Wednesday, March 26, 2014

IBM May Buy Silverpop: B2B Marketing Automation and B2C Email Would Be Great Fit

The InterWebs were buzzing this morning with an Atlanta Business Chronicle article reporting that IBM is negotiating to buy Silverpop. My only reaction was, What the heck took so long? The other enterprise-level B2C email vendors (ExactTarget, Responsys) have already been bought at wondrously high prices, and every B2B marketing automation vendor I talk to tells me that potential investors are approaching them constantly. So it was a totally safe bet that Silverpop was fielding many offers as well. With $50 million in funding, most of it provided years ago, it was an equally safe bet that Silverpop had some investors eager to cash out.

IBM as an acquirer also makes perfect sense. Although they bought B2C marketing automation leader Unica several years ago, they lack enterprise-scale B2C email engine and B2B marketing automation. This makes Silverpop a perfect fit.

The only surprise in this deal is the price, rumored to be about $270 million or 3x revenue. ExactTarget and Responsys both sold for 6-7x revenue and I would have expected Silverpop to yield something similar. The company has always been very tight with financial information, although client and employee counts they’ve provided for our VEST report suggest recent growth rates of 20% to 30% per year, which considerably lags the industry as a whole. We don’t know anything about profitability, but I’d guess they run close to break even, since they haven’t announced any new investment recently and the slow growth rate would reduce the need for capital. In general, the market seems to reward growth over profitability, so these results may depress their price somewhat.

The company’s mix of B2B and B2C clients may also confuse potential buyers and drive down the price a bit. Plus, there just aren’t that many enterprise software companies who still need what Silverpop is offering: Oracle and have already made their purchases, Adobe is part of the way there with Neolane, and SAS and Teradata have their own tools and are probably less interested in B2B because most buyers are small or mid-size firms. SAP might be a potential buyer but hasn’t really shown an interest and just announced a deal to resell Adobe’s marketing suite. You could make an interesting case for Marketo as a buyer – to gain market share and some good technology, while leveraging a stock valued at more than 10x revenue – but that doesn’t seem to be part of their strategy.

So we’ll see. I wouldn’t be surprised if someone else offered Silverpop a higher price, but it’s not obvious who that would be. And if the IBM deal goes through, Silverpop will fit nicely into its new home.

Wednesday, March 19, 2014

IgnitionOne Buys Knotice, Prompting Many Deep Thoughts

Digital marketing technology vendor IgnitionOne today announced its acquisition of email and audience management vendor Knotice. Both vendors are listed in Raab Associates’ Guide to Customer Data Platforms in the “audience management” category. But the extract below from the CDP Guide also shows how they complement each other: Knotice does “fuzzy” matching of names and addresses and sends email, while IgnitionOne buys online media and selects best customer treatments. In other words, Knotice gives IgnitionOne a much stronger ability to incorporate non-Web channels and known individuals in its marketing and databases.

The only gaps shared by both systems are B2B clients and Web scanning for customer data, which is also mostly a B2B application. This further highlights the shift in industry acquisitions to B2C marketing technologies in general (ExactTarget/Salesforce, Responsys/Oracle, Neoalane/Adobe) and in audience data management platforms (BlueKai/Oracle, Aggregate Knowledge/Neustar) in particular.

These deals also reflect some other trends beyond acquisitions. One is the expansion of email vendors into broader multi-channel marketing. ExactTarget, Responsys, and Neolane all did this before they were acquired. StrongView (formerly StrongMail) and SmartFocus (formerly eMailVision) are making similar moves. SiteCore and SDL are moving in similar directions from a base in Web content management.

The second trend is a move by data-owning companies towards execution systems. Neustar, whose core business is linking people to phone numbers, is one example: it recently introduced “PlatformOne”, which it describes as a “centralized marketing solution” that gives marketers “a complete, real-time portrait of their customers and prospects based on accurate data, enabling a personalized dialogue across all marketing channels.”

