So HootSuite just raised a $165 million Series B
(led by Insight Venture Partners
, with participation from Accel Partners
and existing investor, OMERS Ventures
). To put it in context, $165m is an IPO-sized financing (Marketo raised $80m in theirs
; Tableau $254m). This is huge validation not only for HootSuite
, but also for marketing technologies as a whole
. The space has been hot for quite some time, starting with a spate of acquisitions in the social listening / widget / ads space --
Buddy Media (Salesforce), Radian6 (Salesforce), Context Optional (Adobe)--and continuing with recent activity in marketing automation and analytics: Eloqua (Oracle), ExactTarget/Pardot (Salesforce), Marketo (IPO), Tableau (IPO), EdgeSpring (Salesforce) and Neolane (Adobe). So HootSuite's continued growth and success must also be understood in light of the continued Marketing Cloud Wars between Salesforce, Oracle and Adobe. So what's going on here?
Simply put, customer-facing technologies are changing rapidly (the Internet, mobile and social), which is causing buying behavior to change, enabling and necessitating the need for a new marketing technology stack
. HootSuite -- if it continues to dominate its space -- might well be a kingmaker in the battle to consolidate this stack. (From personal observation, it seems the majority of CMOs we've talked to at BrightFunnel are using HootSuite; there is tremendous value in this #1 market share rank).
What's mind-boggling about HootSuite's meteoric rise
is that it only just celebrated its 4th birthday
. As an entrepreneur, it's certainly an inspiring and humbling success story. It appears that next, they've got their eyes set on world domination: “This capital gives us additional resources to expand quickly and strategically into new markets, innovate rapidly, and deliver on our vision around the world” - Ryan Holmes, CEO of HootSuite
Begun, the Marketing Cloud wars have.Today, Salesforce.com announced the acquisition of ExactTarget for $2.5 billion. SALESFORCE EXACTTARGET ACQUISITION FAQ:Why is Salesforce.com buying ExactTarget?
Marc Benioff has publicly stated
that the marketing cloud is a big priority for him. Just over 90 days ago, he said: “We need to buy more marketing companies. We want to be the company you turn to for sales, service, marketing and the platform.”
Well for once, you can't blame him for talking too far into his roadmap. Why Does Salesforce.com Care About Marketing?
Marketing matters to Salesforce because they want to get the massive dollars that brands and retailers spend on marketing. There is simply a much larger addressable market if you solve the needs of marketers versus merely focusing on sales people. As we know, the CMO IT stack is a mess
, and Salesforce intends to help sort it all out (and make a buck or two in the process).
Salesforce is specifically focusing on B2C marketing, because that's where they are weak -- Salesforce CRM is not used by brands. In fact, Salesforce established Retail as a target segment a few years ago. And it's no secret that it wants to go after brand marketers -- it acquired Radian6
and subsequently bought BuddyMedia
for that exact purpose.Who is Salesforce at War With?
The answer that question always starts with Oracle. Besides Salesforce, Oracle is a prominent proponent of their own Marketing Cloud
. They acquired Eloqua
in December 2012, of course. Additionally, Adobe is the third horse in the race. Arguably, they have the most fleshed-out marketing cloud -- thanks to acquisitions such as Omniture
and Efficient Frontie
r -- but paradoxically they're the most quiet about their aspirations.But You Said Salesforce Would Buy Marketo?!
I was wrong. The nice thing for Salesforce in this acquisition is that ExactTarget has already bought Pardo
t, a Marketo and Eloqua competitor. So they are getting a two-for-one deal.Author: Nadim Hossain is CEO of BrightFunnel, and formerly the chief marketing officer of PowerReviews (acquired by Bazaarvoice).
Chief marketing officers (CMOs), unlike other line-of-business executives, are in a unique quandary. Their responsibilities span across the customer journey--from awareness to engagement to sales--which makes it difficult to obtain C-level insights. Unlike sales, finance or HR functions, for example, marketing has no natural "atomic unit" which can easily roll up from individual to team to division and eventually up to the whole enterprise. As a result, even the most basic, existential questions--such as "how did we do last month?"
--are often difficult to answer. And paradoxically, the massive wave of new marketing applications
only makes the problem worse.
