Building a Marketing First world

Profile picture for user slauchlan By Stuart Lauchlan October 27, 2013

marketingstreetsign
Marketo turned in some decent numbers last week that took Wall Street pleasantly by surprise - quarterly revenue rose 65% year over year to $25.5 million with an adjusted net loss of $0.21 per share, good enough to prompt a 14% rally on the stock at one point.

CEO Phil Fernandez sees the numbers as indicative of continuing mainstream acceptance of the marketing space as a core business as well as reinforcing the rise of the CMO within the corporate hierarchy:

“Just a year or two ago, our category was often defined or talked about, as an appendage to the CRM or sales force automation market. But now, every day, I see more and more marketing leaders stepping forward to take charge of their own destiny.

“They are selecting and investing in technology and solutions that they need to do their unique and important jobs. I call this a Marketing First World.”

While regular readers may recall my skepticism about the ‘CMO is the new CIO’ mantra coming out of the likes of Gartner, there is, asserts Fernandez, a growing discussion about the role of the CMO and its evolution which takes the form of:

“just much more active dialog in the industry at large, about the role of the marketer. You can go to conferences, you can talk to industry analysts, you can talk to CEOs at lunch or whatever it is, and people are talking about the topic, It is the first thing. There are enough success stories out there about marketers actually transforming the top line of the business with their great efforts.

“With that, comes a little bit of credibility that marketers are not, just at the end of a rope in terms of other technology decisions going on in the enterprise. I just think its pervasive throughout the industry.

“What we see is this Marketing First World. Marketers are looking at solutions on their own terms, for their own features and functions and ability to make them successful and the way that we have driven our growth over the years.”

The competition

phil fernandez ceo marketo
Phil Fernandez

But this Marketing First vision is one also pursued by partner/competitor Salesforce.com and rival Oracle. Fernandez’ interpretation of the market dynamics here is telling.

“We have seen here and there a kind of consolidated enterprise selling by Oracle, where they are trying to bundle in Eloqua in, and deal with the CIO, but that’s not any kind of a material headwind in the business, that I can tell.

“What we haven’t seen, is frankly any competitive move. We are introducing new products, we are moving – we are going, and the rest of the world kind of seems to be standing still, and that, if anything, has played strongly in our favor.”

That said, Exact Target and Pardot - now scooped up into Salesforce.com’s Marketing Cloud - have always been key competitors of Marketo, so presumably they remain a potential challenge? Fernandez concedes:

“They come up all the time, because they have always come up all the time. They don’t come up as, ‘Oh gosh, now it’s all part of Salesforce, and so that’s a different thing’.

“Salesforce has great relationships with a number of their customers, and they obviously work to use those relationships to their advantage.

“But in this Marketing First World, you know, the marketing buyer is evaluating technology to a different land and in that world, the competitive dynamic is very similar to how it was before any of that acquisition worked.”

Taking on the CRM giants?

marc_1
Partner and competitor

It might be argued particularly in light of Salesforce.com’s strategic direction that the marketing platform offered by Marketo and the CRM platform are coming ever closer together. If CRM firms can pitch themselves as marketing firms, can the same be done in reverse? Fernandez argues:

“It depends how you define a CRM system. We have an extraordinarily powerful data set that gets captured underneath Marketo. It’s the data set that goes well beyond anything that gets captured in a CRM system [by a] traditional meaning. We have this vast set of customer behavioral data - names, addresses and graphic kind of data.

“So from that respect, we are a CRM system in the most fundamental way. We don’t aspire to be on the salesperson’s desktop. We don’t aspire to be on the service person’s desktop as their primary application. We are the product for this Marketing First company.

“In a Marketing First world, the marketing team is the corporate steward of the customer. So to the extent that the marketer is the steward across the whole enterprise of the customer, and we are the primary technology supplier to the marketer, then we are something pretty interesting.

“But I have no desire to declare war on the CRM market at this point, in a literal sense.”

 

Disclosure: at time of writing, Oracle and Salesforce.com are premium partners of diginomica and Marketo is a partner of diginomica.