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Marketing Just Hit the Powerball with Salesforce.com's Acquisition of Exact Target

June 4, 2013 | Justin Gray | No Comments |

Early this morning, Salesforce.com announced definitive plans to acquire ExactTarget. For many of you who follow marketing, this is a huge deal. Salesforce has been rumored to be eyeing ET before, and Hubspot and Silverpop and Marketo and pretty much every other marketing solution on the planet. The OMG moment here is that this appears to actually be happening – and for 2.5 billion dollars – its largest acquisition ever. Beyond all of the BS buzz that this will create is the real crux of the deal. For those of you that just missed it, Salesforce’s largest spend to date was on MARKETING. Not service (where it has heavily focused on smaller strategic acquisition and development), not analytics and BI, not sales and not even social. Marketing.

Marketing has definitely been the buzz lately and the recent Marketo IPO again validated that – but nothing of this magnitude has happened until now. This acquisition says to every old school business owner out there that you are dead. Dead. If you want to grow and you’re not focused squarely on marketing to drive that growth, you will die. And furthermore I will laugh at you.I’ve worked at too many companies and fought that uphill battle; I’ve run too many sales deals and lost to that mentality; I’ve consulted with too many clients and hit a wall, to not revel in the validation that this provides.

So, with all of this great money-backed validation, is there a downside? There’s certainly a potential one – yes. Have you seen many successful Powerball winners? A landslide of investment, within a space that is actually defined by lack of budget, can be tremulous.Marketing Automation has already proven that with a good representative sample. Marketers aren’t traditional purchasers or even buyers at all. Planning and strategy is often under-considered or even ignored in favor of the thrill of getting a new toy in the door. Marketing is sexy – doing marketing right is not.

Even SFDC takes shortcuts – there really isn’t a good reason for the scale of this acquisition. Two and a half billion dollars can buy a lot of development time. ExactTarget comes with 6,000 clients, most of which are Salesforce users. ET acquired Pardot a while back and, frankly, I don’t view Pardot as an asset in this transaction. Pardot had a lot of overlap itself in terms of analytics and duplicate functionality with ET that hasn’t begun to be resolved. Those same conflicts apply to SFDC as well. Couple that with the need to integrate with social tools like Radian 6 (which I don’t really believe SFDC has figured out either) and inherent conflicts with things like visual workflow (MA is really just a workflow engine anyway), and you start to see the bird’s nest. The success of this venture will come at the ability for SFDC to form a comprehensive solution here and unwind the ball of twine. They also need this particular item to scale and do so very well.Salesforce clients that have already embraced Marketing cloud would be the logical early adopters here and those tend to scale to the enterprise spectrum. Neither ET nor Pardot is an enterprise marketing automation solution.

So, what does this mean for Marketo?I don’t know how many times I’ve been asked that since I started this business, but if I added up the time I’m sure I would want those hours of my life back. In the short term, I think this gives Marketo a license to steal. Oracle has already hobbled Eloqua, certainly in terms of SFDC users, of which Marketo’s user base has always been predominately comprised. Pardot is now rolled up in a roll up. I think Manticore actually fell off the planet. Adobe certainly isn’t an established player yet. In the B2B space, Marketo currently has a good (not $2.5 billion, mind you) amount of money thanks to its IPO and a pretty wide-open competitive landscape. Sounds good to me.

Now, long-term, I think it’s important to consider how SFDC makes a lot of its money – through partner ecosystem. Salesforce has never been an “all things to all people” company – they have always wanted to be a platform. That said, eventually this will be a conflict. But a conflict you can see coming 12 to 18 months in advance is a pretty big billboard. If Marketo puts its money into development and acquires in the right areas, it can translate to widening the lead it currently has and becoming the enterprise solution for SFDC clients.

Perhaps more important than market conflict, however, is the propensity for this all just to blow up. Marketing is an area that will always be 50 percent people. For a program to be successful it needs design from skilled marketers and now more than ever, we need a lot of them. That’s an endangered species currently. The amount of money that is being poured into this space requires that we also invest in skillsets to facilitate these solutions. Without that, companies don’t buy, marketing technology doesn’t sell and all of this posturing is for not. We cannot adopt a strategy of hope in regards to educating and acquiring skilled people. No one wants to end up on a cable documentary talking about the time they won $2.5 billion in the lottery and now work at Denny’s. And that’s just where marketing will end up if we blow this shot.

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