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Salesforce.com "number one in enterprise marketing?"

Stuart Lauchlan Profile picture for user slauchlan June 3, 2013
Summary:
If you still don't get that idea that Salesforce.com is serious about the Marketing Cloud then think again after the decision to splash out $2.5 billion to crash into the email marketing sector with the purchase of ExactTarget.

ScottDorsey
Scott Dorsey, CEO, ExactTarget

If you still don't get that idea that Salesforce.com is serious about the Marketing Cloud then think again after today's decision to splash out $2.5 billion to crash into the email marketing sector with the purchase of ExactTarget.

Yup, that's $2.5 billion for a company most recently running at a loss of $21 million on revenues of $292 million. Salesforce is paying $33.75 a share, an 11.7% premium over yesterday’s closing price of $22.10.

It's the biggest flexing of the acquisitions muscles to date from Salesforce.com, dwarfing the $745 million it paid out for Buddy Media.

ExactTarget provides internet-based marketing software used by businesses to personalize e-mail and text messages and to run social media ad campaigns.

It has 6,000 customers, including Burberry, Coca-Cola, Bank of America, GAP and Nike - all common customers with Salesforce.com.

ExactTarget, founded in 2000 and gone public last March in a $100 million floatation, last year acquired marketing automation firm Pardot for $90 million and Web personalization provider iGoDigital for $21 million.

Salesforce.com CEO Marc Benioff is his usual understated self about the deal:

"This is an historic day for cloud computing. I have never been more excited about anything else we've done at Salesforce.com."

He says that if Salesforce.com was going to make acquisitions to serve its Marketing Cloud ambitions, then it couldn't go on making a series of smaller deals as it was just taking too long to flesh out the portfolio.

So it's gone for the big one which, according to Benioff, means :

"No-one will now doubt that Salesforce.com is now number one in enterprise marketing."

He adds that the size of the deal does mean that the firm will be taking the foot of the brakes on acquisitions - so the guys over at Marketo needn't expect 'that' phone call from Benioff any time soon.

Benioff is particularly keen to highlight the inclusion of Pardot in the deal and predicts that within six months it will better native integration with Salesforce.com than any other marketing automation offerings - which might lead to some interesting partner conversations.

Benioff says:

"AppExchange is a dynamic marketplace and people are constantly coming and going. You can see how it evolves and changes like any other ecosystem. That ecosystem has changed since it was introduced."

While Wall Street didn't seem initially too impressed by the announcement, over at ZDnet CRM guru Paul Greenberg reckons the deal could be well worth the money:

In one fell swoop, Salesforce did what it had to do for a price beyond what I expected they'd ever pay — and they now can call their Marketing Cloud a marketing cloud and not be wrong.

This move is precisely (I would have said "exactly" but that sounded redundant) what salesforce needed to do. They now have an excellent email marketing suite, a strong upper-end-of-the-small-and-through-the-middle-of-the-mid-market marketing automation suite (via the ExactTarget acquisition of Pardot last year) and, as an added bonus, the social comms tool Co-Tweet, which was one of the underutilized gems owned by Exact Target.

Greenberg sees the biggest challenge - assuming the deal goes through - will be to scale Pardot:

Pardot is built to appeal to the midmarket. It doesn't scale well to the enterprise, nor does it have the management features that are often necessary for the larger global businesses. It lacks MRM-related capabilities and isn't strong on analytics...Salesforce will have to spend time building or buying the additional capabilities that they lack and architecting them to handle the volume/loads of the larger enterprises.

If the deal completes, it will shore up the importance of email marketing, argues Brad Wilson, CEO of Emailvision:

"It validates the importance of this space as part of the overall CRM market. What this really points to is the importance of not just being able to segment customers but being able to reach them reliably at scale. Email within the mix is the most profitable channel that marketers use. It is important that you have emerging channels but having email is vital."

 

Disclosure: At the time of writing,  Salesforce.com is a premium partner of diginomica. 

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