by James Lawson, Contributing Editor
Despite huge consolidation in recent years, marketing automation remains a growth industry with more vendors than ever, and more powerful solutions than ever – arguably making it more difficult than ever for marketers to find the best solution for their particular needs.
Darron Gregory | Principal Consultant, TAP London
Ben Salmon | Consultant, Attributely
Dennis van der Veeke | Chief Technology Officer, SDL
Nick Worth | Chief Marketing Officer, Selligent
Marketing automation is still booming. Despite extensive consolidation over the last five years, vendors continue to add extra functionality and innovative new entrants keep arriving in droves.
“There are still lots of companies that don’t have a solution or have an old installation,” says Darron Gregory, Principal Consultant at TAP London. “Platforms are continually evolving to help marketers cope with the new channels that continue to arrive, so the MA market is just going to keep on growing.”
The big vendors have spent the last six years spending their way towards the ultimate marketing cloud. In 2010, IBM started the ball rolling when it paid $480 million for Unica. In 2013, Oracle spent $871 million on Eloqua while Salesforce.com splurged $2.5 billion on ExactTarget.
That same year, SAP acquired Swiss ecommerce business Hybris for between $1 billion and $1.5 billion to give the ERP behemoth its first credible marketing solution. Also in 2013, Adobe bought Neolane to bring offline channel capability to its otherwise all-digital Marketing Cloud.
Perhaps the biggest recent news was the deal that didn’t happen: Microsoft’s reported $55 billion offer for salesforce last spring. Though it fell some way short of the $70 billion Marc Benioff supposedly wanted, it highlights both the primacy of the cloud and the vitality of the CRM/MA market.
“Demand is high and the market is strong,” says Jeff Goldberg, Product Marketing Leader, Information Management Software, Pitney Bowes. “I’m optimistic about the opportunities that exist for MA vendors, but the challenges to stay fresh are equally big.”
At the big suites, analytics, social and mobile functionality have been priorities over the last three years. In comparison, there’s now something of a lull with attention returning to fundamentals like data integration.
“The newly instated Chief Data Officers and CIOs are realising that, even with the advances of marketing automation and seamless integrations with a CRM of choice, siloes of untapped customer information still exist outside those systems,” says Goldberg. “We help to break down those siloes of data and create aggregated views.”
That realisation means that dedicated SCV solutions, often known as Customer Data Platforms, are a hot area. Often seasoned with flavours of a DMP and operational data store, vendors include Tealium, Signal, Segment, Openprise, Agility and Lytics, with Ensighten recently winning $53 million in funding.
“What emerged through 2104 and 2015 is the notion of having an integrated, real-time data source that sits behind the platform to drive the website, the CMS and the recommendation engine,” notes Gregory. “That goes well beyond the daily-refreshed SCV. You need to update instantly to reflect recent activity on the web, in apps and elsewhere and minimise latency.”
Digital v offline
Ben Salmon at consultancy Attributely points to the popularity of vendors like Fresh Relevance and Movable Ink that focus on web and email personalisation as marking a further emphasis on using digital over offline data.
“It’s very expensive to build an SCV, close to £200,000 and it’s often not worth it if 90% or more of your customers are online,” he says. “I’m seeing a lot of retailers and automotive clients concentrate on capturing web audience browsing data to personalise content and retarget returning visitors.”
There’s no shortage of vendors concentrating on digital personalisation. Brightfunnel received $6 million last October while b2c vendor Blueshift also gained funding in 2015. The latter focuses on segmentation to drive personalisation in email, mobile and web.
The spate of new products and services from smaller vendors shows no signs of diminishing. Some examples include Claritix (data loading and integration), Real Magnet (set up complex campaigns very quickly) and Brightfunnel (b2b attribution).
“The market is buoyant but changing dramatically,” says Nick Worth, Chief Marketing Officer at Selligent. “The broad integration strategy has continued at the big cloud vendors but innovation has suffered there. Medium sized players are getting financial support and we are seeing innovative startup entrants.”
Machine-learning-driven predictive analytics for B2B lead scoring is probably the hottest area of all right now; companies like Lattice Engines, Radius, InsideSales, Infer and Mintego attracted $242 million in new funding last year alone (Crunchbase). Mobile innovation is a big area for many including Selligent, with its initiatives in areas like geofencing, push marketing and direct linking to mobile web.
“Overall we’re focusing more on the message and offer than the channel, we want to be as channel-agnostic as possible,” Worth says. “It’s about how best to engage with the hyperconnected consumer.”
The serious amounts of money to be made through credible MA applications means external funding isn’t hard to find for start-ups and established players alike. Selligent itself is a prime example.
Venture capitalist HGGC profited from the Hybris deal and obviously sees more potential in the space, paying between $150 and $200 million (Reuters) for a majority stake in Selligent last July. Could the investment be the start of a new marketing cloud?
In September, the investment firm snapped up Email Service Provider Strongview and immediately merged it with Selligent. This reprises the tactics seen with Hybris, which HGGC combined with iCongo before the SAP sale.
