ExactTarget Hones Cross-Channel Communications
Consolidation is a perennial trend in the software industry; specialized applications are gobbled up by larger companies seeking to acquire new functionality, marketshare or customers. Now it has come to the email- and digital-marketing space. Cross-channel communications, the Holy Grail for marketers, was the driver behind ExactTarget's acquisitions of Pardot and iGoDigital.
With two new acquisitions, ExactTarget is pushing beyond its original email marketing mission to become a one-stop online marketing and social media shop. The company has acquired Pardot for US$95.5 million and iGoDigital for $21 million -- it announced both deals last week.
ExactTarget paid out $85.5 million in cash and $10 million in common stock for Pardot. The iGoDigital transaction consisted of $14.7 million in cash and $6.3 million in ExactTarget common stock.
An ExactTarget spokesperson was not immediately available to provide further details.
2 Companies, 1 Mission
At first blush, the two acquired companies appear to have little in common. Pardot is a marketing automation provider. iGoDigital is a provider of Web personalization that focuses on predictive, real-time product recommendations and online guided selling experiences.
However, they both fall under the larger rubric of online marketing, CRM, mobile and social media -- and that makes them viable targets for ExactTarget. Over the past few years, the company has been rolling out products that address some element of these disciplines, usually with an eye to integrating them with its core email marketing functionality.
The Quest for Cross-Channel Communication
Case in point: Earlier this summer, ExactTarget debuted MobileConnect, a mobile marketing application featuring message templates, reporting, enterprise management of short/long codes and keywords -- and cross-channel integration with campaigns across email, social media and the Web.
Cross-channel communications has become the Holy Grail for marketers, Yankee Group analyst Sheryl Kingstone told CRM Buyer. That is the driver behind various companies' evolutions in general -- ExactTarget is not the only email marketer pushing beyond its original boundaries -- and ExactTarget's new acquisitions in particular.
Consider iGoDigital, Kingstone said. "This is the perfect acquisition for ExactTarget, because it needs this kind of functionality to analyze all of the new data it is bringing in. It also needs to add power or value-add to its offerings, and online recommendations can do that."
Pardot was acquired for similar reasons; its lead-nurturing functionality allows marketers to connect with customers across email, mobile, social media and the Web.
Industry Consolidation, New Direction
ExactTarget's acquisitions also point to a larger shift in the digital marketing industry -- that of consolidation, Alex Lustberg, VP of marketing at Lyris, told the E-Commerce Times.
Indeed, this is a perennial trend in the software industry; specialized applications are gobbled up by larger companies that are seeking to acquire new functionality, marketshare or customers -- or all three. Now it has come to the email marketing/digital marketing space.
The pros and cons of this approach are well known: The acquiring company gets its marketshare or customer base, but it must struggle with the difficulties of integration. M&As are still as much art as science with only a few companies -- think Oracle -- able to make a complete success them.
Big Data and How to Handle It
However, there are other trends developing in the digital marketing space that may not be well served by a company whose feature set is knitted together via disparate acquisitions, Lustberg noted -- namely, the struggle by marketers to get their arms around Big Data.
"Having new functionality delivered piecemeal doesn't solve the marketer's true problem now, which is making sense of Big Data," he said. "It requires a high degree of technology and sophistication to bring together these various applications and channels to provide a marketer with the visibility it needs into a customer base."