts, report on out-of-sequence customer movements, or allow customers to migrate backwards into lower-ranked stages (as might happen if stages were based on recency or ratios).
I'm happy to have clarified these matters but none of this changes my original assessment: Lifecycle is a useful product that falls far short of serious life stage analysis.
Tuesday, March 29, 2011
eBay Offers $2.4 Billion for GSI Commerce: More Support for Marketing Automation
eBay’s $2.4 billion offer for e-commerce services giant GSI Commerce has been described largely in terms of helping eBay to compete with Amazon in servicing retailers – or, as eBay President John Donahoe put it somewhat more diplomatically in the press release, “GSI will enhance our position as the leading strategic global commerce partner of choice for retailers and brands of all sizes.”
I suppose that’s legitimately the main point of the story. But what I really want to know is what it means for marketing automation. Not that I’m obsessed or anything.
What makes the connection worth pondering is the approach to marketing automation taken by IBM, most recently in the Smarter Commerce initiative announced earlier this month. IBM defines marketing automation as digital analytics, and puts digital analytics at the center of the business universe. The broad argument is that online activities, including both paid advertising and social messages, drive consumer behavior and can therefore be used to improve both supply chain operations (creating and stocking the right products) and demand chain operations (creating sales and managing brand attributes).
This desire to merge marketing into the larger stream of business activities is shared by GSI Commerce (and now eBay) in their approach of offering marketing within a suite of ecommerce operations. It’s been intriguing over the past few years to watch GSI supplement its core operational services (order processing, fulfillment and call center) with marketing services including email (e-Dialog), agency (Silverlign), mobile (M3), affiliate (Pepperjam), retargeting (Fetchback), database (MBS), and attribution (ClearSaleing).
I fully realize that eBay/GSI’s focus is limited to retail while IBM’s scope is literally the entire world. But both are pushing the fundamental idea of marketing as a node within the larger organizational collective. This is quite different from marketing, and marketing automation, as a largely self-contained activity that only connects with the rest of the organization comes when it drives customers to make a purchase. It also suggests that the notion of “integrated marketing management” is fundamentally flawed – if you take “integrated marketing management” as referring to a system to tightly integrate activities within the marketing department..
There, I said it. It feels so good I’ll say it again: integrated marketing management is bad. Bad bad bad. Companies need to integrate their customer treatments across all functions. The role of marketing, and marketing automation, is to guide those treatments. To do that efficiently, marketing automation must be built into the operational systems, not sit outside them. The only thing that can be handled separately is marketing analytics, just like other types of specialized analytics. But the results of those analytics must be communicated to operational systems for execution. Those operational systems must themselves be tightly integrated with each other to ensure the treatments are coordinated.
You could argue that this coordination across operational systems is also a role for “marketing automation”. I agree it is, but don't think it's not the primary meaning of the term. Traditional marketing automation is about campaign planning, execution, and analysis.
Now, don’t take this to mean that I’ve swallowed the Smarter Commerce Kool-Aid. I still think it’s presented in ways that ignore the fact that most activity is still non-digital. (I also recognize that the folks are IBM are plenty smart enough to realize this, and expect that they’ll merrily include non-digital activities in their projects. Or they’ll argue that even non-digital activities are captured digitally and therefore included in their definition. The latter is true, but if "digital" encompasses everything, why use the term at all?)
Okay, that's just quibbling about words. I see a more important difference between whether you start with an operational platform and add analytics (the GSI approach, if I oversimplify a bit), or you start with analytics and tie it into operational systems (the IBM approach, for sure). In an ideal world, the operational systems would all have great customer management features and the operational approach would win. But here on Planet Earth, most companies have several customer-unfriendly operational systems that won’t go away any time soon. Connecting them into an external analytics system – even if the connections are a bit superficial – is probably the best bet for most organizations. (I could explain this with a wonderful analogy about running extension cords vs. rewiring the walls. But I won’t. You’re welcome.)
Bottom line: whether eBay intends to or not, their GSI purchase supports the broad view of marketing automation as an enterprise-wide utility, not a tool for intra-marketing efficiency. (Ha – and you thought I couldn’t write a concise sentence.)
I suppose that’s legitimately the main point of the story. But what I really want to know is what it means for marketing automation. Not that I’m obsessed or anything.
