Salesforce to acquire Exact Target: I now pronounce you 'Marketing Cloud'

Salesforce to acquire Exact Target: I now pronounce you 'Marketing Cloud'

Summary: What makes this one of Salesforce's most important acquisitions ever is Marc Benioff's proclamation last August that the Marketing Cloud is their next "billion dollar" business.

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In one fell swoop, Salesforce did what it had to do for a price beyond what I expected they'd ever pay — and they now can call their Marketing Cloud a marketing cloud and not be wrong.

This morning, Salesforce announced the acquisition of Exact Target for $2.5 billion via tendering an offer for all outstanding shares of Exact Target stock at $33.75 a share. 

This move is precisely (I would have said "exactly" but that sounded redundant) what salesforce needed to do. They now have an excellent email marketing suite, a strong upper-end-of-the-small-and-through-the-middle-of-the-mid-market marketing automation suite (via the Exact Target acquisition of Pardot last year) and, as an added bonus, the social comms tool Co-Tweet, which was one of the underutilized gems owned by Exact Target. They are also acquiring a substantial customer base that is reasonably ripe for salesforce's other offerings.

What makes this one of salesforce's most important acquisitions ever is Marc Benioff's proclamation last August on the Q2 2012 financial results that the Marketing Cloud is their next "billion dollar" (they're going to have to do way better than that now) business.

That was a lot of pressure for a company that had only a strong social media monitoring platform and a Facebook advertising platform under the rubric "Marketing Cloud" and nothing else, even though what they did have was outstanding quality within its class. They somewhat weakly attempted to spruce it up with the announcement earlier this year of social.com, which was an outgrowth of their Buddy Media acquisition and built around branding in social channels. They attempted to control this lack of traditional marketing tools by branding the Marketing Cloud "social marketing." 

Marketing_Cloud_SFDC_Homepage_6.4.13
"Social marketing" no longer. Now just marketing.

As far back as 2011, they had been driven to build out their one major weak link which had been marketing.

In fact, it was assumed that Infor was to be their "marketing cloud" at one point, but that was scotched at Dreamforce 2011 when Infor became a strategic partner for force.com native marketing and integration with the superb Infor Epiphany Interaction Advisor. The marketing cloud I was expecting to be announced on the stage at Dreamforce with Charles Phillips, wasn't. In fact, in meetings afterwards, Marc Benioff insisted that Radian6 was the marketing cloud. And it was... the first piece of it. But Radian6 wasn't "it."

I made it clear in 2011 that Radian6, as great as it is, wasn't the marketing cloud and they wouldn't have one until they acquired or built traditional functionality. While they made a lot of attempts to get around that, salesforce is far too smart a company to ignore the fact that marketers need to deal with traditional channels and use traditional tools as well, so they went out and did something about it and spent a big chunka change to do so — but got a worthwhile product, moreover a worthwhile company, in return.

There is more to it. There is a lot of market pressure on salesforce to deliver a competitive marketing package with the success of Marketo, the acquistion of Eloqua by Oracle who calls what they provide a "Marketing Cloud," and the entry of Adobe into the race with their own version of the "Marketing Cloud." The growth of Aprimo (now Teradata Applications) and the acquisition of Integrated Marketing Management provider Marketing Pilot by Microsoft added to the pascals.

Of course, this is an "intent to buy," not a completed acquisition, so this is still theoretical until the deal closes, but it's the right move.

Kudos to salesforce.com for filling out the Marketing Cloud the way it should be.

The Thing to Do....

There are a few things that salesforce will have to do of course to make this (assuming the deal goes through) the Marketing Cloud that companies of all stripes and  hues will buy. 

The biggest requirement is to scale Pardot. 

Pardot is built to appeal to the midmarket. It doesn't scale well to the enterprise, nor does it have the management features that are often necessary for the larger global businesses. It lacks MRM-related capabilities and isn't strong on analytics. Again, these are things that smaller companies don't need as much as the larger ones do. They serve their target market very well. Salesforce will have to spend time building or buying the additional capabilities that they lack and architecting them to handle the volume/loads of the larger enterprises.

But that's a great problem to have.

One place that salesforce is going to be very good for Exact Target is around influencer relations. To put it politely, Exact Target was pretty bad at them. Salesforce is great at them. Thus, salesforce, as the parent, will make them much, much better. However, salesforce IR folks should find Derek Grant, who retains the title SVP of Sales at Pardot (Exact Target) and work him into the mix somehow. He is a terrific person and is highly respected by the analysts and influencers who know him.

The End and the Beginning....

I have to admit, I am delighted that salesforce made this acquisition — though it could have been others too. What delights me is that salesforce is not resting on laurels, not justifying lacks, but taking actions that they should be taking to provide them with what they have to have to claim to be a "Marketing Cloud."

Now they can remove "social" from that home page description of the Marketing Cloud. Finally. Thankfully.

Topics: Salesforce.com, Cloud, Enterprise Software, Social Enterprise

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3 comments
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  • Case Management and Salesforce

    Greetings Paul:

    Thanks for providing this analysis.

    Being tied closely into the Salesforce Service Cloud offering with our FuzeAnswers solution, I would love to get your take on where you believe Salesforce is (and needs to be) with their case management capabilities.

    Although not nearly as or glamorous to most as sales and marketing, case management provides critical plumbing for Salesforce’s Sales, Service, and Marketing Clouds and I believe it could benefit from some pretty material enhancements.

    What do you think? Have you heard of any planned efforts by Salesforce to further evolve their case management?

    Kind regards, Chuck
    Chuck Van Court
    • Salesforce and the Service Cloud

      Hi Chuck,
      Good to "hear" your voice. I haven't heard anything about plans to enhance case management but will see if I can find out anything and let you know offline. I'll see what's there, if anything. Sorry I can't be of more help.

      Best
      Paul
      pgreenbe
  • Thanks and follow-up question

    Many thanks, Paul. Anything you can pass my way would be greatly appreciated.

    Regarding my question about where Salesforce currently stands relative to competition with their case management, do you or any of your many insightful readers have an opinion on where SF is with their case management? Is it considered good enough or not, or is it considered just not that important functionality to the success of their platform?

    I am totally biased on this one and would love to get thoughts from others with a clearer view of the big picture. It would be fabulous if someone from Salesforce’s management could "get social" and share their thoughts here.

    Thanks! Chuck
    cvancourt