A Perfect Fit?
Since it's his company, we'll start with Marc Benioff, CEO at Salesforce, who went on CNBC's Mad Money late June 4 to discuss the deal. Salesforce stocks were down yesterday after news of the deal was announced, by the way. Of course, Benioff called ExactTarget a perfect fit, and that the company looked at every marketing automation company there is before snapping it up for US$ 2.5 billion, the largest deal Salesforce has ever made.
The last two deals Salesforce made were for marketing companies, the most recent being Buddy Media, for which Salesforce paid a then record (for itself) US$ 745 million. ExactTarget has a strong background in email marketing specifically, and its customer base is wider than what would have been included with a deal for say, Marketo, Brian Vellmure, an independent analyst told Craig Rosenberg over at the funnelholic blog.
"ExactTarget had nearly double the revenue of Marketo, and the price paid was likely less than twice the multiple of trailing twelve months revenue," Vellmure added.
It was a better deal than what it would have gotten for Marketo, he said.
Many of Marketo's own customers use Salesforce, so naturally, they were curious about what the deal would mean for them, and Marketo addressed the issue in a blog post. With ExactTarget now in the clutches of Salesforce, Marketo is the top dog in marketing automation by a wide margin, a point it didn't miss in the blog post.
"Frankly, we think equating email marketing with a modern and complete marketing platform is a misunderstanding of where the market is going," Phil Fernandez, Marketo president and CEO wrote on the company blog.
That's not just sour grapes over not getting bought out themselves, either. We for sure thought Marketo would be the Saleforce choice ourselves.
"ExactTarget has a legacy e-mail marketing platform, and Salesforce has done very little to advance their own platform, so this leaves their joint customers squarely back in the 20th century," Raghu Raghavan, CEO of Act-On Software wrote at the funnelholic blog.
Justin Grey, from the Marketing Evangelist blog, also sees this as a potential win for Marketo.
"In the short term, I think this gives Marketo a license to steal," he wrote.
Salesforce has a history of taking a long time to integrate companies it buys, and since ExactTarget was mostly focused on email marketing, Salesforce customers will be looking for this deal to scale in a nearly ideal way, Grey noted.
Email Marketing vs. Marketing Automation
Matt Heinz of Heinz Marketing echoed Grey's thoughts, calling Salesforce a latecomer to the marketing automation party.
Russel M. Glass, CEO of digital marketing firm Bizo, disagreed with Grey and Heinz's assesments, saying instead he liked the ExactTarget buy because of its inclusion of that company's own buy of Pardot last fall.
"Pardot will be a key strategic asset for Salesforce, as it’s more B2B and marketing automation focused," Glass said in a statement.
"In terms of what’s coming next, SAP needs to make a move -- I would think they might be looking at Merkle or Responsys," he said.
"Marketo is also a possibility, but it’s not big enough to really move the needle. Look for Oracle to announce another acquisition soon too."
Howard Sewell, president of Spear Marketing Group agreed wth Glass on the SAP point, he wrote on the funnelholic blog. SAP is the one to watch he noted, and with Marketo now a clear target, its price tag just shot up, he noted. (Editor's note: SAP has just announced it's buying e-commerce firm hybris)
State of Marketing
Curiously missing from Forrester analysts Shar VanBoskirk and Rob Brosnan's summary of the industry shakeup this move has brought on, was any mention of Marketo at all. Instead, they focused on vendors like Responsys, Neolane and Silverpop, and possible suitors in the form of Adobe, IBM, Microsoft or SAP. Salesforce has put added pressure on traditional enterprise application providers to make similar moves, the Forrester team wrote.
Forrester also pointed out the cultural differences between the Salesforce team and the ExactTarget team, noting it could be a jarring transition for ExactTarget's existing customers. As Salesforce begins integrating ExactTarget's technology into its Marketing Cloud, there will be less innovation around ExactTarget's core business, and that means less innovation in a time when marketers need exactly that.
We've embedded Benioff's Mad Money appearance below, and we'd love to hear any and all comments about the deal, and its ramifications on those involved or the industry as a whole.