This is the question I found myself pondering while heading home from Dreamforce on Thursday afternoon. Earlier that day I’d watched a demo presentation on Salesforce’s vision for the Exact Target Marketing Cloud. The presentation centered around use of a product called Journey Builder that combined multi-channel intelligence on prospect behavior together with email marketing, targeted social advertising, mobile push notifications and internet-of-things-style device integrations to provide a custom-tailored marketing approach for each prospect. To illustrate how the system might work for particular prospect, the presentation followed a fictional guy that is interested in buying an orange Ford convertible.
I have to admit that I was pretty impressed. The interface looked super slick, and while some of the features weren’t particularly novel (like a nurture email featuring the make and color of the car the prospect was looking at) some of them were really exciting, like the ability to send a push notification to the prospect’s phone informing him that he was near a dealership where he could test drive the car he wanted.
After the presentation ended, I wanted to figure out how much of what had been demonstrated was actually available and what sort of a threat the Marketing Cloud posed to other players in marketing automation, such as Marketo and Eloqua.
What are Exact Target Marketing Cloud and Journey Builder?
The Marketing Cloud consists of a number of Salesforce acquisitions, including Exact Target, Social.com, Buddy Media and Radian6. These products can be purchased separately or together. Salesforce lists the different Marketing Cloud packages available, ranging from Basic to Enterprise (see chart below). At the Basic and Professional levels, the Marketing Cloud is essentially a social engagement and listening tool. Marketing automation is available at the Corporate and Enterprise levels.
Journey Builder is in beta and not widely available yet. A Salesforce rep at the Marketing Cloud area told me that Journey Builder is expected to be available in January, although I have not yet been able to verify this with other sources. If this is true, then that means that the release has been slightly delayed from the Q4 2013 release target mentioned in Exact Target’s September 17, 2013 press release announcing Journey Builder.
Why Salesforce acquired Exact Target
This quora answer from Jason Lemkin, co-founder of Echo-Sign suggests that the acquisition was part of Salesforce’s strategy to get to a billion in marketing revenue, and that the more mature Exact Target, with $300M in ARR compared to the next best Marketo and Eloqua (now acquired by Oracle, so no longer on the table) at $100M ARR would be a safer bet to help them reach $1 billion. However, that’s just one possible explanation. This article in Marketing Automation Times posits a few other convincing perspectives, namely that the acquisition provides Salesforce with an entrance into the B2C customers and a way to beef up the CRM’s currently limited email capabilities. (Having managed email communications in both Salesforce and Marketo, I can personally attest to Salesforce’s email short-comings in terms of dynamic content, scheduling and sending limits)
How does Pardot fit in?
Right next to the main Marketing Cloud area at the expo was a smaller circle for Pardot, a marketing automation company that was acquired by Exact Target prior to Exact Target itself being acquired by Salesforce. And here’s where I started getting confused. If Journey Builder represents an attempt to build Exact Target into a marketing automation suite, where does that leave Pardot, which already is a marketing automation platform? I asked this question of a couple of different booth staffers in each circle, and got a couple of different answers. A woman with Pardot suggested that Pardot will likely remain more suited for B2B companies while Exact Target and Journey Builder will serve B2C customers. A guy with Social.com on the Marketing Cloud side told me that the difference would likely come down to price and scale, with Pardot being a better fit for SMBs and the full-service offering of the Marketing Cloud predominantly serving large enterprise customers.
So what does the future hold for Pardot? Will Salesforce help it develop to be a strong competitor against Marketo and Eloqua, or will it fade further into insignificance behind Exact Target? Some of the reps at Pardot suggested that they hope to eventually become fully integrated with Salesforce, eliminating the need to sync data between a marketing automation platform and the Salesforce CRM. Since data syncing issues account for a good portion of the headache associated with administering a marketing automation system, a complete integration would indeed be a game-changer and would make Pardot much more competitive. However, such a move would be costly and time consuming (we’re talking years, not months here) and given that acquiring Exact Target’s $300M ARR and developing Journey Builder is a big bet for Salesforce, it’s unclear to what extent Salesforce will continue to invest in further developing Pardot.
(In response to the question, “Will Salesforce Invest Enough in Pardot to make it competitive with Marketo?”, Mike Volpe, CMO of Hubspot, votes “no”.)
How does the Exact Target Marketing Cloud compare to Marketo and Eloqua?
