B2C uptick for Marketo, but losses widen

SUMMARY:

Mixed fortunes for the original marketing cloud provider Marketo yesterday as it reported fourth-quarter net loss of $15.5 million, up from the $8.0 million reported last year, on  revenues rising to $28.2 million from $16.8 million last year. For 2013 as whole, Marketo reported a net loss of $47.4 million on revenues of $95.9 million, […]

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Phil Fernandez

Mixed fortunes for the original marketing cloud provider Marketo yesterday as it reported fourth-quarter net loss of $15.5 million, up from the $8.0 million reported last year, on  revenues rising to $28.2 million from $16.8 million last year.

For 2013 as whole, Marketo reported a net loss of $47.4 million on revenues of $95.9 million, up 64% year on year.

Nonetheless CEO Phil Fernandez remains upbeat, declaring marketing software to be the most dynamic enterprise software market sector:

“As we have been saying since the day we started Marketo, this is happening because marketing professionals uniquely have their hands on today’s levers for business growth. They are the owners of their company’s presence on the web in mobile and on social media.

“More broadly, they are the storers of their customers’ experience and lifetime value. This has compelled marketers in virtually every industry to step forward and to become essential catalysts for revenue growth.

“Because this role for marketers is so important to their businesses and so different from what their colleagues do in other parts of the enterprise, marketers are demanding a technology solution built just for them. This is what’s driving our business to being the independent thought leader and technology innovator for marketers.”

Some other numbers from the analyst call yesterday:

  • Marketo closed 2013 with 3,001 customers.
  • The LaunchPoint ecosystem ends the year with over 250 partner solutions, more than double from a year before.
  • Professional services and other revenue in Q4 was $3 million, up 94% year-over-year, and $10.8 million, up 91% over the prior year, for the whole of 2013.
  • In Q4, B2C marketing solutions represented 12% of our new bookings, up from essentially 0% a year ago.

That last stat is one that Fernandez is keen to highlight:

“This is one of the most critical growth engines for Marketo. Our observation is that our core technology platform one that lets our customers really build these personal, relevant, ongoing dialogues with customers across inbound, outbound, social, mobile channels is broadly applicable to every industries, every market whether it’s the lead acquisition like B2B or other kinds of applications like driving customer lifetime value and various kinds of B2C businesses.

“So, we continue to scale. We’ve increasingly been putting energy and momentum into driving demand in that sector. Our Marketo Dialog Edition is a packaging of our products specifically designed to appeal to B2C customers.

“Broadly speaking, we’re reaching a scale and awareness in the market where B2C customers are coming to us and we expect to lean into that.”

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Woof!

A good example of the kind of customer that the Dialog Edition is reaching is the American Kennel Club (AKC), which has signed up to the Marketo offering to enable them to listen and engage with dog owners in real-time.

The AKC  wants to be able to interact with club members based on individual online behaviors to deliver personalized content that promotes responsible dog ownership and helps people better enjoy their pets.

The club recently launched its Woofipedia digital offering aimed at younger dog lovers. It now wants understand what people love to discuss and learn most about their dogs on Woofipedia, and then extend two-way conversations with community members across other channels.

Away from the four-legged friends, the overall competitive landscape in the B2C positions Marketo against traditional email campaign marketing:

“In B2C, there is almost always an incumbent e-mail tool that’s being replaced as part of the purchase.

“Our point of view on B2C is that the world needs to move from treating e-mail as a channel standing alone to be an integral part of an ongoing relevant personal inbound and outbound discussion.

“So what we see in B2C is companies moving really from using e-mail as their strategic marketing tool to using a more complete multi-channel platform like Marketo. So that tends to be a shift in purchase where there is a move from an e-mail product to Marketo.”

Fernandez adds:

“We’re not in anyway backing away from the B2B business but we’ll continue to expect to see increasing growth and traction in B2C.

“In the B2B space, this is almost entirely a greenfield market. There are various kinds of technologies installed, but this is the first time that customers are changing any kind of a strategic marketing tool.”

Disclosure: at time of writing, Marketo is a partner of diginomica.