First Oracle bought Eloqua and Responsys, then Salesforce snapped up ExactTarget. All signs were pointing to IBM, SAP or Microsoft acquiring Marketo, but instead the largest independent marketing automation firm, publicly traded since 2013, went the private equity route with Vista Equity Partners. It remains to be seen what ends up happening with Marketo, but irrespective of that, consolidation in the marketing automation industry is likely to continue. That’s due to three primary drivers: Industry maturation, enterprise adoption of cloud solutions and brands’ drive to deliver consistent digital experiences.
One of the primary catalysts for the recent acceleration of consolidation in marketing automation is broad adoption. Virtually every HERO client from mid-sized companies to those in the Fortune 100 already has a marketing automation solution in place. Their biggest challenge is how effective those solutions are in delivering consistent and highly personalized experiences across a variety of digital customer channels.
This drive to provide comprehensive and personalized experiences for customers throughout the engagement journey is of paramount importance for every company that recognizes the criticality of winning the “experience war.”
As a result, from the CMO down, our clients are focused on aligning their strategies, internal resources, and customer experience solutions. Brands are looking for comprehensive solutions that allow them to create and manage content across digital channels. As they evaluate the multitude of digital marketing solutions, companies realize they must be nimble and effective, managing fewer platforms.
The Current Landscape
Adobe set the pace by creating their digital marketing cloud and effectively integrating their acquisitions, providing unified UI, seamless content asset flows, publishing, and analytics. The approach forced other vendors from Salesforce to Oracle to develop marketing clouds. With the exception of Sitecore, which opted to design and build out its own marketing platform, that has mostly happened through acquisition. In addition to its purchase of ExactTarget, Salesforce recently entered the e-commerece field with its acquisition of Demandware, signaling its intention to expand its marketing cloud across the entire customer journey.
We look for additional consolidation via acquisition and strategic partnerships to include companies such as Acquia. Acquia has already developed or acquired technologies like TruCentric for personalization. Marketing automation platforms Hubspot and Act-On are clear targets for acquisition. Additionally, Callidus is attractive for companies such as IBM and SAP seeking to compete with Salesforce.
As the marketing tech industry continues to mature and consolidate, the story is not always a good one for marketers. In fact, it’s often negative for marketers who are already using a product from an acquired company as either the core product is eventually deprecated, or the acquiring company stops innovating, leaving them with a less compelling solution. For the most part, only Adobe and more recently Salesforce have truly integrated their acquisitions, and then Sitecore has always built on to its own platform. With the majority of other products, instead of having a unified UI, workflows and data — which is what you might expect when a big company acquires a smaller software provider — customers often still have to deal with disparate applications. Now they just have to work with a much larger vendor on a product that isn’t that vendor’s most important offering.
Fortunately, while this consolidation will continue, the cycle of marketing technology innovation is fueling even more solutions. The landscape has grown from a few hundred companies to nearly 4,000 in 5 short years. As a result, marketers must choose solutions based on more than current capabilities. Instead, the age-old dilemma of integrated suite versus best-of-breed solutions will become even more important as marketers must now consider the entire landscape and likelihood they’ll be forced to adopt new solution partners over time. Of course, one way to mitigate the risk of changes to features and licensing that could impact marketing efforts is to work with a cross-platform agency that can see the changes coming down the pipeline and help guide companies toward future-proof solutions.