So the more I learn about the Marketing Cloud, the more I am under the impression that the Marketing Cloud and the Journey Builder app transform Exact Target into a true marketing automation platform like Marketo and Eloqua, but do not cause it to surpass Marketo or Eloqua in any meaningful way (at least not at this point). This year has seen a lot of growth in marketing automation and a trend towards developing marketing automation clouds or suites of integrated marketing services. The Exact Target Marketing Cloud is really a suite of different apps, and includes Fuel, a platform for the development of new Marketing Cloud app. This isn’t unique. Marketo has the Launchpoint ecosystem of Marketo-compatible apps, and Eloqua has the AppCloud.
For an interesting case on why this recent “Marketing Cloud” trend might be bad for innovation, check out Tom Wentworth’s blogpost at Acquia.com.
In the future, I’d like to write a post directly comparing the features included the Exact Target Marketing Cloud with other major marketing automation platforms. In the meantime, I do have some impressions regarding some key differences in philosophy. From what I can gather, the Exact Target Marketing Cloud focuses more on social and mobile marketing than Eloqua or Marketo, but, since it seems to be envisioned as more of a B2C than B2B platform, it does not seem to provide same lead prospecting capabilities. (They may exist, but they definitely don’t seem to be a focus. The presentation at the Dreamforce expo emphasized that Journey Builder is trigger-based, rather than score-based.)
(To see a comparison of functionality between four major marketing automation providers, check out this marketing automation review on R2i. Unfortunately, they haven’t included the Exact Target Marketing Cloud yet.)
What do the competitors have to say?
“It’s been a super competitive market since we founded the company six years ago and we’ve been the fastest growing and we continue to be the innovator and the leader. So we’d expect probably some kind of move from Salesforce with this new acquisition, but we’ve competed with ExactTarget for some time like the way we compete and expect to continue to compete really favorably with them going forward.” — Phil Hernandez, CEO of Marketo
Finally, as the last part of my research, I wanted to find out how other marketing automation companies had responded to news of Salesforce’s Marketing Cloud.
About a year ago, when the Salesforce Marketing Cloud consisted only of Buddy Media and Radian6, a number of CMOs from marketing automation companies responded to the question “Will Salesforce’s Marketing Cloud be a threat to marketing SAAS companies like HubSpot and Marketo?” At the time, the responses were generally positive and combined “a rising tide raises all ships” sentiment regarding the added buzz around marketing automation with an observation that, at the time, the Marketing Cloud did not have the core components of a marketing automation platform.
Mike Volpe, CMO of Hubspot said that “SFDC is not very competitive with other solutions… today”, but also guessed that “at some point in the next 12-24 months they will acquire additional companies or build new features internally to have a more complete marketing solution”, a prediction that has proved true. But simply acquiring marketing automation features is only part of the challenge. A year ago, Marketo CMO Sanjay Dholakia put it this way: “The stuff above [marketing automation] is very sophisticated stuff and not easily replicated. It’s even harder to put it into an easy to use package that every marketer can use. That makes us a very complementary solution with Salesforce.” Even after news of the Exact Target acquisition, Marketo’s tune didn’t changed much. In an interview with Jim Cramer in June, Marketo CEO Phil Hernandez has this to say about competition from Salesforce in the marketing automation space: “It’s been a super competitive market since we founded the company six years ago and we’ve been the fastest growing and we continue to be the innovator and the leader. So we’d expect probably some kind of move from Salesforce with this new acquisition, but we’ve competed with ExactTarget for some time like the way we compete and expect to continue to compete really favorably with them going forward.”
So after this research, what do I think? What does the Salesforce Marketing Cloud mean for other players in the marketing automation space?
I’ve summarized my opinions into three main points:
- Competition is growing among large corporate players (Oracle, Adobe, Salesforce) for the enterprise marketing automation market, but it remains to be seen who will best capture the SMB market and whether any independent marketing automation companies (like Marketo or Hubspot) will continue to be competitive in the long term.
- The resources behind the Salesforce Marketing Cloud may be significant, but the marketing automation component is still in its infancy and has not yet demonstrated that it truly has comparable functionality and usability when compared to more mature products. It will also likely take a year or two for the recent Exact Target and Eloqua acquisitions to be fully integrated with Salesforce.
- Finally, Salesforce’s decision to focus on Exact Target and the more B2C-focused Journey Builder app suggests that the strategy behind the Marketing Cloud may be less about directly competing with the more B2B-focused marketing automation establishment, than about opening up into the relatively uncharted area of B2C marketing automation. If that’s the case, I’m curious to see who will try to be their competition in that new arena.
What do you think the future has in store for marketing automation? Share your predictions in the comments!