Connections 16 - Salesforce Marketing Cloud center stage at the conference that nearly never was

The tech conference that nearly never was kicks off later today in Atlanta, Georgia, with day one of the Connections marketing jamboree, run by Salesforce’s Marketing Cloud unit.

Over 7,000 delegates have registered for the event, many of whom may have been forgiven for not finalizing their travel plans after Salesforce threatened to pull the gig in the face of the introduction of discriminatory anti-gay legislation.

Salesforce CEO Marc Benioff threatened to cancel Connections unless the legislation was withdrawn, resulting in a mass campaign by tech and business leaders following suit with threats of what Benioff dubbed "economic rolling thunder".

In the event, Governor Nathan Deal backed down and refused to sign the legislation into law and Connections was back on again.

So, later today, Salesforce Marketing Cloud CEO Scott McCorkle will kick off proceedings, with a series of product announcements, including:

• Bringing the Lightning UI to Marketing Cloud, following the release of Sales Cloud Lightning and Service Cloud Lightning earlier this year. This will, according to the company, bring a common look-and-feel and streamline processes that span marketing, sales and service operations.
• New Lightning components to allow developers to create or customise new business apps. Components will include core email functionality, like previewing emails and tracking email open rates, to journey capabilities, like automatically adding a lead or contact to a journey and reviewing the journey history of a specific lead or contact.
• Marketing Cloud for Google Match to enable companies to co-ordinate advertising on Google properties directly alongside other digital advertising and marketing campaigns across email, mobile, social, web and Internet of Things.

Marketing evolution

The Salesforce Marketing Cloud is at an interesting stage in its development. In common with many of the other marketing clouds out there - and there are plenty to choose from! - the Salesforce version has been built out through acquisition of companies such as ExactTarget and Radian6.

For the latest fiscal year, Marketing Cloud is the least successful of the various Salesforce clouds, accounting for $654.1 million of total corporate revenues of $6.205 billion. That’s up 29% year-on-year from $505.5 million, but that growth rate lags behind other clouds, for example, Service Cloud on 38% growth. (The App Cloud boasts the highest growth on 39%, but bundles various assorted cloud functionality under the heading of Other.)

Given that the Salesforce mantra for the past few years has been about how lucrative a market sector marketing is, and the supposed rise of the CMO as IT powerbroker and purse-holder (thanks to Gartner’s predictions), this relatively low take-up seems puzzling at first. Is it in large part down to seeming delays in integrating the various bought-in pieces of the Marketing Cloud whole?

I caught up with McCorkle prior to today’s Connections opening and put that question to him. He told me that the Marketing Cloud is in a good place for growth now that integration work has been completed. He added that there’s a process that needs to be gone through to achieve this position:

Marketing Cloud is the product of several acquisitions. Marketing clouds are being assembled within larger enterprise software firms through acquisition. An important milestone is to bring those products together. Our differentiator is that we are the only marketing cloud that’s part of a CRM system. We are integrated.

There is a three year cycle roadmap from the beginning. The first year is when the companies come together and you work out what to do next. The second year is when you know your way around and get experience of where the customers shape your priorities. In the third year, you do it.

There are now benefits that are accruing from getting past year three, he said:

We do see significant synergies with Salesforce. Our sales team are completely integrated, we have aligned management reporting etc. What’s changed is how the sales team executes as a part of Salesforce. Pre-integration, we [ExactTarget] didn’t have a customer success group. We now have a team looking at customers, not as a sales team, but just as a service to customers.

McCorkle said that business is now coming in both from new logos and up-sell into the installed base of other Salesforce clouds:

If we go back to the past year, as Marketing Cloud, we set records for the largest individual contracts in Q1, Q2 and Q4 of the past fiscal year, all new logos.  If you look at our new customers, many of them were existing Salesforce clients. Amex is a great example of a long-standing Salesforce customer that became a Marketing Cloud customer.

