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Salesforce acquiring ExactTarget: Is it really on Target?

Salesforce recently announced its agreement to acquire ExactTarget for a whopping $2.5 billion, making it, the largest deal ever done by Salesforce. This news came as a surprise to many as the expectation was that Salesforce would go for acquiring Marketo or Neolane (Adobe going to acquire Neolane) (1). There were several obvious reasons behind it: 80% of Marketo users are also Salesforce users (2) , Marketo is categorized as Leader in Gartner's quadrant for CRM Lead management and has better financial performance compared to ExactTarget. When Oracle acquired Eloqua in February, 2013, a leading marketing automation solution company, several companies operating in same area e.g. Marketo, ExactTarget, Neolane had become hot target. In my view, not getting acquired by Salesforce would cause several challenges for Marketo in coming days as Salesforce would try to push its own marketing automation solution to customers now.

This deal would bring cross-channel campaign management capability to Salesforce which it was lacking till now. Its new Marketing cloud offering includes Radian6 and Buddy media which focuses on social listening and engagement. However, there were no strong Lead/campaign management offerings available from Salesforce till now.  With customers getting more access to product information through various channels, marketers are trying to maintain a targeted and consistent message across all channels. Keeping this trend in view, targeted communication to prospects become vital and acquisition of ExactTarget is going to give Salesforce a boost in this space.


Although this deal looks great on paper, I have few points to make about it. Going by financial reports given on ExactTarget website(3), we can see that the company has posted loss of $21 millions for year 2012 with revenue of approx. $292 mn. In year 2011 too, ExactTarget had reported loss of $35 million. This is on account of acquisition of Pardot & heavy investment in R&D by ExactTarget. SFDC has paid more than 7 times of ExactTarget's last year revenue to acquire it. I believe that success of this acquisition would largely depend on getting more innovative product out of this R&D expenditure in coming days and offer customers a better deal compared to Marketo or Neolane.

 

Also, currently there is plethora of offerings from salesforce and coherency is missing among them. For example, Marketing cloud would be now offered as combination of Radian6, Buddymedia & ExactTraget, all   of these are different acquisitions made by Salesforce. These look like discreet products tied around social & cloud thread. In a time, when customers expects maximum value out of every penny they spend, Salesforce would need to streamline & integrate their offerings more tightly.

References:
1.http://www.adobe.com/aboutadobe/pressroom/pressreleases/201306/062713AdobetoAcquireNeolane.html
2.http://www.gartner.com/technology/reprints.do?id=1-1F6R82P&ct=130425&st=sg
3.http://www.exacttarget.com/company/investor-relations/quarterly-results

 

Comments

I'm agree with you Amit,
CRM play a big role in business, Customer engagement model could play a Big role in this process and in this digital era customers seeking Brands which present around them like Social Media Marketing and here work engagement.
Thanks for such a nice Post..

Thanks a lot, Jitendra for your comments.
As impact of changing "Customer engagement model" becoming more evident, more and more companies would design their offering keeping this aspect in view. In coming days, we would witness compelete shift from traditional CRM to social/mobile/cloud based shift.

It's my pleasure,Amit
Keep writing post, I'm waiting for another..

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