Intuit has purchased Demandforce, a marketing software-as-a-service (SaaS) provider that automates Internet marketing and communications. The purchase is yet another sign that Intuit is trying to grow its small and medium business (SMB) business.

SMB the Next Big Thing in the Enterprise Market?

Intuit’s latest acquisition, Demandforce, provides dozens of tools that help SMBs manage their digital marketing campaigns and engage with leads and customers. Even if you haven’t heard of the company, tens of thousands of SMBs have. Demandforce, which was founded in 2003, has more than 35,000 customers and generated US$ 37.5 million in sales last year.

The company’s strong market position and profitability resulted in an impressive acquisition price for Demandforce -- US$ 423.5 million -- the largest in Brad Smith’s tenure as CEO. Financial analysts are describing the purchase as expensive, but it’s a strategic move for Intuit, which has been trying to expand its role in the SMB market. Intuit currently has popular small business accounting and payroll products; adding a marketing automation solution will allow Intuit to extend its reach inside of its existing 5 million buyers and potentially add a few new customers.

Why Demandforce?

It’s unclear how exactly Intuit will integrate Demandforce’s offerings with its existing products. It could choose to allow Dreamforce to continue to operate independently and cross-sell or it could pursue a deeper product integration. No matter what it decides, marketing automation is clearly a growth area because of the number of businesses that are formalizing their digital marketing efforts.

From a financial perspective,  Demandforce’s monthly subscription rates are US$ 200-US$ 300, which is substantially more than Intuit's existing business-focused services. The acquisition will allow Intuit to increase its average revenue per customer and target larger businesses with its more comprehensive offerings.