Salesforce Acquires Marketing Automation Provider

Are you really surprised that Salesforce went out and bought ExactTarget for US$ 2.5 billion?

A Giant in the Making?

Marc Benioff is a man on a mission, for Salesforce to be the world's "leading" CRM platform and the "market leader" in market and technology. That's what Salesforce is saying with its biggest acquisition to date.

This is not the first marketing platform to join the Salesforce family. Radian6 and BuddyMedia came before it. But ExactTarget is probably the biggest marketing automation provider in the industry that wasn't owned by someone else (Eloqua would have fit in here, but it was acquired by Oracle last year).

The deal is this: Salesforce will acquire all shares of ExactTarget for US$ 33.75/share in cash. It is expected to increase Salesforce revenues by US$ 120 -125 million for the 2014 fiscal year. Of course Salesforce still has all the hoops to go through before the deal is final, but the company is noting a July 31, 2013 closing date.

The CMO is expected to spend more on technology than the CIO by 2017,” said Marc Benioff, chairman and CEO, salesforce.com. “The addition of ExactTarget makes Salesforce the starting place for every company and puts salesforce.com in the pole position to capture this opportunity.”

Salesforce didn't meet its numbers for Q1 only growing 28% to US$ 893 million, just US$ 100 million shy of its first US$ 1 billion quarter, but you can expect it sees ExactTarget as a way to meet and exceed that US$ 1 billion mark.

The Salesforce Marketing Cloud Expands

ExactTarget will slide in nicely to the Salesforce Marketing Cloud alongside BuddyMedia, Radian6 and Social.com. It will certainly provide Salesforce with end-to-end digital marketing capabilites that will integrate fully with all of the Salesforce CRM offerings.

And remember, ExactTarget acquired Pardot just last year to add small business marketing automation capabilities to its own platform, which in the end gives Salesforce the ability address any size business.

This acquisition holds true to what Gartner recently said about the importance of lead management in CRM. Gartner estimates that investments in CRM marketing automation applications and services, which includes lead management, grew by 20% in 2011 and 2012 and by 2016 will be worth in the region of US$ 4.2 billion.

Oddly enough, it did not put ExactTarget in the leaders quadrant for lead management, pointing instead to Marketo (which just went public) and Eloqua. It did however note that Salesforce is a niche player and ExactTarget is a visionary, so the combination of the two should make a formidable challenger next year (note that this was the first year, ExactTarget made the Gartner Magic Quadrant).

So...are you surprised? And what does this really mean for Salesforce?

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