As banks and credit unions pour gasoline on their direct outreach, Adobe’s announced acquisition of Marketo shows us just how hot digital marketing automation is right now.
Marketo is a system vendor that automates lead management including email, mobile, social, digital ads, web management and analytics. In the morphing cross-industry world of sales, marketing and even some service outreach, it’s hot. As financial institutions try to mature their delivery of content to engage customers and prospects remotely, it’s hot. And as FIs’ budgets move from mostly feel good brand stuff to driving demand, it’s hot. But how hot?
Marketo’s $1.8 billion valuation in 2016 when Vista Equity Partners bought it (6X revenue – not chump change) nearly tripled in a mere two years. Adobe will pay $4.75 billion (15X revenue). Cornerstone Advisors President Steve Williams pointed to how the deal felt like 1990’s froth. 15X does seem pretty dotbomb crazy, but Cornerstone Research Director Ron Shevlin recently wrote about Salesforce’s acquisition of Mulesoft at 20X. Adobe is already valued at 17x. Adobe currently has a marketing platform (although less deployed around leadgen aspect of marketing automation), so the Marketo acquisition is part complementary mashup and part rollup. Marketo competitor Hubspot is also valued at 15X. There are real clients doing real stuff with these tools, even if the playbook of emerging practices is still being written. It’s not like the ’90s when my bank’s digital vendor rep arrived at our office with an NDA and some loony portal concept.
Adobe’s last acquisition – analytics provider Magento at $1.8 billion – was 10X, which is where bullish values are these days. Even “killing it” industry darling Salesforce is “only” at 11X. So Adobe is placing a BIG bet in a high momentum game. How much momentum?
Cornerstone Advisors estimates that one-third of large credit unions have a marketing automation system deployment in flight right now, and the vast majority of those are Marketo. The Marketo system has also quickly run the table in fintech firms and bank tech vendors. Commercial banks have leaned more toward Salesforce Marketing Cloud or Hubspot where Salesforce had better luck taking an integrated suite into commercial and wealth management shops. Hubspot has also appealed to some banks with a lower cost and leaner toolkit to learn. So, the Adobe-Marketo acquisition will have a more significant impact in the credit union and fintech markets. Many of these shops are already Adobe customers in some way anyway, so maybe this simplifies the vendor management a little. But, there are some challenges to overcome:
Congrats to Vista Equity Partners for getting a great price for Marketo. And c’mon Adobe, let’s see what kind of integration muscle you have! Best of luck to the Marketo clients out there.