No Atomic Unit
Marketing, by necessity is a diverse function, encompassing artists and quants under the same roof. But ultimately, its mission is to drive future revenues. Unfortunately, the only metrics readily available to marketers are interim ones -- such as traffic, leads, awareness, followers and attendees. This lack of visibility into the true impact of marketing spend frustrates both CMOs and their executive peers.
Ironically, this makes CMOs more similar to CIOs than it does to their line-of-business peers. CIOs have long dealt with disparate metrics such as cost, speed, innovation and security. Where the similarities end is that CIOs have many tools at their disposal to measure and manage their universe, whereas CMOs do not.
An Eight Billion Dollar Gorilla Has Yet to Emerge
Software vendors have emerged to provide CxO insights to sales, finance, HR and IT executives. But the same cannot be said for CMOs. The market simply wasn't mature enough 5 or 10 years ago, and the CMO IT stack
had yet to emerge.
The New CMO IT Stack Only Makes Things Worse
The good news is that we are now seeing a massive wave of new marketing applications emerge
. This helps sub-functions within marketing--such as the demand generation team or the social media team--do their jobs better. The bad news is that it only makes the CMO's job harder, as they now have even more data to track.
The Marketing Cloud Wars Will Sort This Out
As companies like Salesforce
battle for the hearts and minds of the CMO, it will be interesting to watch what solutions emerge to solve this pressing problem. In the meantime, go to your local CMO, give them a big hug and say "I understand now. You're flying completely blind."
Naturally, my first reaction was that there must be some grade inflation going on here -- perhaps a few categories had been invented, or perhaps the definition of "marketing technology" stretched to include more companies than reality would warrant. What I found, instead, surprised me: the mass of vendors included appeared to be quite legitimate.
So my skepticism turned to nerdy joy -- finally here was visual proof for what I've known at a gut level, as well as through sometimes painful experiences: we are being crushed under the weight of so many marketing tools. Yes, many of these tools are amazing advances, and they are supposed to enable and inspire us, but at the end of the day, they are making decisions harder, not easier, and are not helping CMOs and their direct reports gain truly actionable insights.
And they're not helping disparate marketing teams -- the quants and the artists -- collaborate or gain a common view of the customer. And they're certainly not doing enough to help CEOs and Boards of Directors with the timely insights needed to instill confidence in the right actions, plans and budgets. That task will have to be taken on by the next wave of marketing technology innovators.
It's like that awkward moment in a romantic comedy, when everyone knows that two characters should get together, except for the protagonists themselves. It's come to that with Salesforce.com
. As a proud alum
of Salesforce.com, and satisfied former client and friend of Marketo
, it's especially frustrating for me to watch this obvious love match between best-of-breed Software-as-a-Service companies take so long to happen.
Of course, the would-be couple only has themselves to blame. Salesforce initially looked to build its Marketing Cloud with sexy social enterprise acquisitions
-- namely Radian6
and Buddy Media
-- which were targeted to consumer brands more than its bread and butter B2B enterprises. At the time, this seemed to be a bold -- and perhaps even brilliant -- move by Salesforce, as it instantly gave it credibility not only with consumer brands such as Burberry
, but with CMOs of all stripes. But as is often the case with M&A, the company hit some road bumps
along the way.
Marketo, for its part, also looked to sprinkle on itself the magic dust of social
, with an acquisition of Crowd Factory
-- a B2B social application vendor -- in April 2012. But the time has come for each to put its youthful dalliances with social enterprise apps in the rearview mirror. Marketo finds itself now competing with Oracle, as a result of Oracle's $871 million acquisition of Eloqua. If there is one rule of survival for mature enterprise software technologies, it is this: do not mess with Larry Ellison. Oracle, of course, is Salesforce.com's nemesis. One analyst, Rick Sherlund of Nomura, even praised the Eloqua deal because it "should allow Oracle to better compete with Salesforce.com."
But the synergy between these two companies goes beyond merely having a common enemy. For all the sizzle surrounding Salesforce.com's re-positioning itself over the years as a Cloud Computing leader
, Social Enterprise vendor
, and now champion of Customer Companies
(though evidently an enemy of English teachers everywhere), at its core it is a SaaS CRM vendor for B2B companies. And these companies are embracing marketing automation technologies at a rapid pace. So it's only fitting that the company's next acquisition will be Marketo. I just hope for both that they don't wait too long, as there is an unglamorous but reliable German suitor
waiting in the wings.