Three Key Takeaways from IBM’s SilverPop Acquisition

IBM’s acquisition of SilverPop may appear to be a no-brainer to most – they had a hole in their tech marketing stack and SilverPop’s solution fit perfectly as IBM continues to build out their marketing automation software platform. But there are three other important messages about this space that are interesting to note.

First, the arms race around “understanding the customer” is heating up. As companies compete to more closely understand and react to customer behavior, technology is increasingly leveraged, fueling the recent spate of deals such as E-circle (Teradata), Exact Target (Salesforce.com), Responsys and Eloqua (both by Oracle). As one of the first tech companies to focus on the marketing tech stack, IBM continues to put muscle behind following the marketing dollars (diversifying away from the selling to IT) and builds on its previous acquisitions of Coremetrics, Unica and Sterling in this area.

Second, the most important trend in marketing automation is personalization. SilverPop’s acquisition underscores the need to be able to address personalization on a massive scale. Companies need to deliver their relevant content in a very personalized manner across all mediums. SilverPop brings the ability to effectively keep identities in context regardless of how they engage and continue to drive a personalized experience.

And third, we believe the SilverPop deal may be a tipping point for this market.  At Clearsight, we’ve watched over the past few years as the larger software vendors compete to build out their marketing technology stack. We have also observed the digital marketing services firms more aggressively prioritize acquiring and/or developing their own tools. The market has moved over the years from a bundled solution to an unbundled best-of-breed solution, and now, we believe we are on the cusp of moving back towards a comprehensive bundled solution. Integration across the marketing stack is critical.  We see the frustration mounting as CMOs are still not able to access data to track customers across their entire lifecycle and various touch points – the highly coveted “single customer view.” We are currently witnessing the rise of systems integrators and data analytics consulting firms who work hand-in-glove with the IT organizations to make all the various point solutions communicate with each other. Our thesis is that the convergence will continue, and both software firms and marketing services businesses will continue to acquire technology, integration, and analytics services businesses to facilitate the current unmet market demand.

As the turf war intensifies for marketing dollars, software vendors are facing-off with global digital marketing firms to provide complete and robust solutions to their clients with one single seamless view of the customer. As a result, we expect to see a faster pace of M&A deals from both groups as companies battle to complete their full solutions and ultimately gain access to the ever increasing marketing ”honey-pot.”