V12 Group, another major data compiler, offers “Launchpad”, which “allows organizations of all sizes to build new audiences and manage existing customers using multiple channels and tools on a single platform.” Infogroup (which for some reason refuses to speak with me directly) in January announced “Yes Lifecycle Marketing” combining “email and digital marketing services, data, database technology, and agency services”. Venerable Acxiom has repositioned itself around the “Audience Operating System”, an “open platform” where “marketers, agencies and publishers can plan, buy and optimize audiences across channels, devices and applications, with precision and scale.”

Of the two trends, I think the second is more important. It’s not because execution systems are hard to find. Quite the opposite: they are essentially commodities, which is what makes it possible for so many data vendors to offer them. The significance is that consolidated customer databases are still very difficult to build, which is why there’s a Guide to Customer Data Platforms in the first place. A consolidated customer database is inherently part of the data vendors’ offering of execution systems, since the execution systems need to access a company’s own data to be useful.  This means that data vendors entering the execution market will compete to offer consolidated customer databases to marketers, hopefully at a much lower cost than the custom-built databases those vendors have traditionally provided. That these databases will combine digital advertising audiences with personally-identifiable names and addresses is pretty much a given, subject of course to privacy constraints. Many marketers will find hiring one of these vendors is an appealing alternative to building their consolidated customer database in-house.

Of course, today's real giants in compiling customer data are the companies like Google, Facebook, and Amazon.  They already sell advertising and do some customer data ingestion, and their resources dwarf the data vendors listed above. Don’t be surprised if any of them start building customer databases and offering execution systems. The only barrier is they may not think it’s a big enough business to be worth the trouble.

Monday, March 17, 2014

Marketing Automation Dissatisfaction: Are Users Buying the Wrong Systems?

I took a preliminary peek at the results of the marketing automation deployment survey that VentureBeat and I have been fielding for the past few weeks. There are some hints of really interesting insights, but we don’t have enough responses yet to publish. Like the sheriff in Blazing Saddles who held himself hostage, I'm writing this to encourage more people to complete the survey so we can release it.

First, some context. One of the rarely-spoken truths about B2B marketing automation is that a sizable minority of users – roughly one-third in most surveys – are not happy with their results. I wrote about last year in a pair of posts (here and here).  One purpose of the new survey was to probe for the reasons. We tested a number of possibilities: buyers are picking the wrong systems; they lack the skills to operate their systems; systems are too hard to use; marketing automation programs don’t deliver enough value to be worth the effort.

The results are open to interpretation but one figure jumped out at me: 25.9% of the respondents cited “missing needed features” as a top-three challenge in successfully using their systems. This wasn’t the most common answer but it still means that one-quarter of the users bought a system that didn’t meet their needs – that is, they bought the wrong system.

Answers about time spent on the search, number of systems considered, evaluation critieria, training, and staffing seem to consistent with this view. We’d gain some clarity if we could split the responders into groups: for example, were people who looked at more systems or searched for longer periods more happy with their selection?

This is where you come in, Dear Reader. We need more responses before we can publish the full results or do deeper analysis. If you’ve recently purchased a marketing automation system, please take the survey yourself and encourage others to do the same. Everyone who takes the survey will get a free copy of the report.

Thursday, March 13, 2014

Teradata Integrates Its Marketing Automation Acquisitions for Enterprise Marketers

Last year’s biggest marketing automation acquisitions were products for consumer marketing: ExactTarget by, Neolane by Adobe, and Responsys by Oracle. But it would be wrong to see these as expanding the industry to a new set of users. Consumer marketers have had their own, highly sophisticated marketing automation systems for years. Products like Unica (now IBM), Teradata Customer Interaction Manager, and SAS Marketing Automation were introduced before the earliest B2B marketing automation systems and B2C email products. They’ve continued to grow their client bases, which are concentrated among large enterprises. As new entrants explore the world of B2C marketing automation, it’s important to recognize that the territory is already occupied.

