Insights | Marketing

Rise Of The Digital Marketing Suite – Market Update

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Michael Brown

January 05, 2017
Bowery Capital

In Q2 2014 Bowery Capital came up with a series of articles on the ‘Rise of the Digital Marketing Suite’. We divided the digital marketing sector into six key categories, created the market landscape and conducted deep-dives on big players as well as independent companies. To serve as a refresher, we provide below an update about the key companies that were acquired or went public since our last report. As many folks who read our initial report on digital marketing will remember we provided everyone with a nice public google spreadsheet called Market Comparables which we are also updating and adding here.

On the acquisition front, Oracle continued its trend of inorganic growth to build presence in the space by acquiring Datalogix. Oracle, which has previously bought 8 companies at roughly 4.0-16.3x revenues for a total of $6.7B, paid $1.1B at 9.2x revenues for Datalogix. Datalogix aggregates and provides insights on over $2 trillion in consumer spending and sits in the Marketing Automation + SEM space of our analysis. Datalogix complements Oracle’s acquisition of Bluekai last year and enhances Oracle’s new data cloud offering. With 9 acquisitions under their belt in the space this move is likely to heat up the marketing cloud segment and pose a challenge to both Adobe and Salesforce. Among our other top 5 players, Salesforce acquired RelateIQ ($390M EV, ~80x Revs). RelateIQ leverages data science and machine learning to create a relationship intelligence platform and sits in the Analytics piece of our categories. The deal serves a dual purpose for Salesforce – first strengthening their customer data analytics capabilities and second preempting a future competitor in the CRM space. Outside of the top 5 players there were some other acquisitions that were worth noting in our update. Rocket Fuel, a provider of artificial intelligence advertising solutions, acquired [x+1] ($230M EV, 2.6x Revs) for its data management platform. In addition, Axciom acquired LiveRamp ($310M EV, 12.4x Revs) which also operates in the same space as Datalogix and [x+1] so we add all 3 to our Marketing Automation + SEM category. Amoebee, a subsidiary of Singtel, acquired advertising company Adconion ($235M EV, 1.3x Revs) and content marketing start-up Kontera ($150M EV, 5.8x Rev) to enhance its digital marketing solutions and strengthen leadership in the ad tech space. Both companies sit in the Analytics category. Finally, we note that LinkedIn’s acquisition of Bizo ($175M EV, 4.4x Revs) should bring about some interesting new thinking also to the Analytics category and IBM’s acquisition of Silverpop ($275M EV, 3.5x Revs) and GoDaddy’s acquisition of MadMimi ($42M EV, 8.4x Revs) represent two of the last remaining email marketing companies in the Campaign Management digital marketing category

On the public company front in digital marketing, Hubspot went public in Oct 2014 by raising $125M through the IPO and currently carries a market cap of around $1.3B. Since its IPO, the SaaS based marketing automation company has exceeded analyst expectations and achieved 53% revenue growth and 35% customer growth in Q4 2014. While there were no other IPO updates to our report, we believe that the digital marketing space is also likely to see a lot of IPO activity throughout the remainder of 2015. MaxPoint Interactive is the first one to follow Hubspot as it has already set terms for a $75M IPO this month. Yodle, AdSame, and Act-On have talked about their plans about going public in 2015 and we expect them to follow MaxPoint Interactive into the big show. Apart from the above, recent large rounds of funding raised by AppNexus, Sprinklr, and Tealium suggest that IPOs for these companies are potentially around the corner as well.

In the next blog post, we’ll cover updates about the changes to the digital marketing offerings of the top 5 players in this space.