What makes the connection worth pondering is the approach to marketing automation taken by IBM, most recently in the Smarter Commerce initiative announced earlier this month. IBM defines marketing automation as digital analytics, and puts digital analytics at the center of the business universe. The broad argument is that online activities, including both paid advertising and social messages, drive consumer behavior and can therefore be used to improve both supply chain operations (creating and stocking the right products) and demand chain operations (creating sales and managing brand attributes).
This desire to merge marketing into the larger stream of business activities is shared by GSI Commerce (and now eBay) in their approach of offering marketing within a suite of ecommerce operations. It’s been intriguing over the past few years to watch GSI supplement its core operational services (order processing, fulfillment and call center) with marketing services including email (e-Dialog), agency (Silverlign), mobile (M3), affiliate (Pepperjam), retargeting (Fetchback), database (MBS), and attribution (ClearSaleing).
I fully realize that eBay/GSI’s focus is limited to retail while IBM’s scope is literally the entire world. But both are pushing the fundamental idea of marketing as a node within the larger organizational collective. This is quite different from marketing, and marketing automation, as a largely self-contained activity that only connects with the rest of the organization comes when it drives customers to make a purchase. It also suggests that the notion of “integrated marketing management” is fundamentally flawed – if you take “integrated marketing management” as referring to a system to tightly integrate activities within the marketing department..
There, I said it. It feels so good I’ll say it again: integrated marketing management is bad. Bad bad bad. Companies need to integrate their customer treatments across all functions. The role of marketing, and marketing automation, is to guide those treatments. To do that efficiently, marketing automation must be built into the operational systems, not sit outside them. The only thing that can be handled separately is marketing analytics, just like other types of specialized analytics. But the results of those analytics must be communicated to operational systems for execution. Those operational systems must themselves be tightly integrated with each other to ensure the treatments are coordinated.
You could argue that this coordination across operational systems is also a role for “marketing automation”. I agree it is, but don't think it's not the primary meaning of the term. Traditional marketing automation is about campaign planning, execution, and analysis.
Now, don’t take this to mean that I’ve swallowed the Smarter Commerce Kool-Aid. I still think it’s presented in ways that ignore the fact that most activity is still non-digital. (I also recognize that the folks are IBM are plenty smart enough to realize this, and expect that they’ll merrily include non-digital activities in their projects. Or they’ll argue that even non-digital activities are captured digitally and therefore included in their definition. The latter is true, but if "digital" encompasses everything, why use the term at all?)
Okay, that's just quibbling about words. I see a more important difference between whether you start with an operational platform and add analytics (the GSI approach, if I oversimplify a bit), or you start with analytics and tie it into operational systems (the IBM approach, for sure). In an ideal world, the operational systems would all have great customer management features and the operational approach would win. But here on Planet Earth, most companies have several customer-unfriendly operational systems that won’t go away any time soon. Connecting them into an external analytics system – even if the connections are a bit superficial – is probably the best bet for most organizations. (I could explain this with a wonderful analogy about running extension cords vs. rewiring the walls. But I won’t. You’re welcome.)
Bottom line: whether eBay intends to or not, their GSI purchase supports the broad view of marketing automation as an enterprise-wide utility, not a tool for intra-marketing efficiency. (Ha – and you thought I couldn’t write a concise sentence.)
Wednesday, December 22, 2010
Teradata Buys Aprimo for $525 Million: More Marketing Automation Consolidation To Come
Summary: Teradata's acquisition of Aprimo takes the largest remaining independent marketing automation vendor off the market. The market will probably split between enterprise-wide suites and more limited marketing automation systems.
Teradata announced today that is acquiring marketing automation vendor Aprimo for a very hefty $525 million – even more than the $480 million that IBM paid for somewhat larger Unica in August.
Given the previous Unica deal. other recent marketing system acquisitions, and wide knowledge that Aprimo was eager to sell, no one is particularly surprised by this transaction. Teradata is a logical buyer, having a complementary campaign management system but lacking Aprimo’s marketing resource management, cloud-based technology and strong B2B client base (although Aprimo has stressed to me more than once that 60% of their revenue is from B2C clients).
This is obviously a huge decision for Teradata, a $1.7 billion company compared with IBM’s $100 billion in revenue. It stakes a claim to a piece of the emerging market for enterprise-wide marketing systems, the same turf targeted in recent deals by IBM, Oracle, Adobe and Infor (and SAS and SAP although they haven’t made major acquisitions).