I recently caught up with the folks at Teradata, which had its own marketing automation system for a decade before it acquired Aprimo marketing automation in 2011 and added Munich-based email vendor eCircle in 2012. The three products overlapped significantly, especially in campaign management, and it took Teradata a while to sort things out. But as of earlier this year, everything is now marketed as part of a Teradata Integrated Marketing Cloud including Marketing Operations (largely Aprimo’s marketing resource management technology), Campaign Management (the Teradata campaign engine with a sprinkling of Aprimo features and new user interface), and Digital Messaging (based on eCircle). The company also offers a suite of analytic applications for database management and predictive modeling.

The new user interface is the most noticeable change in Campaign Management’s latest release, version 7. But, bright colors and curly lines aside, what distinguishes it from other marketing automation systems is that nodes in a campaign flow can feed in customers from different database segments or Web interactions.  Most other systems do this audience definition outside the campaign flow.  The Teradata flows do continue with nodes that move through the program after they enter.  Users can assign separate paths to different treatment outcomes, such as an email bounce, open, or click, and can merge several paths into a subsequent node. Treatment nodes can be linked to data output templates and content templates, which can include dynamic blocks that are populated in real time when the message is rendered. Rules can limit the combined number of messages sent to each customer across all campaigns, with separate limits for messages of different types in different channels. These are advanced features for consumer marketing automation and almost unheard of in B2B systems.

Beyond the campaign interface, Teradata builds on its traditional strengths in data management and analytics.  It provides unified access to digital and offline data, automated predictive modeling, cookie-free Web behavior tracking through an alliance with Celebrus, user-defined response measures, posting of Twitter comments to customer profiles, and “extended” data tables that draw from multiple sources.  Users can create emails and landing pages and preview how they would appear on different devices, although the system-generated contents don't automatically reformat the outputs to fit the viewing platform (a.k.a., "responsive design").  The system can deliver emails and support real time interactions across other channels. Messaging and real-time interaction are software-as-a-service only, while other components can run on-premise or be hosted by the vendor. The system can run on SQL Server as well as Teradata’s own database, and can interact with data stored in Oracle, SQL Server, and Teradata.

The Marketing Operations and Digital Messaging components of Teradata’s Marketing Cloud are similarly advanced. The company this week announced enhancements to both, including new interfaces, collaboration tools, a central repository for marketing assets, and tighter integration with Campaign Manager. The underlying theme is providing a more comprehensive, shared view of customer behaviors across all channels and connecting marketing costs with results to enable more accurate return on investment calculations.

All of this doesn't come cheap: Teradata aims at clients with at least $500 million revenue and sets is prices accordingly.  But large, sophisticated marketing organizations that need a large, sophisticated marketing system should keep Teradata on their list of options.

Friday, March 07, 2014

Ontraport Revamps Its Small Business Marketing Automation System

It’s five long years since I wrote a detailed review of OfficeAutoPilot (now Ontraport), which is a lifetime in industry terms. But, while the product has steadily expanded its features during that period, the basic interface and structure have remained unchanged. I speak with particular authority here, since Ontraport is the marketing automation system of record at Raab Associates – in part because they give me a free account, but mostly because it has the particular mix of email, Web forms, order processing, automation, and WordPress integration that suits my needs and have provided great customer support. Nor does it hurt that I enjoy their corporate sense of humor – see their recent announcement of integration with Wistia for video display, featuring 9-year-old “Girl CEO” Phoebe Ray, daughter of the company founder.

Great customer support has been important because setting up work flows in Ontraport, such as order processing for the VEST report, was pretty darn complicated. It was especially hard for someone like me who only touches those features once or twice a year. Ontraport recognized the issue some time ago and has in fact been working on a complete rebuild for more than two years. They finally released it last week, at least for new clients. Existing installations will be converted over the next few months. But I saw a beta version some time ago and it looks like a major improvement.

