This week brought forth rumors of a potential landmark deal that would shake up the marketing technology space, Adobe acquiring Marketo. While no deal is final, Reuters reported that the San Jose, Calif.-based marketing cloud and customer experience software provider is in talks to scoop up Marketo, a marketing automation software company based in San Mateo, Calif., some 30 minutes north of their potential acquirer.
The deal would come more than two years after Vista Equity Partners acquired Marketo for $1.79 billion in May of 2016. That move took Marketo off the public payrolls three years after its $80 million IPO. Reuters reported this week that Adobe is ready to pay significantly more than that $1.79 billion price tag; one would think Vista is in the business of turning a profit, so that makes sense.
UPDATE: Adobe Officially Acquires Marketo for $4.75B
UPDATED as of 5 p.m. ET Sept. 20: Adobe made it official by announcing in a press release it has entered into a definitive agreement to acquired Marketo for $4.75 billion. This brings Marketo’s engagement platform to the Adobe Experience Cloud, according to officials. It brings together the "richness" of Adobe Experience Cloud analytics, content, personalization, advertising and commerce capabilities with Marketo’s lead management and account-based marketing technology. This, officials said in the Adobe press release that went out Sept. 20, will provide B2B companies with the ability to create, manage and execute marketing engagement at scale.
"Adobe and Marketo both share an unwavering belief in the power of content and data to drive business results,” Steve Lucas, CEO of Marketo, said in the release. “Marketo delivers the leading B2B marketing engagement platform for the modern marketer, and there is no better home for Marketo to continue to rapidly innovate than Adobe." Lucas will join Adobe's senior leadership team and continue to lead the Marketo team as part of Adobe’s Digital Experience business, reporting to executive vice president and general manager Brad Rencher.
Shantanu Narayen, CEO of Adobe, said in a Sept. 20 conference call, said he feels Adobe is now in a "unique position to be able to serve all marketers. ... We think we have an unbeatable combination."
B2C vs. B2B Still Matters
Tony Byrne, CEO of Real Story Group, said last week when it was just a rumor that the potential acquisition shows definitively that B2B vs. B2C still makes a big difference in outbound engagement, Adobe already has a B2C-focused platform, he told CMSWire.
Another analyst inside the MarTech space told CMSWire in 2016 that the private equity buyout of Marketo was surprising. Cathy McKnight, co-founder and vice president of consulting and operations for New York City’s Digital Clarity Group, saw one of the big tech vendors like IBM, SAP or Microsoft scooping up Marketo. Two years later, McKnight would be right on after all should Adobe and Marketo pull the trigger on a mega deal.
"The narrative of this acquisition, if it happens, will hinge a lot on the purchase price," Scott Brinker, creator of the Chief Marketing Technologist Blog, told CMSWire.
Related Article: What is Marketo?: A Marketer's Guide
Creating a 'Bidding War with Salesforce?'
The leak of the potential Adobe-Marketo deal this week could be nothing more than an attempt at creating a "bidding war with Salesforce," according to Scott Liewehr, CEO of Digital Clarity Group. "Someone leaked this," Liewehr told CMSWire. "Why would they do that?" Adobe and Salesforce haven’t really been super competitive because they weren’t really head-to-head given each other’s gaps, according to Liewehr. "But," he said, "if Adobe were to acquire Marketo it would put them directly in the crosshairs of Salesforce. Now Adobe would be coming into the sales space." Stepping into the sales space is a "natural next step to expand the breadth of (Adobe's) purview," Liewehr added.
The acquisition would also satisfy Adobe's efforts to figure out how to reach down into midmarket, something they've looked at for a long time "without just lowering the price of their complex, enterprise products." "Marketo," Lieweher added, "has a healthy base of midmarket customers with tools that get up and running quickly to drive value." Marketo has its enterprise customers, Liewehr added, but they "tick a lot of boxes for midmarket."
The Adobe Experience Cloud powers its marketing technology suite. It includes components of analytics, audience profiles, content management, campaign execution, advertising, personalization and commerce. Adobe acquired Magento for $1.68 billion earlier this year to bring native commerce capabilities to its suite. Competitor Sitecore had its own commerce, bringing Adobe on par in the transactional arena. Marketo is in the cloud. If Adobe acquires it, it could serve as a "better pairing for their Magento purchase," Liewehr said.
The Adobe-Marketo deal would likely be the largest in the space featuring these kind of digital experience software providers. The last two years has yielded some other notable deals:
- April 2016: EQT acquires Sitecore for $1.14 billion
- May 2016: Vista Equity Partners acquires Marketo for $1.65 billion
- May 2018: Adobe acquires Magneto for $1.68 billion
- Sept. 2018: Insight Venture Partners acquires Episerver for $1.16 billion
Adobe's Potential Quest for B2B
Lori Wizdo, analyst for Forrester who has covered Marketo for multiple years, noted that Adobe decommitted from its lead management software, which was part of an Adobe Campaign, in the past year. "That action, along with others the company has taken," Wizdo said, "has made it a non-viable vendor for the majority of B2B marketing use cases." Adobe could still sell into B2B marketing companies or B2B2C marketing companies where marketing practice is closer to B2C use cases: more email, less account-based marketing, less complex contextual nurturing, etc., according to Wizdo. "But," she said, "it is definitely a company at the periphery of B2B marketing automation."
Forrester calls the more core B2B marketing practice Lead-to-Revenue Marketing (L2RM), Wizdo noted, and forecasts the global L2RM platform market to grow at a 19.4 percent CAGR over the 2017-to-2023 period from a base of $1.3 billion in 2017. "In order to fully participate in that market, Adobe would need to build or buy new functionality," Wizdo said. "And Marketo is a good potential source for that. The company is on the short list in just about every B2B marketing automation platform selection."