This enterprise market is probably going to evolve into something distinct from traditional “marketing automation”. The difference: marketing automation is focused on batch and interactive campaign management but just touches slightly on advertising, marketing resource management and analytics. The enterprise market involves unified systems sold at the CEO, CFO, CIO and CMO levels, whereas marketing automation has been sold largely to email and Web marketers within marketing departments.
The existence of C-level buyers for marketing systems is not yet proven, and I remain a bit of a skeptic. But many smart people are betting a lot of money that it will appear, and will spend more money to make it happen. Aprimo is probably the vendor best positioned to benefit because its MRM systems inherently work across an entire marketing department (although I’m sure many Aprimo deployments are more limited). So, in that sense at least, Teradata has positioned itself particularly well to take advantage of the new trend. And if IBM and Oracle want to invest in developing that market so that Teradata can benefit, so much the better for Teradata.
That said, there's still some question whether Teradata can really benefit if this market takes off. Aprimo adds a great deal of capability, but the combined company still lacks the strong Web analytics and BI applications of its main competitors. A closer alliance with SAS might fill that gap nicely...and acquisition or merger between the two firms is perfectly conceivable, at least superficially. Lack of professional services is perhaps less an issue since it makes Teradata a more attractive partner to the large consulting firms (Accenture, CapGemini, etc.) who already use its tools and must be increasingly nervous about competition from IBM’s services group.
The other group closely watching these deals are the remaining marketing automation vendors themselves. Many would no doubt be delighted to sell at such prices. But, as Eloqua’s Joe Payne points out in his own comment on the Aprimo deal, the remaining vendors are all much smaller: while Unica and Aprimo each had around $100 million revenue, Eloqua and Alterian are around $50 million, Neolane and SmartFocus are $20-$30 million, and Marketo said recently it expects nearly $15 million in 2010. I doubt any of the others reach $10 million. (This excludes email companies like ExactTarget, Responsys and Silverpop [which does have a marketing automation component].) Moreoever, the existing firms skew heavily to B2B clients and smaller companies, which are not the primary clients targeted by big enterprise systems vendors.
That said, I do expect continued acquisitions within this space. I’d be surprised to see the 4-5x revenue price levels of the Unica and Aprimo deals, but even lower valuations would be attractive to owners and investors facing increasingly cut-throat competition. As I’ve written many times before, the long-term trend will be for larger CRM and Web marketing suites to incorporate marketing automation functions, making stand-alone marketing automation less competitive. Survivors will offer features for particular industries or specialized functions that justify purchase outside of the corporate standard. And the real money will be made by service vendors who can help marketers fully benefit from these systems.
Teradata announced today that is acquiring marketing automation vendor Aprimo for a very hefty $525 million – even more than the $480 million that IBM paid for somewhat larger Unica in August.
Given the previous Unica deal. other recent marketing system acquisitions, and wide knowledge that Aprimo was eager to sell, no one is particularly surprised by this transaction. Teradata is a logical buyer, having a complementary campaign management system but lacking Aprimo’s marketing resource management, cloud-based technology and strong B2B client base (although Aprimo has stressed to me more than once that 60% of their revenue is from B2C clients).
This is obviously a huge decision for Teradata, a $1.7 billion company compared with IBM’s $100 billion in revenue. It stakes a claim to a piece of the emerging market for enterprise-wide marketing systems, the same turf targeted in recent deals by IBM, Oracle, Adobe and Infor (and SAS and SAP although they haven’t made major acquisitions).
This enterprise market is probably going to evolve into something distinct from traditional “marketing automation”. The difference: marketing automation is focused on batch and interactive campaign management but just touches slightly on advertising, marketing resource management and analytics. The enterprise market involves unified systems sold at the CEO, CFO, CIO and CMO levels, whereas marketing automation has been sold largely to email and Web marketers within marketing departments.
The existence of C-level buyers for marketing systems is not yet proven, and I remain a bit of a skeptic. But many smart people are betting a lot of money that it will appear, and will spend more money to make it happen. Aprimo is probably the vendor best positioned to benefit because its MRM systems inherently work across an entire marketing department (although I’m sure many Aprimo deployments are more limited). So, in that sense at least, Teradata has positioned itself particularly well to take advantage of the new trend. And if IBM and Oracle want to invest in developing that market so that Teradata can benefit, so much the better for Teradata.
