As banks and credit unions pour gasoline on their direct outreach, Adobe’s announced Marketo acquisition shows us just how hot digital marketing automation is right now. Let’s discuss what Adobe acquiring Marketo entails for the industry.
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?
The Marketo platform’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 the lead gen 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.
The last Adobe 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:
Marketo clients suffer from integration to third-party data source and user interface systems. At the recent NCR conference, one of the gritty hallway chats was about how to integrate the Marketo and Digital Insight systems. That wasn’t an outlier conversation. Financial institutions are finding that when it comes time to reality-check their journey mapping exercise with their vendor cobbling, it’s really hard work. Vendors like Marketo and Adobe expect their clients to sift through integration or bring in horizontal third-party professional services firms to sort it out. This acquisition exacerbates that challenge. Adobe hasn’t really been known for integrating its own capabilities quickly, let alone third parties. So, buckle up Marketo clients!
Marketo requires a lot of care and feeding with talent that is in high demand across multiple industries. According to Cornerstone digital expert Tim Daley, these resources are scarce, putting smaller financial institutions that drank the Marketo Kool-Aid at a disadvantage. [Career advice for anyone looking to make a change: Marketing automation expertise will be in demand for the next decade.] Adobe requires similar care and feeding, so no change there. But now, Adobe’s Vegas Summit and Marketo’s Vegas Marketing Nation (mashing up presumably?) will compete with Salesforce’s San Francisco Dreamforce conference for both headlining bands and cross-industry job recruiting hookups.
Daley also points out that purchasing Marketo is not a “set it and forget it” proposition for financial institutions. Marketing automation tools require a culture of experimentation, analysis, and enhancement that historically has not existed in the marketing teams in the small to mid-size financial institution space.
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 Adobe Marketo clients out there.