Steady as she goes is as good a description as any of Marketo’s latest set of financials this week. The firm turned in a loss of $18.4 million in its first quarter on revenue up 35% year-on-year to $62.2 million, pretty much in line with Wall Street expectations.
The firm also announced an intriguing hire in the shape of Shankar Venkataraman, who’s coming on board as Chief Scientist, in which role he will be responsible for overseeing product development. Prior to joining Marketo, Venkataraman was serving IBM as Chief Technical Officer for the IBM Analytics Platform, so it’s likely we’ll see more focus on the data analytics aspect of marketing automation.
The firm has been busy focusing on the data aspect of marketing needs anyway, says CEO Phil Fernandez, citing the release in January of the firm’s Audience Hub data resource:
Over the past year, the entire marketing and advertising industry has woken up to the importance of data, and more specifically, to the importance of first-party customer behavioral data. First-party data is the permission-based information that organizations collect about their own customers as they interact with them over time. Harvesting and analyzing first-party data has always been a strength for Marketo, and now we’ve brought this capability strongly forward in our platform and partnerships.
Fernandez cites the example of Berklee College of Music in Boston to illustrate his point:
A long time customer, Berklee uses Marketo to identify and recruit promising new students. In that process, they come to understand student similarities and differences, what messages various cohorts of them respond to most favorably, when and where they click on the web and mobile marketing campaigns, how they respond in social media and so forth.
Now, with models built from the first-party data in Audience Hub, Berklee is able to target new look-alike prospects using paid advertising on Facebook, all in an automated closed loop process built with Marketo, and the results are impressive. In their first few months of using Audience Hub to drive their Facebook campaigns, Berklee College of Music has seen more than a five-fold increase in click-through rate for their ads, a powerful illustration of how first-party data can literally redefine the performance of digital advertising.
The introduction of more data analytics capabilities is driving a re-evaluation of Marketo’s capabilities among the C-Suite, argues Fernandez:
What we once called marketing automation has evolved and grown into a whole new thing, a broad, ultra high scale, analytically powered, enterprise customer platform. As such, our technology is rapidly becoming essential to the kinds of vast transformation projects now in the agenda of the CIO and even the CEO.
I recently had the opportunity to sit with the CEO and the top two commercial officers at the leading digital and local brands in Australia and a long time Marketo customer. The CEO of $1 billion revenue company literally spoke Marketo. He and his two top commercial executives were fluent in what we did and why we’re so important. The CEO told me point blank that Marketo has become ‘an essential strategic weapon in his business’.
This has changed the way that Marketo goes to market, explains Fernandez:
Historically, Marketo [has] been extraordinarily good at a fast transactional kind of selling model. Anytime a deal gets complex, what you try to do is kind of burrow small, make sure we don’t ever get on the CIO’s radar. How do we get this done quickly? That’s been ultimately not consistent with building the great company we’re trying to build.
What we’re seeing now is that CIOs and CEOs and Chief Digital Officers and CMOs at the most senior level have money and projects on their agenda that are more ambitious. They get called digital transformation and customer experience transformation, a number of names like that. Often they’re being led by the CIO in conjunction with the CMO. They are bigger and more complex, but they’re much, much higher value and they’re also bought out of budgets, and in ways, that are different from the OpEx budgets in marketing departments.
There has been a separate process of these transformation budgets getting identified by the CEO or the CIO. There is even a new Gartner study out last week that some large percentage of CEOs are saying they are holding digital transformation as their own agenda with their own budget. So you do see these additional pools of budget popping up. And you see these ideas of what the CEO from Forrester called this dense collaboration between the CIO and CMO.
So I think these themes that we’ve been hearing for the last few years in the market have an evolving relationship between the CMO and the CIO. We’re kind of settling into a new, somewhat more strategic, somewhat more transformational, somewhat more budget-rich world as the CEO and CIO bring budget to the table.
I find the CEO interest in marketing automation more convincing than the CMO as IT decision-maker meme we’ve had for the past few years. I imagine we’ll hear more around this at Marketo’s Marketing Nation event in Las Vegas next month.
Disclosure - At time of writing, Marketo is a partner of diginomica.