The basic workflow approach is still the same: customers define a list of steps without a graphical flow chart. This is somewhat simplistic but adequate for most small businesses. What’s changed is that emails within the workflow are now read from a central library, avoiding the common mistake (at least by me) of editing the library copy without realizing that the system sends a separate copy stored within the workflow itself. The other big improvement, also a pain point for Yours Truly, is that data capture forms and order forms are now the combined: previously, they were created and stored separately. The new version also allows users to store incomplete steps while building a sequence, to assign actions to different task outcomes, and to track response using Google Analytics tags. Those haven’t been issues for me personally but they should be valuable to others. Ontraport can now send and receive SMS messages as well.

I’m only talking here about new enhancements. Ontraport already provided rich features for CRM, task management, marketing automation, order capture, and partner and membership programs. An open API lets it integrate with third-party systems for shopping carts, payment processing, and webinars, as well as with WordPress for Web content management and Facebook for social sign-on. In addition to email and SMS, the system supports postcard mailings through integration with a network of printers. Beyond standard customer support, users can pay a “concierge service” to execute projects for them. Pricing remains a very affordable $297 per month for up to 25,000 contacts, 100,000 emails per month, and two users.

Ontraport reports about 5,000 clients, about half of whom are on SendPepper, a lower priced system for email, postcards, and landing pages. This makes it one of the industry's larger vendors, although the company has kept a relatively low profile.  It’s certainly worth a look if you’re in the market for a small business all-in-one sales and marketing system.

Tuesday, March 04, 2014

Vendemore Moves B2B Display Ad Targeting Towards the Bottom of the Funnel

My post last month on DemandBase and Bizo’s products to target Web display ads at individual businesses resulted in a call from Vendemore, a Stockholm, Sweden-based firm that has been providing similar services for seven and a half years. Like the other firms, Vendemore uses IP address to identify the company of Web site visitors, spots visitors of interest to its clients, and sends targeted ads to those visitors. This can happen via real time bidding for ads on external Web sites or on the client’s own home page. Vendemore can also use cookies to identify site visitors for retargeting on other Web sites within an ad network.

Users can assign spending limits, frequency caps, and ad contents to individual businesses or to lists of businesses. API integration with CRM and marketing automation systems also lets those systems assign businesses to the target lists. This allows marketers to send different contents to companies as the marketing automation system tracks them through different stages of the buying process. Vendemore has also developed standard formats for channels including YouTube, Twitter, Facebook, blogs, and surveys, making it easy to convert existing content into advertisements. It provides more global coverage than U.S.-centric DemandBase and Bizo.

It's tempting to position Vendemore and similar firms at the top of the marketing funnel, as a way to connect with new prospects that have not yet identified themselves to a company. This would offer a simple narrative about expanding B2B marketing automation beyond its home base in the middle of the funnel, where it nurtures known leads. But that’s not quite right. Vendemore CEO Christopher Engman says the system is used primarily to reach people at firms which have already begun a buying process. He said the other most common applications are to encourage cross selling within existing client accounts and to reach potential users at firms that have authorized corporate purchases of a product but left the actual buying decisions to individual divisions or departments. In each case, the systems reaches people at target firms who can't be identified by the sales force or marketing automation.  In two of those three cases, the result is actually to move further down the funnel, to existing customers, rather than higher up.

Looking even further down the funnel, today also brought an announcement by retention specialist Optimove of its new ability send retention messages via paid online advertising, in the form of Facebook Custom Audiences. I’ve recently had some other conversations as well about using marketing automation to support retention campaigns.

So we are indeed seeing an expansion of marketing automation along two dimensions: beyond email to media such as paid advertising and Web personalization, and down the funnel towards customer growth and retention. The move down-funnel makes particular sense because it leverages the known individuals present in the marketing automation database.

I still do expect to see marketing automation systems move up-funnel towards acquisition.  This will use paid advertising and social media, supported by unified databases built with Customer Data Platforms. But apparently it will happen later than I had expected.  After all, it's easier to add value when selling to existing customers, there are fewer synergies between acquisition and marketing automation (i.e., no known individuals to leverage), and marketing automation is run by different people than paid advertising and social media. If you’re sniffing around for the Next Big Thing, this suggests you might turn your nose in a slightly different direction.