That said, there's still some question whether Teradata can really benefit if this market takes off. Aprimo adds a great deal of capability, but the combined company still lacks the strong Web analytics and BI applications of its main competitors. A closer alliance with SAS might fill that gap nicely...and acquisition or merger between the two firms is perfectly conceivable, at least superficially. Lack of professional services is perhaps less an issue since it makes Teradata a more attractive partner to the large consulting firms (Accenture, CapGemini, etc.) who already use its tools and must be increasingly nervous about competition from IBM’s services group.
The other group closely watching these deals are the remaining marketing automation vendors themselves. Many would no doubt be delighted to sell at such prices. But, as Eloqua’s Joe Payne points out in his own comment on the Aprimo deal, the remaining vendors are all much smaller: while Unica and Aprimo each had around $100 million revenue, Eloqua and Alterian are around $50 million, Neolane and SmartFocus are $20-$30 million, and Marketo said recently it expects nearly $15 million in 2010. I doubt any of the others reach $10 million. (This excludes email companies like ExactTarget, Responsys and Silverpop [which does have a marketing automation component].) Moreoever, the existing firms skew heavily to B2B clients and smaller companies, which are not the primary clients targeted by big enterprise systems vendors.
That said, I do expect continued acquisitions within this space. I’d be surprised to see the 4-5x revenue price levels of the Unica and Aprimo deals, but even lower valuations would be attractive to owners and investors facing increasingly cut-throat competition. As I’ve written many times before, the long-term trend will be for larger CRM and Web marketing suites to incorporate marketing automation functions, making stand-alone marketing automation less competitive. Survivors will offer features for particular industries or specialized functions that justify purchase outside of the corporate standard. And the real money will be made by service vendors who can help marketers fully benefit from these systems.
Tuesday, November 02, 2010
Oracle Buys ATG: Bad News for Marketing Automation?
So…Oracle bought ATG today for $6.00 per share or, as the press release puts it with charming nonchalance, “approximately $1.0 billion”. I can’t exactly say I told you so, since this particular pairing never crossed my mind. But if you look back at my “doughnuts and pizza slices” post on software acquisitions, it does make perfect sense. ATG is a specialist in e-commerce (the ERM doughnut in the online operations pizza slice), an area where Oracle’s traditional ERM products are weak. As my model suggests it should, ATG also encompasses online CRM and online marketing, where Oracle’s Siebel line is also a little thin.
Since Oracle is already strong in offline ERM and offline analytics, ATG leaves Oracle just one slice short of a pie. In other words, Oracle needs a Web analytics product. With Omniture, CoreMetrics and Unica already gone, only Webtrends is an option…unless Oracle gobbles up Adobe. ‘nuff said.
So much for the obvious. What I really care about is the implications for marketing systems. I’d say the ATG purchase lessens the odds of Oracle buying a marketing automation vendor. The logic is this: buying ATG suggests that Oracle, like IBM (which put Unica in its WebSphere organization), is focusing on online marketing rather than marketing automation in general. Since ATG itself provides substantial online marketing functionality, there’s a smaller gap for Oracle to fill with a separate marketing automation purchase. Nor have I forgotten that Oracle already bought marketing automation vendor Market2Lead, plugging a different set of holes.
If anything, Oracle (and IBM) need to strengthen their position in online advertising. I'd look for them to buy tools to manage banner ads, search ads, and search engine optimization. This in turn could point towards investments in content management and digital asset management systems. That also leads further away from standard marketing automation.
The day-to-day impact of all this on marketers is slight. They still need marketing automation tools to do their jobs. If anything, they’re better served by having some marketing automation vendors remain independent, since this keeps prices down and encourages competitive innovation. A less-helpful result may be to further isolate digital marketing from other channels, when what we need is to integrate them more closely. Perhaps digital marketing systems will grow to the point that they take over offline marketing as well. I hadn't expected such a role reversal, but it’s certainly possible. Just ask Oedipus. Not that that turned out so well.
Since Oracle is already strong in offline ERM and offline analytics, ATG leaves Oracle just one slice short of a pie. In other words, Oracle needs a Web analytics product. With Omniture, CoreMetrics and Unica already gone, only Webtrends is an option…unless Oracle gobbles up Adobe. ‘nuff said.
So much for the obvious. What I really care about is the implications for marketing systems. I’d say the ATG purchase lessens the odds of Oracle buying a marketing automation vendor. The logic is this: buying ATG suggests that Oracle, like IBM (which put Unica in its WebSphere organization), is focusing on online marketing rather than marketing automation in general. Since ATG itself provides substantial online marketing functionality, there’s a smaller gap for Oracle to fill with a separate marketing automation purchase. Nor have I forgotten that Oracle already bought marketing automation vendor Market2Lead, plugging a different set of holes.
