By: Helena Schwenk, Principal Analyst, MWD Advisors
Published: 11th June 2013
This work is licensed under a Creative Commons License
Last week Salesforce.com raided its piggy bank by announcing not one but two acquisitions. It started the week with news of its impending $2.5 billion purchase of marketing software vendor ExactTarget and then soon after it announced the purchase of BI and analytics startup EdgeSpring for an undisclosed amount. So what’s behind both Salesforce acquisitions? And equally, are they related in some way?
At $2.5 billion ExactTarget is Salesforce’s largest acquisition to date, further underlining the company’s commitment to servicing the needs of the CMO and marketing organisation. It will also complement its previous two acquisitions of Buddy Media and Radian6 and help flesh out the company’s Marketing Cloud offering by providing marketing automation as well as email, social and mobile digital campaign capabilities. It’s clear the company has big plans for its Marketing Cloud having previously stated it wants it to become a $1 billion revenue line for company. With its revenues currently around $100 million that’s an aggressive target – and considering it has shelled out roughly a 8x multiple for ExactTarget (whose reported 2012 revenues were around the $290 million mark) it will obviously need to move quickly to integrate the company and leverage its size and scale to facilitate ExactTarget’s contribution to meeting this target.
While the sum paid for ExactTarget maybe a surprise, the fact that Salesforce has picked up a marketing software vendor is perhaps less so. The company needed to flesh out it offering particularly around marketing automation and email campaigning if it was going to credibly sell to the CMO – and this is where ExactTarget fitted the bill. Not only that, the company was already a partner of Salesforce and the two companies shared a number of ExactTarget’s 6000 customers. But this acquisition also has a competitive flavour to it since Salesforce isn’t the only vendor vying for the budget of the CMOs: other IT vendors, including Oracle – who incidentally recently snapped up marketing automation vendor Eloqua for $871 million – and Adobe are both building out Marketing Cloud offerings of their own. Similarly other information management vendors such as Teradata and IBM have picked up digital marketing acquisitions, with Teradata acquiring Aprimo and eCircle and IBM buying Unica and Coremetrics.
While Salesforce’s Marketing Cloud has always had a social theme, both Buddy Media and Radian 6 for example support social media marketing capabilities – Buddy Media on the advertisement and publishing side and Radian 6 (as we have written previously about here) on the social listening, measurement and engagement side. ExactTarget brings a deeper email marketing flavour to its offering, something that no doubt was a major draw for Salesforce. As we recently wrote about here, email marketing often gets overlooked in favour of newer (and dare we say it sexier) marketing communication channels such as social and mobile, but it still remains a core discipline in any marketer’s armour. By acquiring ExactTarget Salesforce can build out its marketing platform to more fully support social channels, alongside and integrated with e-mail, text, mobile and the web. The challenge as always is to manage the integration all of these different software components into one marketing platform as quickly and as efficiently as possible while continuing to drive growth for the company.
Although ExactTarget is very much a marketing-orientated acquisition, EdgeSpring on the other hand brings Salesforce an analytics platform with a more cross-purpose flavour in mind. In particular its platform includes a data store called EdgeMart and a dynamic visualisation engine called Lens Framework that help users build analytic applications and allows business managers and operational workers to make sense of their semi-structured and structured data. The company has recently emerged from stealth mode and has previously raised $11m in Series A venture funding from Kleiner Perkins Caufield & Byers and Lightspeed Ventures.
Salesforce’s cloud platform on the other hand has never really been built with analytics in mind; in fact, its existing BI and analytic capabilities are best described as basic, with many companies choosing to rely on third-party partners such as Birst to extract, integrate and report on Salesforce data. EdgeSpring therefore provides Salesforce the potential to develop and embed a more robust analytics offering across its entire portfolio that takes into account a range of structured and semi-structured data sources. The pressure to manage and exploit all forms of data is only likely to get more intense over the coming years as organisations recognise its value in becoming more competitive – that’s why building out and enhancing Salesforce’s analytics story is, we believe, a good move for the company.
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