IBM cast a wider net in Cloud applications market with the planned purchase of Silverpop, which specializes in email marketing software for 5,000 brands worldwide.
The acquisition illustrates the scale IBM aims to take its Cloud strategy by picking up a number of strategic assets, which already include Cloud and on-premise products like Tealeaf for customer experience management, Unica for marketing campaign management, Coremetrics for digital analytics, and more recently Xtify for mobile messaging. Email marketing, or marketing automation in general, is another piece that fits nicely into IBM’s vision of helping companies big and small realize better outcome when reaching their customers both online and offline.
The Silverpop purchase follows a parade of acquisitions that have recently been announced by major platform providers as well as private equity firms to double down on Cloud CRM applications vendors, as shown in the following table. Based on recent transactions and the valuation paid by some of its competitors, IBM’s purchase price could exceed $500 million.
Recent Cloud CRM Acquisitions
|Target||Buyer||Price, $M||# of customers|
|Active Network||Vista Equity Partners||1,050||55,000|
|Vocus||GTCR Private Equity Firm||447||16,854|
Source: Apps Run The World, April 2014
Founded in 1999, the 520-person Silverpop has amassed over 2,000 customers such as Aetna, Mazda and Newell Rubbermaid, as well as a base of 380 partners including Coremetrics. Bill Nussey, chief executive of Silverpop, said the company offers one of the most extensive integration into Salesforce.com, especially for B2B marketing automation. In 2012 Silverpop expanded its reach into the more than two million customers of Microsoft Dynamics CRM by acquiring marketing application vendor CoreMotives, which operates completely within the Dynamic CRM with full support of Azure.
While most vendors have shied away from discussing the subject of spamming, the fact is that email marketing remains one of the most effective tools to reach certain users. Similar to junk mail, any incremental gain in getting someone to open and read a piece of personalized correspondence is perhaps worth as much as investing a fortune in a Super Bowl ad. Hence Salesforce.com plunked down $2.5 billion for ExactTarget, while Oracle responded with similar extravagance by paying $1.5 billion for Responsys.
IBM’s position appears to be running deeper than that. With existing and prospective customers of Silverpop, the move to get into email marketing may well be just the opener. The real gem lies in helping IBM/Silverpop clients analyze mountains of interactions, click-rates, and patterns of behavior after stitching different customer touch points into a single view.
That’s where the battle of marketing automation will be fought in the future and few vendors have been able to master the art of delivering that single view at a cost point that makes sense for companies to invest in a holistic solution. As it stands, most companies are still investing in point solutions for marketing automation hoping to strike some quick wins merely by getting attention of their customers.
On the other hand, IBM, which is equipped with one of the most comprehensive analytics portfolios covering everything from SPSS for predictive analytics to its latest Watson Foundations for supercomputer-enabled Big Data insights, may stand to be in the best position to scale that to its advantage.