If anything, Oracle (and IBM) need to strengthen their position in online advertising. I'd look for them to buy tools to manage banner ads, search ads, and search engine optimization. This in turn could point towards investments in content management and digital asset management systems. That also leads further away from standard marketing automation.
The day-to-day impact of all this on marketers is slight. They still need marketing automation tools to do their jobs. If anything, they’re better served by having some marketing automation vendors remain independent, since this keeps prices down and encourages competitive innovation. A less-helpful result may be to further isolate digital marketing from other channels, when what we need is to integrate them more closely. Perhaps digital marketing systems will grow to the point that they take over offline marketing as well. I hadn't expected such a role reversal, but it’s certainly possible. Just ask Oedipus. Not that that turned out so well.
Friday, August 13, 2010
IBM Buys Unica: Will Acquisitions Now Shift to B2B Marketing Automation?
IBM announced this morning that it was purchasing enterprise marketing automation leader Unica for $480 million, more than double the company’s current stock market valuation. This is wholly unsurprising: as the last and only big independent left in its space, Unica was obvious acquisition bait. It was also a motivated seller, since it faced an increasingly impossible struggle to fund the product enhancements necessary to compete with the likes of SAS, Teradata and Siebel / Oracle. Conversely, IBM is on a customer intelligence acquisition spree that has already included Coremetrics Web analytics, Sterling Commerce B2B integration and Cognos and SPSS business analytics.
There’s been some comment (I’m looking at you, Jonathan Block of SiriusDecisions) relating the IBM/Unica deal to consolidation with the B2B marketing automation industry. Sorry, but I don’t see a connection. As I discussed in my own post on industry consolidation, Unica belongs to the class of marketing systems that serve consumer marketers. Its acquisition is basically the completion of the consolidation of that space, not the start of consolidation among B2B marketing automation vendors. (I’m overstating a bit: there are a couple of B2C vendors left including Neolane, Alterian and SmartFocus, although the latter two use proprietary database engines that would make them difficult to integrate into a larger enterprise suite. Probably the most prominent survivor is Aprimo, but they’re more B2B.)
If there’s any connection at all, it’s that this acquisition may spur Web content management vendors to accelerate their own acquisition of marketing automation capabilities. I discussed this a bit in my post on Adobe’s acquisition of Day Software and in the industry consolidation post. Given that there are so few B2C marketing automation vendors left, the Web content management players are almost forced to consider buying a B2B marketing automation system. (The other option would be email vendors like ExactTarget and Responsys.)
This isn’t really a bad thing: the B2B marketing automation products have pretty much all the capabilities of the B2C systems and then some. On the other hand, most B2B systems are designed for smaller data volumes and have less flexible data structures.
The bottom line is probably that the upper tier B2B marketing automation vendors (Eloqua, Silverpop, Aprimo, possibly Marketbright) are next in line to be bought. But you already knew that.
There’s been some comment (I’m looking at you, Jonathan Block of SiriusDecisions) relating the IBM/Unica deal to consolidation with the B2B marketing automation industry. Sorry, but I don’t see a connection. As I discussed in my own post on industry consolidation, Unica belongs to the class of marketing systems that serve consumer marketers. Its acquisition is basically the completion of the consolidation of that space, not the start of consolidation among B2B marketing automation vendors. (I’m overstating a bit: there are a couple of B2C vendors left including Neolane, Alterian and SmartFocus, although the latter two use proprietary database engines that would make them difficult to integrate into a larger enterprise suite. Probably the most prominent survivor is Aprimo, but they’re more B2B.)
If there’s any connection at all, it’s that this acquisition may spur Web content management vendors to accelerate their own acquisition of marketing automation capabilities. I discussed this a bit in my post on Adobe’s acquisition of Day Software and in the industry consolidation post. Given that there are so few B2C marketing automation vendors left, the Web content management players are almost forced to consider buying a B2B marketing automation system. (The other option would be email vendors like ExactTarget and Responsys.)
This isn’t really a bad thing: the B2B marketing automation products have pretty much all the capabilities of the B2C systems and then some. On the other hand, most B2B systems are designed for smaller data volumes and have less flexible data structures.
The bottom line is probably that the upper tier B2B marketing automation vendors (Eloqua, Silverpop, Aprimo, possibly Marketbright) are next in line to be bought. But you already knew that.
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