Geek Out Over Multi-Billion Dollar Marketo & Demandware Acquisitions
Techies love billion-dollar deals, and this week they were treated to not one but two huge acquisitions to analyze and envy involving separate deals for Marketo (acquired for $1.79 billion) and Demandware (bought for $2.8 billion by Salesforce).
First, marketing automation company Marketo entered in a definitive agreement to be acquired by Vista Equity Partners (its investment portfolio includes ReturnPath, Autotask and many others) for $1.79 billion and, in turn, goes from a public company to a private one once again.
A Marketo acquisition would have made sense for a number of tech giants including Microsoft (MarketingPilot was acquired by them four years ago) or SAP (which snagged SeeWhy in 2014 for behaviorial marketing but aligned with Adobe for additional marketing functionality) because their competitors have bulked up on technology to increase engagement and activate customers like NetSuite purchasing Bronto, Salesforce taking on ExactTarget/Pardot, Oracle buying Eloqua and Responsys and IBM bringing on Silverpop - to sum up the complex and deepening marketing cloud wars.
Success indicators certainly live in how the functionality comes to market (think NetSuite customers now being able to use cart recovery because of the Bronto acquisition or Salesforce users following up with the right offer thanks to Pardot functionality), but not everyone is sold on these megadeals. Carlos Hidalgo, CEO and founder of demand generation firm ANNUITAS (a Marketo partner firm) believes that by Marketo going the private equity route, it can focus on its broader vision of a marketing platform.
"In looking at recent history of some MarTech acquisitions, many of the acquired companies have struggled to pursue their vision and best serve their customers given competing priorities by their larger acquirers," said Hidalgo. "Marketo’s route to being acquired hedges against this happening, which is a big win for their customers."
Regardless of which aisle professionals sit on, Act-On CEO Andy MacMillan believes the Marketo purchase validates the marketing automation industry and the value the technology brings to organizations - citing the best is yet to come.
“The use of marketing automation has just scratched the surface and there is a lot more that we will see from it," said MacMillan. "The future of marketing automation goes beyond demand generation - it will be the command center stewarding the customer experience - from brand awareness through customer retention and loyalty."
Salesforce is doing all that and more, which brings us to the next multi-billion dollar deal announced this week. Salesforce is stacking its customer realtionship management (CRM) deck with marketing automation (like the aforementioned pick-ups) and now commerce, entering into a definitive agreement to purchase Demandware in a transaction worth approximately $2.9 billion - certainly laying to rest rumors of Salesforce being shopped around itself.
For the unfamiliar, Demandware counts top names like L'Oreal, Lands' End and Marks & Spencer as customers to power their commerce and connect one on one with consumers across channels (Web, mobile, social and in-store). The Demandware acquisition will certainly position Salesforce as a major player in cloud commerce, and it will be interesting to watch how Salesforce moves beyond leads and into commerce - housing shopper data coming from Demandware to "automatically" leverage within Salesforce and improve user experience and generate more sales for the retailer.