Category: marketing software

Amobee moves past mobile

Scott Denne

Contact: Scott Denne

Amobee’s pair of acquisitions today shows a dramatic increase in the mobile ad network’s ambitions since becoming a subsidiary of SingTel in late 2012. The purchases of Adconion and Kontera for a combined $359m take Amobee beyond offering mobile advertising products and into selling advertisers the capability to reach their intended audience across digital mediums.

The pickup of Adconion brings Amobee the ability to send targeted ads to individuals across different ad channels (mobile, video, display, social, etc.) It also didn’t hurt that most of the target’s $185m in 2013 revenue came from North America, giving Amobee an instantly larger footprint in that market (about 40% of Amobee’s revenue comes from Asia). With Kontera, Amobee obtains technology that improves contextual understanding of where and how ads are placed on the Web and mobile devices.

These deals stand in contrast to Amobee’s only two previous acquisitions, which were mobile-focused technology tuck-ins (Gradient X and Adjitsu.com). The increasing importance of audience-specific, rather than channel-specific, digital media is a trend that’s playing out across the ad-tech industry as advertisers seek to optimize interactions with target audiences, rather than experiment with individual ad channels.

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Acxiom takes onramp to online data with $310m acquisition of LiveRamp

Scott Denne

Contact: Scott Denne

Acxiom makes its boldest bid yet to push its marketing data business further into the digital world with the $310m acquisition of LiveRamp. The marketing data giant has talked up the opportunities to expand its existing assets and build out its offline data assets for the digital sphere, but spending has been tame compared with this deal.

In 2013, Acxiom tripled its R&D budget to $31.6m, still only one-tenth of what it’s paying for LiveRamp. That tripling was, in part, to build and launch AOS, its data management platform for digital marketing applications. That offering gains potency with LiveRamp’s technology and partnerships and will position it to compete with Neustar and Oracle, both of which recently bought their own data management platforms.

Not only is Acxiom spending about 75% of its cash on the deal, it’s paying a healthy multiple. Discussing the acquisition on its earnings call, Acxiom said it expected LiveRamp to have $25-30m in annual revenue by the end of two years from now, meaning it values LiveRamp beyond 10x projected revenue. To add shock to the sticker price, take note that Acxiom hasn’t purchased a technology company since 2008 (when it snagged Quinetix for $2.7m) and hasn’t spent more than $100m on a technology acquisition in almost a decade, according to The 451 M&A KnowledgeBase.

LiveRamp built technology that takes in a company’s CRM data and matches it to online devices. Acxiom has long trafficked in consumer data, both its own and that of customers. By owning LiveRamp, Acxiom enables marketers to retarget existing customers online, even if it only has an offline relationship with them. For example, car companies could target customers with Web videos, even if they have only been to the dealership, and not the website.

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Social measurement looks ripe for M&A

Scott Denne

Contact: Scott Denne Matt Mullen

The growing amount of funding, matched with the increasing quality and importance of social media measurement, could make that sector the next battleground for marketing software M&A. The past three months have seen companies like Socialbakers, Simply Measured and L2 raise venture rounds of $15-25m, and social media software vendor Lithium Technologies added to its marketing cred with the acquisition of social measurement firm Klout.

The abundance of untamed social media data, and the value of that data, is creating a vital need for better measurement – something that’s lacking in the first generation of social media marketing products, such as Google’s Wildfire. While those tools did little more than counting ‘likes’ and ‘retweets,’ the current generation of software enables marketers to dig deeper into the results of campaigns, with capabilities such as content optimization, visual analysis and competitive industry benchmarks.

It’s the need for not just better social measurement but better measurement across several marketing channels that has driven marketing and advertising software deals lately, including Google’s purchase of Adometry, Oracle’s pickup of BlueKai, and AOL’s $89m reach for Convertro.

We’ve taken a more in-depth look at this sector, including potential acquirers and targets. Subscribers to 451 Research’s Market Insight service can click here for that report.

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IBM finds a bargain in Silverpop purchase

Brenon Daly

Contact: Brenon Daly

Fittingly enough for an acquisition to bolster its Smarter Commerce portfolio, IBM appears to have smartly picked up a bargain in its purchase of marketing automation (MA) vendor Silverpop. Big Blue didn’t release terms of the deal, but reports put the transaction value at roughly $250m-300m. Assuming that’s roughly accurate, it would value Silverpop at only about half the valuation that other significant MA providers have received in recent exits.

According to our understanding, Silverpop put up about $80m in sales last year. However, several industry sources have indicated that the Atlanta-based startup was only growing at about 10-15%. Other similar-sized MA firms are vastly outstripping that rate. For instance, Marketo boosted its top line almost 70% in 2013, and we estimate that HubSpot was right in that neighborhood, too. More broadly, a recent report from 451 Research’s MarketMonitor service forecasted 22% CAGR for the overall MA industry over the next four years.

Silverpop’s sluggish growth would appear to have put pressure on its valuation, with IBM paying 3-4x trailing sales for the company. Meanwhile, rivals such as Oracle, Adobe and salesforce.com have paid multiples ranging from roughly 6-10x trailing sales. Overall, the shopping spree has topped $7bn in spending for MA vendors.

