Posted by Suresh Vittal on December 22, 2010
Teradata announced today that it was entering into an agreement to acquire Aprimo, a privately held enterprise marketing platform company, with a strong focus on Campaign Management and Marketing Resource Management (MRM). Coming on the heels of the acquisition binge by IBM who acquired Unica, Coremetrics, and a bunch of other analytics and data management companies, we can safely say that marketing automation and campaign management solutions are up for grabs.
I was briefed by Teradata and Aprimo executives on the rationale for the acquisition. They expect the deal, valued at US$525 million, to close in Q1 2011. Now this is an even greater premium than IBM paid for Unica. So besides this being a very happy holiday season for Aprimo executives and the board, what does this mean for marketers, CI professionals, and competitors? Here’s my take on the deal:
- Signals Teradata’s seriousness about the application business. Clearly all the data that drives Teradata's revenue isn’t enough. This acquisition signals a belief that Teradata views the business application space as critical to drive the utilization of the enterprise data warehouse. The fact that Aprimo has a strong on-demand marketing software business isn’t lost on Teradata either.
- Strong complementary fit. In my experience covering this market and helping CI professionals select marketing technology, I rarely see Aprimo and Teradata compete in the same deal. Aprimo is always a better fit in B2B, mid-enterprise, or process management focused deals while Teradata TRM is a better fit in high-volume, retail-centric, or analytical campaign management propositions. So the coming together of these companies means strengthening the other’s weakness. In addition, they share some marquee clients like Walmart and Dell, which always helps.
- Campaign management technology to serve multiple markets? Both executives suggest that the two campaign management systems – TRM and Aprimo’s Marketing Studio – will coexist indefinitely. I am more skeptical. I think eventually the product strategy will play itself out, and we may find that Teradata reverts back to old form. But in the meantime, we will have to take the comments on face value. One other question is how will Teradata's large sales team, used to selling high-ticket data warehouse deals to large B2C clients react to the notion of selling much smaller on-demand deals to both B2C and B2B marketers.
- Campaign management is coveted technology. With Unica and Aprimo, the two largest enterprise marketing platform companies off the block, it’s clear that campaign management is attractive technology to acquire. Why is campaign management so coveted? Besides being a growth category – our last forecast estimated that this market is growing at roughly 17% – campaign management is mission critical. It is the fundamental technology that allows marketers to use customer data to develop relevant, multichannel communications. Simply put, it unlocks the value in customer data. This is particularly timely given the unprecedented growth in data volumes, driven primarily by the popularity of online, social, and mobile channels.
- More acquisitions will follow. We expect the market to remain active. As large players drop, the ones left standing become a little more valuable. Or do they? While most vendors would like us to believe that this is good for the market and sets the price, I am hesitant to think that other players with smaller technology footprints, limited functionality, and lower barriers to entry will command the same multiple. We expect the market to remain active and other analytical campaign management, email, Web content management, MRM, and DAM solutions to become viable targets, although not at the same multiples. To be as valuable, the technology should offer truly differentiated capability like multichannel support, optimization, comprehensive process management, large on-demand client base, or a laser-like focus on the mid-enterprise market.
- Innovation under threat. As campaign management technology gets consumed into the CRM/enterprise software stack, we risk seeing a slowdown in innovation. The large players are either too busy integrating the acquisitions or just too slow to support innovative functionality development to support different market segments. We expect innovation will indeed slow down unless new players enter the market or existing providers like Neolane, Alterian, Responsys, ExactTarget, and Eloqua step up.
- Buyers should dig deeper into product strategy. As buyers evaluate campaign management platforms, our advice to them is to dig deeper into the product road map and ask the tough questions. Which database platforms and operating systems will you support? What will your on-demand capabilities looks like? How committed are you to the marketing space and how will you prove it? How will you support new product development and what are your approaches to accelerate innovation? How will you enable online and social channels?
As with most acquisitions in this space, the picture is nowhere near complete and how the combined entity executes will determine if this tale will have a happy ending. We’ll get more information after the transaction closes, per standard operating procedure for a deal of this nature. What are your impressions, and how do you think this will play out in the long term?