HomeBlog Salesforce.com’s Acquisition: Why ExactTarget?

Salesforce.com’s Acquisition: Why ExactTarget?

June 05, 2013 | By Jay Famico

Salesforce.com recently acquired ExactTarget. Why now? Jay Famico shares his thoughts on the acquisition and what benefits ExactTarget brings to Salesforce.com.

In our earlier analysis of Salesforce.com’s acquisition of ExactTarget, Jonathan Block discussed what the acquisition means for the marketing automation platform (MAP) market. Here are my additional thoughts on why Salesforce.com acquired ExactTarget.

As Jonathan noted, no crystal ball was needed to predict that Salesforce.com would purchase (or build) a marketing automation platform at some point. The question then becomes, why did Salesforce.com choose ExactTarget as an acquisition target – and why did it do so now?

First, contrary to what many industry insiders have said, Salesforce.com did not purchase ExactTarget just to get into the marketing automation platform market. If Salesforce.com had sought simply to enter the marketing automation platform market, it would not have waited for Pardot to be acquired by ExactTarget. Remember that ExactTarget purchased Pardot last October for $95.5 million; Salesforce.com had plenty of opportunity to acquire Pardot directly for much less than the $2.5 billion it paid for ExactTarget.

What does ExactTarget bring to the table, then?

  • B-to-c entry point. ExactTarget holds a significant roster of b-to-c customers, ranging from Expedia and Universal Music Group to Nike and Coke. This roster provides Salesforce.com with an entry point into the b-to-c segment, where it can cross-sell its sales force automation, social media and MAP offerings.

  • Email capabilities. The email capabilities in the core Salesforce.com platform are weak. Email designers are non-existent, email deliverability is poor, and users cannot send large volumes of email out of Salesforce.com. The areas where ExactTarget excels in email marketing address these product gaps. Moreover, b-to-b marketing automation platform penetration is currently 20 percent, which means that 80 percent of the b-to-b marketplace still leverages email marketing without a MAP. Assuming Salesforce.com enhances its email capabilities with ExactTarget’s offerings, it has the opportunity to supplant email tools its clients are currently using.

  • Marketing automation. ExactTarget’s 2012 purchase of Pardot provides marketing automation capabilities. Our recent vendor profile of Pardot noted that its marketing automation solution “may not pass muster with large, complex enterprises, but for more of a do-it-yourself marketer, it should be on the short list of marketing automation platform providers to consider.” Keep in mind that for the vast majority of Salesforce.com’s client base, Pardot’s MAP capabilities offer exactly the level of marketing automaton capability required.

  • License (not service) revenue. Compared to their peers, ExactTarget and Pardot emphasize usability for average marketing users and do not generally require significant professional services to set up and execute demand generation tactics. This ties in nicely to Salesforce.com’s focus on driving revenue through licensing rather than services.

The acquisition of ExactTarget also has a lot of implications for the marketing automation platform market as a whole. I will follow up with a second blog post on this topic shortly.

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