“We’re tightening the integration every day and will go to market with a single offer in the future,” says Worth. “But not yet.”
A perceived demand for midmarket b2c MA solutions is driving Selligent’s development strategy. “We see a tremendous gap in the mid market below the top 100 enterprises that the big b2c vendors target,” says Worth. “That’s our opportunity right there. Real marketers need the right functions at the right price.”
However that opportunity has historically proven elusive, partly due to the cost of handling the complexity of even midmarket b2c data and campaigns. ClickSquared’s failure to grow despite a compelling proposition and its subsequent sale to Zeta Interactive is a salutary warning.
However a real success story here is Apteco, close to owning the UK midmarket for MSP hosted campaign management and analytics. Gregory describes them as “the de facto standard” for marketing analytics.
The company is currently working on CloudStage, its latest hosting platform. As its name suggests, cloud infrastructure from the likes of Amazon supports rapid scaling of processing and storage.
“Our partners will be able to spin up preconfigured Alterian servers in minutes and add processors as required,” says Simon Fletcher, Apteco’s Business Development Director. “We will be using Amazon Web Services initially but the aim is for it to be able to run on multiple platforms.”
However, this will not change the traditional Apteco partner sales channel for hosting. “It will be a quicker way for our partners to set up servers but we will not be offering an Apteco hosting environment ourselves,” explains Fletcher. “The partners will still do the work.”
Prior to its 2012 acquisition by SDL, Alterian was a direct contender for Apteco. However the deal hasn’t worked out too well. “In the UK, they have disappeared as a competitor,” says Fletcher.
SDL recently posted a $7 million loss for its Technology business in the first half of 2015. The company now intends to sell on the old Alterian modules with other less successful applications: Campaigns (including Email & Analytics), Fredhopper and Social Intelligence.
“We will be divesting certain areas of SDL’s technology business that are non-core,” says Dennis van der Veeke, Chief Technology Officer at SDL. “We are confident that these solutions and our people that work in them will be more successful in their new home.”
Where that new home will be is as yet unclear. Instead, SDL intends to follow a “best of breed” approach and “integrate with third-party solutions for marketing automation, CRM, ecommerce, PIM and enterprise search”.
Teradata has also dropped out of the marketing cloud race, stating its intention to sell its Marketing Applications business last November only weeks after buying a DMP. No buyer has yet appeared but the company appears to want to keep its on-premise application (bought from Ceres many years ago) and offload the rest.
Back in business
After a torrid few years, another familiar UK marketing automation brand is now thriving. After selling off its hosting business to Blue Group in 2013, Smartfocus is now firmly focused on cloud-based, midmarket MA.
“Demand is certainly increasing, with many customers looking to replace the systems they have,” says Jane Dixon, Partner, Global Strategic Accounts, Smartfocus. “We’re seeing huge interest in the Virtual Beacon technology that we introduced last year, especially from retailers with large stores.”
Using DMPs to drive targeting has yet to capture mainstream imaginations. Dixon says that her company has just finished its first DMP integration, building links from the SCV to support online ad targeting.
“We worked with a major FMCG brand to use their SCV profiles to fine tune display advertising with services like Facebook Custom Audience,” she says. “The response rates have been incredible. They also want to use information from online display to support other channels, though obviously there are data protection challenges there.”
Dixon also notes a growing desire to replace relational databases with big data platforms. Smartfocus has moved away from relational databases entirely to a Cloudera Hadoop-based cloud solution. This supports real-time data management and analysis, scales rapidly and is significantly cheaper to license than traditional platforms.
Smartfocus client Waterstones is one company attracted to this capability. “They see moving to the same technology as companies like Google and Facebook as part of their competitive strategy,” says Dixon. “There’s unlimited room for change and growth.”
Cloud is now looks unstoppable as the delivery mechanism of choice for all but the most conservative sectors like financial services. Pitney Bowes is one of the most recent arrivals here with its graph-based Spectrum Data Hub.
All the big suite vendors offer a in-house choices and also hybrids such as Adobe’s Neolane-derived Mid-Sourcing server, but this is less common in the midmarket. Selligent still produces an in-house installed option but it doesn’t sound like it could be around for too long.
“SaaS is the right and best solution for everyone in the long term,” states Worth. “Obviously some businesses have concerns about security and we offer an on-premise solution in some areas at the moment.”
What lies ahead?
So where is the market heading from here? Some predict 2016 as the year that MA “crosses the chasm” and really enters the mainstream. An even higher adoption rate for marketing technology should see the leading vendors pulling away from the small fry and a subsequent slow drop in total vendor numbers as the losers get bought or exit the market completely.
Adtech will continue to hog the headlines but may well see its share drop as ad blocker use continues to grow in Europe and the US. Other hot tickets include feeding intent data and other contextual information like location and temperature from the (long touted) Internet of Things into the targeting decision.
With retailers already looking ahead to when domestic products incorporate a re-order button, the flow of new channels and digital platform-driven customer interactions is only going to increase.
As marketers search for the best way exploit them, innovative marketing technologies will keep right on coming.