Insights | Marketing

Rise Of The Digital Marketing Suite – Part III (Deep Dive:

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Michael Brown

August 08, 2019

downloadIn Part II of our series on the rise of the digital marketing suite we laid the groundwork for who is currently operating in the space today and selling into the CMO suite. The market has grown substantially in just the past 5 years and today calls big players like Oracle, IBM, Microsoft, Adobe and Salesforce the category leaders. For Part III on the landscape we continue to understand “how did all of these players get to where they are today, what are their strengths and weaknesses, and where are they going?

We will again deviate a bit from the normal categories here and focus instead on each of these 5 main players and their businesses while coming back to our buckets from time to time.

First up was Adobe Systems. Today we cover

History – Since 2011, Salesforce (like Adobe) has predominantly acquired companies to get into this space, buying 3 companies at roughly 7.6-20.0x revenues for a total of $3.4B and like Adobe building only 1 product organically. Amazing that both companies spent almost the exact same amount to get into this space with tradeoffs. Salesforce did this with 3 less transactions but was about 2 years behind Adobe in thinking about the marketing cloud. Starting with the Social category in March 2011 Salesforce acquired Radian 6 ($326M EV / 9.3x LTM Revs) to enhance all of it’s existing products. The concept of a marketing cloud barely existed yet within Salesforce and it was not until their next acquisition in June 2012 of another Social category company called Buddy Media ($652M EV / 20.0x LTM Revs) that the company started touting the concept of a marketing cloud. They would immediately combine Radian 6 and Buddy Media post acquisition to form this concept of a marketing cloud. Then, in early 2013 the company took a pause from M&A and instead launched it’s own product to add again to its Social category called Finally in June 2013 the company made its largest acquisition to date buying Exact Target ($2.3B EV / 7.6x LTM Revs) to build into multiple categories including Campaign Management / Email Marketing, Marketing Automation (via Pardot) and Content Management. Like prior integration, the company brought Exact Target and Pardot into the Radian 6 and Buddy Media family to make up what we know today as the “Exact Target Marketing Cloud.”

Strengths / Weaknesses – Salesforce has built a strong solution set for the CMO today with really strong products in Marketing Automation and probably the deepest solution out there right now in Social. Pardot is one of the best in the Marketing Automation category which gives them a distinct advantage over many of the large independent vendors as well as the big 5. They have no product to service the Analytics or eCommerce bucket and their depth in mobile and video like Adobe is somewhat limited. Before Exact Target they were severely lacking in the Campaign Management / Email Marketing, Content Management, and Campaign Management / Email Marketing categories but today they are close to having a full solution in every category. Like Adobe there is limited amount of integration and only time will tell if all of these solutions can unify to a great product for a CMO.

Go Forward – With Salesforce we know two things. First, they have publicly stated that they want a huge share of CMO dollars over the next 10-20 years. Second, they have an incredible visionary behind the wheel who is not price sensitive and sees the future. For a while many questioned what Radian 6 + Buddy Media would really get them but with Exact Target it is clear that they are going after all of the major CMO categories. We would expect Salesforce to really think hard about buying companies in the Analytics category as well as eCommerce to build the full solution. Finally we do know that the company has a history of going deep in each category so there is a chance that they pick up more businesses around Content Management and maybe Campaign Management / Email Marketing rather than Marketing Automation given the already great product they have in Pardot.

That’s it for Salesforce. Tomorrow we will move on to Oracle.