Marketing qua business process

Given the flurry of acquisitions that has taken place around marketing cloud vendors, I wondered if McCorkle sees room for pure-play providers in this sector or does the future lie in being part of larger enterprise software providers?  He made the point that marketing isn’t necessarily open to an apples-to-apples comparison with other enterprise functions:

Marketing cloud, marketing in general, has different characteristics to other types of enterprise software, finance, HR and so on. They automate a specific business process. Marketing isn’t a specific business process. There are infinite degrees of differentiation with all the different [customer] engagement processes. We’ll see lots of vendors coming into marketing as a by-product of that dynamic.

The multiplicity of channels now open to digital marketers in turn leads to a desire by customers to have a marketing hub, “a place they can call home” for a marketing audience record that is consistent across all those channels.  Within these hubs, there will be products that are Salesforce’s and products that are not:

There will never just be one marketing vendor for customers…Pure-plays can bring innovation in a specific channel. There were many marketing software vendors, then the consolidation happened three years ago. But there are actually more marketing vendors than there ever were.

What there is considerably less of these days is the citing of Gartner’s headline-grabbing, but paper-thin, assertion that CMOs would have more influence over IT spend than CIOs by, well, around now actually. As predictions go, it was a PR masterstroke by Gartner, but I asked McCorkle if, in retrospect, it was in reality a useful road to travel in messaging terms? His reply was diplomatic:

I think we are moving on from that. We don’t see that quote as often as we used to. My own experience is that we are interacting with CIOs as much as CMOs. IT spending towards marketing means IT is taking a much more active role, especially as we start to manage the customer experience. No-one has lost influence. The CMO is as active as ever, but in partnership with the CIO. It’s now more about the influence of the two roles. At ExactTarget, it was very rare to meet with the CIO. But what has been happening is that the way that organisations can interact with customers has changed because of the digital revolution. That impacts on every line of business. The traditional lines of CRM are blurring.

As Connections gets underway, the recent discriminatory legislation will doubtless be acknowledged. If not, it will be an elephant in the room, particularly as ExactTarget’s home state of Indiana was at the heart of a similar controversy in 2015, which also resulted in the state legislature backing down in the face of threats of economic sanctions.

Salesforce has moved on since then. Last week the firm announced it plans to invest $40 million in the state as well as boosting the size of the Indianapolis workforce by 50% over the next five years. It’s also bagged another tower block and renamed it the Salesforce Tower in the process!

McCorkle told the media that all of this would not have been possible if the so-called Religious Freedom Act hadn’t been repealed. Certainly it’s a remarkable turn of events. At diginomica, we’ve been very vocal in our support for the ongoing battle against such discrimination - which is now happening in North Carolina and Mississippi.

But I wondered how Salesforce managed the balance here. How does it engage with what it sees as right, but also avoid becoming the tech industry’s ‘police officer’? McCorkle told me:

We start from the position of protecting employees, starting from our employees saying, ‘This can’t happen’. From this perspective of helping employees, we think of all the things happening around the world. That’s the most important starting point. The company has now established a leadership role that transcends where our employees are. But where we have major operations, we ask ‘Can we invest where there is discrimination?’.

Connections is a large investment. But we were on record that we would move Connections. Fortunately Governor Deal vetoed that law and so Connections is full-steam ahead.

My take

Three years on from the ExactTarget acquisition, this is going to be an interesting event for the Marketing Cloud. If the integration work is now finally completed, it’s time to see that reflected in the growth rates and customer adoption.

I’ll be interested to see some of the use cases at the conference - those have seemed a tad thin on the ground to date, particularly in Europe. But then, the firm’s 10k SEC filing concedes that Marketing Cloud revenue is “primarily derived” from the US. That’s got to change as the marketing cloud wars ramp up.

After all the controversy, it’s good to see Connections can go ahead. It’s also nice timing that Indiana is getting an investment boost after backing away from its own discriminatory stance, a lesson that still isn’t being learned in North Carolina! But that’s another story.