ExactTarget filed an S-1 last Wednesday, November 23, the first step towards an initial public offering (IPO) by the end of March, 2012.1 The company grew substantially over the past several years and is tracking a 55% growth rate in 2011. ExactTarget now services about 4,600 direct clients and reports $148 million in revenue through September 30, 2011. Congratulations to Scott Dorsey and his team for guiding the company to this point.
How will ExactTarget's IPO benefit CI Pros? The IPO can:
- Provide additional capital for research and development. The funds ExactTarget will raise through the IPO will help transform the company from an email service provider (ESP) into a full-fledged marketing technology platform. Increased R&D will allow the company to evolve through organic development and acquisitions. Both moves will help it to fill out its cross-channel campaign management and Customer Intelligence offerings. CI Professionals at mid-to-large enterprises should expect to see the company move more aggressively to offer enhanced enterprise marketing capabilities.
- Enhance attractiveness to partners. ExactTarget's IMH has yet to catch on with heavy hitters in analytics, offline channel management, and marketing resource or operations management.2 The quarterly and annual disclosure requirements on ExactTarget could help clarify the company's plans to potential partners and assuage concerns about future competition. Stronger partnerships will lead to additional IMH applications for CI Pros.
- Improve perceptions from prospects. Companies considering ExactTarget will also benefit from public disclosure. Marketing technologists, application developers, and enterprise architects can develop more detailed marketing technology road maps. Enterprises skeptical of an ESP's ability to deliver enterprise marketing technology will benefit from the company's increased scale and capabilities.
- Widen international expansion. Both multinational corporations and companies outside North America will gain from ExactTarget's IPO. ExactTarget will add execution infrastructure as well as global sales and account management in Europe, Asia, and the Middle East.
CI Pros should also be cautious about the company's IPO. A strong response from public investors could have perverse effects. The change may:
- Pull management's focus. The legal, financial, and other regulatory commitments of public companies require substantial time and attention from senior management. Acquisitions and strategic partnerships could similarly distract executives. ExactTarget's toughest challenge will be to execute its aggressive vision while satisfying regulators and investors.
- Dilute account management. Should revenue fall or growth lag, ExactTarget's leadership may need to cut expenses to meet investors' expectations. The company may seek to reduce the service it provides its clients in strategic guidance, analysis, and reporting. Even if ExactTarget meets its targets, investors may pressure the company to reduce margins, resulting in fewer services for CI Pros and interactive marketers.
- Raise attention from hackers. Increased public visibility and scale will draw those who wish to gain access to its client's customer data. ExactTarget offers clients security through a data tokenization option and an account activity monitoring service. ExactTarget's clients should thoroughly review of these security services prior to the company's IPO and global expansion.
What do you think? Are you excited or concerned by ExactTarget's decision to go public?
1 ExactTarget originally filed an S-1 on December 14, 2007, but pulled out of the IPO in the face of 2008's economic conditions. The company instead took in $70 million in additional funding from Battery Ventures and Scale Venture Partners.