An edited version of my article ran originally on ClickZ on June 13, 2013. The full article with original and unedited comments from the leaders I asked for input is below.
Digital Leaders React to the Salesforce/ExactTarget Monster Deal
By Simms Jenkins
An arms race in the cloud has been shaping up and the marketing world has been in focus for software behemoths of late. The announced acquisition of ExactTarget by Salesforce.com made things a lot more interesting.
Is this the future of the digital world or an expensive act of desperation trying to fill a product hole? Reactions ran the gamut from a home run to the end of a great company. (One tweet from @theeMailGuide said “I think the ExactTarget merger with Salesforce will kill heart and soul of a great company. Sorry for ExactTarget.”
Time will tell how ExactTarget’s core email business will be impacted but it does appear ExactTarget will be run as an independent company, at least for the time being.
Other interesting reactions came from across the entire software spectrum but a notable reaction was from SAP Co-Chief Executive Officer Bill McDermott who, according to Bloomberg said “that he and other CEOs usually throw marketing emails into the spam bin, calling rivals’ moves “quite puzzling.”
Regardless of your view on this deal, it is hard to dispute the notion that marketing tech is hot and this largely centers around the shift of power in buying and consumer behavior. Gartner predicts CMOs will outspend CIOs on IT by 2017. What is the #1 activity that US consumers choose to engage with on their smartphones? Email.
So email seems to (finally) be in that sweet spot of convergence – consumers, marketers and Wall Street all want a piece of the email industry.
I asked well respected leaders (and in some cases competitors of the combined companies in the $2.5B transaction) to chime in and provide their expert analysis of this megadeal as well as its impact on the email and digital marketing landscape. I gave the highly regarded contributors the option of responding to questions or providing general thoughts on the deal.
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“ExactTarget is an email company, and that is what Salesforce.com bought for almost $2.5B. At Marketo, our comprehensive solution includes great email capabilities, but goes much deeper to include enterprise-class marketing automation, social marketing, marketing financial management, and revenue cycle analytics. Frankly, we think equating email marketing with a modern and complete marketing platform is a misunderstanding of where the market is going. We founded Marketo with an unwavering vision about where marketing was headed, and have been the innovator in the space ever since.”
Jon Miller, Co-Founder and VP, Marketing Content and Strategy – Marketo
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Analysis of the deal
“Salesforce.com is building a solution by weaving together separate, siloed tools. Their executive, Mike Lazerow was quoted in AdAge saying, “integration will be more piecemeal based on clients’ needs.” Even if each solution is strong in its own right, and even with the value of a single vendor, marketing and others focused on customer experience will ultimately look for a unified solution that provides a single view of the customer across channels and tools.”
What it means for the email marketing industry and its future
“It is definitely another reminder that we are part of an incredibly dynamic market. Change and consolidation are inevitable and typically very positive for the industry. What won’t be positive is if consolidation starts to trump innovation. In the face of all this change, the vendors in our space who will be the most successful will be those who are able to remain undistracted and laser focused on their current customers and on product developments that help marketers collect data from every imaginable customer touch point, regardless of system or vendor, into a single view.”
Overall impact and rationale for a Salesforce/ExactTarget combination
“I think it is very telling that none of the details about the deal speak to integration plans, and anticipate that any kind of technology integration is probably several years in the future. If ExactTarget is run independently, as it appears it will be, most of the benefit to future customers will be more about organizational processes (contracts, billing, etc.) than functionality and vision.”
Bill Nussey, President and CEO – Silverpop
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“This deal really just proves what anyone working in or around the internet has known for a long time – the future of marketing is about digital communications. Email, mobile, social – these are the channels that marketers will increasingly rely on to reach their customers and prospective customers. At the same time, the fractured nature of the digital world has led to an explosion of companies looking to serve marketers every flavor of automation, analytics and optimization. The array of decisions is completely dizzying. This means that companies that can provide marketers with a wide range of really integrated, robust and innovative services across the entire digital landscape will be able to capture a bigger share of budget. “
Matt Blumberg, Co-Founder, CEO & Chairman
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Analysis of the deal
“As the saying goes, “email is the killer app of the Internet”, now maybe we have $2.5 Billion reasons to confirm it. Bottom line, the Salesforce.com acquisition of ExactTarget confirms the importance of email as a communications channel for both marketers, due to the tremendous ROI, as well as software providers, due to the stickiness and core nature of email. Salesforce.com had a decision to make, is email vital enough to potentially destroy a partner channel and pay a 50% premium for it, they answered the question yes. This will affect their partner channel as “email marketing” is the number one requested application in the AppExchange, and they paid a hefty price for it.
As a leader in the email marketing industry this excites me and motivates me. Markets always look for choice, so this acquisition certainly does not freeze our other providers and honestly my prediction is that it creates more opportunity for other providers such as WhatCounts. In the short-term will Salesforce.com push to make ExactTarget the de-facto standard, yes, but the entrepreneur in me knows that very rarely works. “
What it means for the email marketing industry and its future
“Email marketing has always set atop the digital ROI stack, because it works. This acquisition simply confirms that again, and for an industry that often is tough on itself, this is an opportunity for us all to celebrate – we are number one – and will remain number one for a long-time. Email marketing works.“
Overall impact and rationale for a Salesforce/ExactTarget combination
“Salesforce.com has been shopping for an email marketing acquisition for nearly 3 years. All leaders in the space, WhatCounts included, have been courted at various stages by Salesforce.com. This combination is simply a testament to the strategy that Salesforce.com has been executed against as it relates to the Marketing Cloud. The idea that marketing as a core functional area will continue to spend on technology solutions, and those solutions will be delivered mainly through a SaaS/Cloud offering. ExactTarget assembled through organic and non-organic strategies the pieces that Salesforce.com viewed as the “marketing cloud”. This acquisition allows them to truly make that statement more of a reality, and for that they paid 50% more.”
Allen Nance, President and CEO, WhatCounts
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“The acquisition of Exact Target by Salesforce.com makes total sense for both parties. For Salesforce.com, they acquire a leader in the email deployment space that has a fantastic and fanatic fan base. For Exact Target, their shareholders obtain a liquidity event and their clients eventually receive benefits in the form of advanced CRM capability. The real news here is that email is finally being recognized for the central role that it plays in CRM.
The Email address has always been the primary key for any modern CRM database – not the cookie – so this acquisition of ET by Salesforce.com becomes more than a sum of its parts. This is an immediate win for three stakeholders: Salesforce.com customers, ExactTarget customers, and Exact Target shareholders. For Salesforce.com shareholders, the acquisition of another SaaS business with recurring and growing revenues will only help grow the business because, as people are beginning to figure out, email is the lynchpin technology that binds everything on the internet together.”
Dave Hendrix, COO – LiveIntent
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I offered ExactTarget the opportunity to comment and they directed me to a blog post by CEO Scott Dorsey and the official announcement.
I am of the opinion that this certainly validates email marketing as the digital marketing hub and its continued importance in the marketing suite. It also plugs a huge hole for Salesforce and allows CMOs another entry point into their evolving product offerings. Acquiring an email and messaging platform like ExactTarget could be a natural fit for a company centered around CRM as their primary business model. As for any acquisition, the devil is in the details. We shall see how this pans out.
What are your thoughts, analysis and hopes related to this combination?
