The Blog

  • June 4, 2013
  • Salesforce and ExactTarget in Deal

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    BenioffJune4

    Salesforce CEO, Marc Benioff

    Holy moly Salesforce announced they were buying ExactTarget for a cool $2.5 billion this morning.  The deal will do much to complete CEO Marc Benioff’s vision of a MarketingCloud to go along with the SalesCloud and ServiceCloud of the company’s core CRM suite.

    Some would say the Salesforce and the entire CRM suite vendor corps have been late to the market in developing a robust marketing solution and I would be one of them.  However, it needs to be said that the vendor community played things well by a lot of measures.

    For the last five years with a depressed economy it was natural to concentrate on service since the name of the game in a slowdown is to protect your core business.  That’s what a lot of CRM vendors did, they beefed up their service and support offerings building in elaborate social architectures that enable their customers to service their customers effectively and at lower costs than previous modalities.

    Fast forward to this year and the economy is picking up steam and that means a more traditional approach to gaining new customers and an emphasis on sales and marketing.  Sales we know had been the bread and butter of CRM so it was logical for the vendor community to go after marketing.

    For years, marketing has languished as the largely independent stepchild of CRM.  Marketing is widely acknowledged to be CRM but its business processes are very different from service and sales and for that reason many vendors always put off building robust marketing functionality into their CRM suites.

    Instead, marketing has remained independent with companies like Eloqua and Marketo running their own shows.  But Eloqua was recently bought by Oracle and Marketo had an IPO just a few weeks ago, Pardot was bought by ExactTarget, which I think made the acquisition much more attractive for Salesforce.

    However, I see some yellow flags waving on this deal.  First off, $2.5 billion bucks can buy a lot of development talent (and a good weekend in Vegas).  This is an expensive deal and I wonder why Salesforce didn’t want to build the solution itself.  They seem to prefer buying over building these days and while I can understand buying for strategic reasons, I have a hard time when I see making a purchase as the default position.  And, speaking of acquisitions, the buzz around the industry I had been hearing was about how long Salesforce would let Marketo wander around without taking them off the street.  Guess we know now.

    Secondly, there appears to be a fair amount of overlap between ExactTarget and Salesforce especially in the analytics arena.  If you back the analytics components out of the deal, then you have to ask how much more development there would have been to build something that was Salesforce native.

    None of that matters now; the deal is done and except for the price tag (I am a flinty, tight fisted New Englander after all) there is a lot to like about the combination.  Instantly Salesforce gets 6000 ExactTarget customers but then again many of them are already Salesforce customers too.  The combination also comes with serious marketing chops given that Gartner gave ExactTarget high marks in its recent Magic Quadrant.

    I think the companies this affects most are SAP, Microsoft and Sage — add in NetSuite too.  With Eloqua and now ExactTarget in enemy encampments there are fewer marketing options for these companies.  This could make Marketo the bell of the ball for these vendors though right now Marketo is well tuned to being in the Salesforce ecosystem but it is not exclusive to be sure.  So maybe Marketo walks out of this with a clearer landscape and more market power.

    At any rate, it will take a few months for the dust to settle but ExactTarget is already in the market and executing with Salesforce customers so for the most part it’s game on.

     

    Published: 1 year ago


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