IBM Announces Intent To Acquire Silverpop And We're Not Surprised

IBM has announced its intent to acquire marketing automation company Silverpop for an undisclosed sum. This acquisition is — on the surface — just another tactical play by a large marketing technology vendor to bring on additional capabilities to support a strategic platform narrative. While Forrester clients can look for our analysis of this announcement in a forthcoming Quick Take — which I will be publishing in collaboration with my colleague Lori Wizdo — Forrester’s initial thought on the news is that we’re not surprised. Given that the various competitors in this space have been adding capabilities left and right through acquisitions, IBM is simply doing the same — checking the box to build out an expansive product line portfolio. The marketing automation vendor landscape (both business-to-business [B2B] and business-to-consumer) shrinks further, and we continue to wait for examples and proof that these mega vendors can deliver the integration they promise.
So what does Silverpop bring to IBM’s Enterprise Marketing Management solution?
  • A 100% software-as-a-service solution that IBM can sell immediately, which is in keeping with IBM’s stated commitment to move to the cloud.
  • Email service capability that is stronger than that currently available in Unica — though questions remain about how Silverpop’s ownership and storage of data will work with much larger clients with existing data warehouses.
  • The vision (with some technical execution) for customer profiles based on behavioral attributes, a topic that Silverpop pioneered but has left open for others to claim a lead.
  • A credible offering for B2B marketing automation. 
  • Access to midmarket firms that IBM has not previously targeted — though we’re dubious about whether that is actually a competitive advantage for IBM at this juncture.
The sustained consolidation happening in this space meant that it was really just a matter of time until Silverpop was snatched up — and IBM is a logical fit. IBM’s decision to acquire Silverpop was certainly a sound one. But it’s not altogether sure that it will be a transformational one.
Forrester clients, look for our deeper analysis on what this means for marketers early next week. If you're reading this and happen to be in attendance at our Forum for Marketing Leaders, come find Lori or me to talk further!


Reasons behind the acquisition

Excellent analysis, Cory. I would agree with much of what you said, except that I think the real value here lies in Silverpop's automation platform (which can be scaled quickly to an enterprise level) and and their targeting capability - regardless of channel. It fits in well with IBM's focus on mobile customer engagement that we've also seen in the Xtify acquisition and significant growth in the MobileFirst group.

My full take on the acquisition is here:

Hope to see you at Smarter Commerce!

B2B SaaS Vendor Marketing/Sales Spend

Many B2B SaaS vendors carry a very high sales/marketing spend. Salesforce still spends 50+ of revenue on sales/marketing---and Marketo, a publicly traded Silverpop competitor is above 65%---i.e. for every dollar of top line revenue they burn 65 cents.

These percentages will get worse in the coming marketing automation price wars as M/A becomes a 'feature' of enterprise suites.

Silverpop is being smart here by gaining access to IBM's customer base and IBM is closing a gap in their product line.

Don't see Marketo lasting much longer as an independent ISV either. Unsustainable expense numbers.

Who's next?

Consolidation continues. After Oracle - Eloqua (2012), Salesforce - Pardot (2013) and IBM - Silverpop (2014) just waiting for SAP's announcent for the acquisition of Marketo. Or will we be surprised by Microsoft? However they bought MarketingPilot in 2012 it is still unsure if the upcoming "Spring-release" of MS Dynamics Marketing will be able to compete fully on functionality and specs with "proven" platforms like Eloqua, Pardot, Marketo and HubSpot.

We're not surprised either

We're not surprised either by the acquisition, Cory, for all the points you raised. While it strengthens IBM's portfolio, the $240 Million dollar price tag speaks volumes of just how transformative it will be to IBM. I see the bigger story in this acquisition centered on the growing acceptance of behavior-based interactions and -driven personalization. That is the next stage in marketing automation maturity that vendors must excel at in order to compete. Only by being able to spot and understand intent of anonymous, as well as known, visitors can marketers engage in a relevant, persistent and meaning conversation with customers and prospects.