Adobe will acquire rival Marketo for $US4.75 billion, as consolidation in the martech sector heats up. The deal strengthens Adobe’s B2B play, and also plugs some capability gaps in its Adobe Campaign offering.
It also represents almost $6.43 billion of shared holder’s money spent in just four months on companies who’s sweet spot looks more like the mid-tier than Adobe’s traditional high-end enterprise customers.
The final price is also a big win for Marketo’s owner, Vista Equity. It acquired the company two years ago for $US1.8 billion. For the sector, it is the largest marketing technology deal yet, though it can be argued that Salesforce’s $US6.5 billion strike on Mulesoft earlier this year was driven in part by the need to better integrate its marketing cloud with other technologies in the Salesforce kit.
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News of a potential deal was first reported a week ago.
According to Gartner analyst Chris Ross, “Adobe continues to assemble a huge capability footprint that should certainly make every marketing technology vendor take notice. Currently, they are focused on the enterprise audience, but with the acquisition of Magento and Marketo, both firms with more mid-market centers of gravity, one could speculate on Adobe’s interest in becoming more active in mid-market.”
He said that Adobe coming down market could create new competitive dynamics across the martech continuum.
Ross also cautioned that the acquisition will require time to integrate and the impact of the deal will play out over a long horizon.
“There will likely be some quick-hit integration, or shared technology opportunities. For example, it would make sense to see Adobe’s Sensei AI capabilities quickly integrated to power enhanced features within the Marketo platform. I would expect to see other quick snap-in, snap-on technology integrations in the near-term.”
He said the much bigger challenge will be seeing how both companies manage the technology evolution as well as the impact on existing customers. “Aggressively driving innovation and tighter integration while maintaining the stability and support of their large base of customers will be a challenge. Add to that the other recent acquisition of Magento and the challenge becomes even more substantial. Adobe has acquired strategic pieces that make sense; everyone will be watching closely how the transition and evolution unfolds.”
For Adobe the price looks toppy — it’s basically three times what Vista paid to buy out the founders of Marketo just two years ago. That suggests the company had a pretty important need to meet, and quickly. Insiders we spoke to said that having been down this route before with NeoLane — in the B2C space — the experience of that integration means this one should run more smoothly.
“They are not going into the space cold like Salesforce did with Exact Target and Oracle did with Eloqua and Responsys so they are further along the learning curve — though behind in the race,” according to one senior exec with experience of competing with and working for all three.
The executive also made note of the price Salesforce paid for Mulesoft. “Mulesoft was a bigger deal for Salesforce and arguably more strategic for the long run, as it puts it in the digital middleware space, something Adobe is going to have to face in the future: how do apps connect to data.”
Those we spoke to said the deal is final confirmation that Adobe, and competitors Salesforce and Oracle, have now pulled far ahead of the marketing technology pack.
Marketo’s cloud-based marketing engagement platform will join Adobe’s experience cloud.
According to the official statement, the acquisition brings together “Adobe Experience Cloud analytics, content, personalisation, advertising and commerce capabilities with Marketo’s lead management and account-based marketing technology to provide B2B companies with the ability to create, manage and execute marketing engagement at scale.”
Upon close, Marketo CEO Steve Lucas will join Adobe’s senior leadership team and continue to lead the Marketo team as part of Adobe’s Digital Experience business, reporting to Executive Vice President and General Manager Brad Rencher.
Lucas said the deal signalled the next phase of Marketo’s growth, emphasising to customers that the company will continue to invest in the product.
“Adobe and Marketo both share an unwavering belief in the power of content and data to drive business results,” said Lucas. “Marketo delivers the leading B2B marketing engagement platform for the modern marketer, and there is no better home for Marketo to continue to rapidly innovate than Adobe.”
In May Adobe acquired Magento for $US1.68 billion, adding an ecommerce platform to its Experience Cloud.
“The imperative for marketers across all industries is a laser focus on providing relevant, personalised and engaging experiences,” said Rencher. “The acquisition of Marketo widens Adobe’s lead in customer experience across B2C and B2B and puts Adobe Experience Cloud at the heart of all marketing.”
The transaction, which is expected to close during the fourth quarter of Adobe’s 2018 fiscal year, is subject to regulatory approval and customary closing conditions. Until the transaction closes, each company will continue to operate independently.