What a difference several quarters can make, especially in the marketing automation space. Silverpop has acquired CoreMotives, Manticore Technology has merged with Sales Engine International, Aprimo has acquired eCircle, Eloqua filed an initial public offering and then was acquired by Oracle, LoopFuse has merged with Nearstream, ExactTarget has acquired Pardot, and now, Salesforce.com has acquired ExactTarget.
In my last post, I focused on why Salesforce.com acquired ExactTarget and how its motives go beyond simply getting into the marketing automation platform (MAP) market. In this post, I will look at how Salesforce.com’s acquisition of Pardot (via the ExactTarget acquisition) impacts the marketing automation platform market as a whole, as well as how it will change Salesforce.com’s relationship with Eloqua.
In the marketing automation platform space, Salesforce.com is the most frequently integrated sales force automation (SFA) platform. Moreover, for many marketing automation platforms, Salesforce.com represents upwards of 60 percent of their SFA integrations; for other MAPs, such as Marketo, the Salesforce.com integration rate is significantly higher.
With these statistics in mind, many industry publications have noted that Salesforce.com’s acquisition of ExactTarget provides Salesforce.com with marketing automation capabilities disruptive to the MAP marketplace. I fully agree that this acquisition significantly alters marketplace dynamics, as SFA and marketing automation platform technologies were previously noncompetitive will now will be competitors in some cases. But I don’t believe the ExactTarget acquisition is the MAP market’s death knell. Yes, if Salesforce.com succeeds with its post-acquisition integrations (unlike what happened with some of the company’s recent social investments), eventually Pardot will become a native marketing automation platform inside Salesforce.com, most likely as an add-on module.
However, that transition will take time, and Pardot’s capabilities are not as strong as those of other marketing automation platforms, although they are well positioned for the majority of SFDC’s client base. Clients with advanced marketing automation platform needs will still require other MAPs (e.g. Silverpop, Eloqua, Neolane).
Other industry observers have commented that the “marriage” between Salesforce.com and Eloqua is now over. To be sure, Oracle and Salesforce.com have never been friends, but Eloqua and Pardot focus on different types of clients. When both of these marketing automation platform vendors are on the same client’s shortlist, one of them is in the wrong opportunity. This separation will stay in place for the foreseeable future.
Additionally, Eloqua and Salesforce.com have a significant number of joint clients (i.e. where Eloqua and Salesforce.com are integrated). Eloqua will continue to support Salesforce.com, as dropping support would have a significant impact on revenue. Salesforce.com will also continue to support Eloqua, as many of its enterprise customers would be up in arms if support were dropped. But we expect both companies to move away from pursuing any deeper integration and instead focus on enhancing their core platforms individually.
Salesforce.com’s acquisition of ExactTarget sets the stage for Salesforce.com to become more of a centralized marketing platform. In addition to its current lead management and social capabilities, Salesforce.com will gain email marketing pay-per-click and marketing automation capabilities, although it will need basic content management capabilities in order to move forward and assume such a centralized platform approach.
This centralization is noteworthy because it mimics an approach to the B2B marketplace that is epitomized by HubSpot, a provider of all-in-one marketing software. Salesforce.com could pose a formidable challenge for HubSpot as it seeks to increase its target market audience beyond organizations with fewer than 150 employees. To make the situation even more interesting, Salesforce.com is a current HubSpot shareholder, having invested in HubSpot’s March 2011 Series D funding.
So, what does this all mean? The marketing automation platform industry will remain a fast-growing and highly innovative market. Although Salesforce.com’s acquisition alters marketplace dynamics, it doesn’t signal a cataclysmic event. I expect several marketing automation platform vendors will modify their market positioning or focus more heavily on specific areas of product or partnership development, but I don’t envision any major (previously unplanned) shifts.
The big question – which I will examine in my next post – is where the marketing automation platform market will be in two or three years. What will be viewed as standard functionality? How many vendors will there be, and what skills will be required in order to drive the most value from a marketing automation investment?