Earlier this month news broke that IBM had finalized an agreement to buy Atlanta-based marketing automation system Silverpop for about $250 million. In an exclusive interview with IBM’s Kevin Bishop, VP of enterprise marketing management, it became clear that the purchase is part of a plan long in the making.
And one that’s not finished yet.
The “martec” (marketing tech) space has heated up fast in the past couple of years. Rivals Adobe, Oracle, and Salesforce have stocked up on ammo, acquiring marketing tech companies Eloqua, Neolane, and ExactTarget. And independent company Sitecore accelerated the expansion of its enterprise marketing management suite of tools.
The goal, for each, is to be able to support one-to-one marketing at global scale.
That means embracing big data, big tech, and big cloud — not to mention big price. But these companies’ customers, which are global enterprises who have traditionally relied on mass media to communicate to anonymous blobs of customer segments, are moving from a one-to-many communication model to a one-to-one communication model. They want to know their customers’ names, their preferences, their needs, and their desires — and be known by their customers as a trusted, likable partner.
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For IBM, supporting those desires has required an ongoing series of acquisitions.
“We bought Unica and CoreMetrics together,” Bishop said, speaking of the B2B marketing automation system and the web analytics companies IBM bought several years ago. “They were important together: CoreMetrics lets you understand, and Unica lets you do. Then we bought DemandTech [retail analytics] … and then TeaLeaf [customer experience analytics], because analytics about where people are isn’t enough … you need to also know what they’re doing.”
What Silverpop brings, however, are richer mobile capabilities — something a series of new competitors are hitting hard — and a midmarket focus that allows IBM to deliver on 1-to-1 marketing for enterprise, but also to bring it to slightly smaller companies than before. That will allow Big Blue to hit a wider swath of the market. That focus on smaller companies will, not coincidentally, help protect IBM from infiltration by the current flood of small and nimble marketing automation systems and martec innovators who are working their way up the corporate value chain.
Plus, it brings a new level of consumerization-of-the-enterprise user friendliness to IBM’s tools.
Of course, this new acquisition doesn’t mean Big Blue is all finished picking up every single piece of its planned full-scope marketing experience suite. And conversely, it also doesn’t mean that IBM will buy everything it believes its customers need or want in marketing tech. Frankly, in a space that is exploding this fast, even a giant like IBM can’t afford the cost or the time.
Bishop has another plan: partnerships and integrations, via APIs.
“This is an incredibly fragmented market,” he told me. “There are 20 to 30 bits of software you’re trying to integrate from all parts large and small to get in front of your customer … none of us can ever claim to have all the pieces.”
The solution is IBM’s Smarter Commerce Alliance, with more than 140 partners, and its Digital Data Exchange, with over 100 partners. Through these, and via APIs, IBM plans to allow its customers the freedom they want — and need — to experiment.
As long as IBM’s technology is at the center, of course.
“They do want to experiment — they want to be at the cutting edge,” Bishop told me about his enterprise clients. “I’d like IBM to own and integrate all the things in your core layer, be really strong in things like mobile engagement and social engagement, and offer APIs in to the latest and greatest innovation.”
“If something comes from a tiny startup with two students in a back room,” he added, “That’s good too!”
Picking Silverpop was the result of a long process in which IBM looked at “a whole bunch” of acquisition targets, Bishop told me. (Which raises the likelihood that IBM kicked the tires on Hubspot and Marketo as well, the two leading indie marketing automation systems in the space today.) Silverpop’s strong email capability, as well as its capability to track mobile phones with a unique ID, were two of the differentiators.
“Silverpop has a great implementation around the idea of universal behaviors … they know what your mobile phone is doing … so you can start building patterns around behavior before you know who that user is, and then eventually you can stitch that all together when you learn more about the person and connect an email address,” he said.
That enables capabilities that traditionally B2B companies want, of course, as they move to market to people, not groups. An example Bishop used is that companies have started to connect individuals to one another as members of families.
Since you don’t always know who the key decisionmaker is in a family — or which kid might kickstart a conversation that will lead her parents to a purchase — companies are marketing to the entire family, but as individuals, attempting to guide a multi-decision-maker scenario into a favorable outcome for their bottom line.
(And yes, that could get creepy, and have significant privacy implications.)
Price was likely an object as well, of course. Hubspot and Marketo are more mature competitors, generally higher on the lists of best marketing automation companies, and have more customers, than Silverpop.
For Bishop, the end goal is not the technology alone, but the combination of software, service, and support that big enterprises like IBM are known for, and consider competitive advantages vis-a-vis smaller, more resource-constrained upstarts.
And, of course, a sea-change in how companies sell.
“You’re not changing your marketing to be more efficient,” he says about all the new technology and processes marketers are adopting. “You’re changing how you’re doing marketing.”