Select marketing automation deals

Date announced Acquirer Target Price to sales ratio Deal value
December 20, 2013 Oracle Responsys 7.7x $1.6bn
June 27, 2013 Adobe Systems Neolane 8.6x* $600m
June 4, 2013 salesforce.com ExactTarget 7.6x $2.5bn
December 20, 2012 Oracle Eloqua 9.7x $956m
April 27, 2012 Intuit Demandforce 11.4x* $423.5m
December 22, 2010 Teradata Aprimo 6.3x $525m
August 13, 2010 IBM Unica 4.4x $523m

Source: The 451 M&A KnowledgeBase *451 Research estimate

GTCR gets into marketing software with Vocus buy

Scott Denne

Contact: Scott Denne

GTCR jumps into the pricey marketing software industry with a value play. The private equity firm will pay $446.5m in a take-private of Vocus, a public relations and marketing software provider. The deal gives Vocus an enterprise value of $413m, or 2.2x its last 12 months revenue, well below where others in this space have traded hands lately.

At 2.2x, the acquisition is the second-lowest multiple we’ve seen for a marketing software company in the past 24 months. According to The 451 M&A KnowledgeBase , the median multiple for marketing software deals in that period is 7.7x, reflecting the double-digit growth and promising prospects of many vendors in the marketing space. Vocus, on the other hand, has had little growth and doesn’t expect that to change this year.

The company has struggled to grow since it launched a suite of marketing products and acquired email marketing vendor iContact in early 2012. The market reacted negatively to that transaction, pushing its stock price below $20 per share, where it has remained as Vocus has been unable to leverage that deal to grow its business. (GTCR will pay $18 per share; Vocus closed at $12.18 before the deal was announced.)

Vocus finished 2013 with $186.9m in revenue, only $6.5m more than the combined revenue of iContact and Vocus for 2012 and well below the $200m it initially projected for the year – projections that were regularly adjusted down to reflect weaker than expected performance for both its PR and marketing software. For 2014, the company anticipates revenue to shrink by about $4m amid declining sales of iContact and some of its other point products, as well as a flatlining of its PR software business.

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Lithium takes a dose of Klout

Scott Denne

Contact: Scott Denne Matt Mullen

Lithium Technologies reaches for Klout, a measurer of social media influence, in a deal that aims to boost the marketing capabilities of the acquirer’s social media SaaS suite. The price tag was widely reported as $200m. While we think that’s a bit off, the mostly stock transaction suggests that Lithium’s valuation is growing beyond its nearest public-market peer, Jive Software – a company that’s about double the size of Lithium and trades at a $550m market cap.

In recent years, Lithium has expanded beyond providing tools for online communities into other elements of enterprise-focused social media, including social marketing and customer support via its acquisition in 2012 of Social Dynamx – a service that should get a boost from Klout’s technology, which can be used to determine the priority of each discovered support case.

Behind this deal is, perhaps, a desire for Lithium to get more involved in the marketing data management business. Oracle and Adobe have both made moves in that area, purchasing BlueKai and Demdex, respectively. If Klout’s consumer business remains open and the combined companies can resolve some of the misgivings concerning accuracy around scoring and categorization, then its 500 million profiles should give it a head start in assembling a form of audience-building technology that could be built out from its existing technical assets.

We’ll have a more detailed look at this deal in our next 451 Market Insight.

Lithium Technologies’ acquisitions

Date announced Target Offering
March 27, 2014 Klout Social media analytics
October 9, 2012 Social Dynamx Social media customer service
May 11, 2010 Scout Labs Social media sentiment analysis
June 2, 2009 Keibi Content moderation

Source: The 451 M&A KnowledgeBase

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Ensighten eyes tag management market with TagMan buy

Scott Denne

Contact: Scott Denne

Ensighten picks up TagMan to bring additional customers and technology to its offering for tag management, a space that’s seen little M&A activity. The deal brings Ensighten a smaller competitor, but one that does about two-thirds of its business in Europe, giving it an opportunity for international expansion. The combined company will have less than 200 people. Petsky Prunier advised TagMan on its sale.

Tag management vendors have been a tough sell – TagMan was on the market for about a year and Search Discovery’s Satellite technology, which sold to Adobe last summer, saw little interest from potential acquirers beyond Adobe. Most large marketing software firms have already built or bought tag management technology to go with their own apps and view tag management as a feature.

Ensighten, which just closed a $40m venture round in January, and competitors like Tealium and BrightTag aim to build tag management systems that make it easier for marketing products from different vendors to share data. The market for stand-alone tag management software is still nascent, likely less than $50m in annual sales. While big software companies are focused on selling their own applications, they’re unlikely to put a premium valuation on a platform that would enable customers to integrate marketing apps from competitors. Deals in this space will remain small for the foreseeable future.

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Poor ExactTarget results may extend salesforce.com’s M&A holiday

Scott Denne

Contact: Scott Denne

Two quarters in, salesforce.com’s ExactTarget acquisition is already losing some steam. The email marketing company continues to grow, though far from the pace it had as an independent business. On salesforce.com’s earnings call Thursday night, the CRM vendor announced that ExactTarget contributed $96m in revenue, up roughly 14% from the last quarter of 2012 (‘roughly’ because salesforce.com and ExactTarget’s fiscal quarters are misaligned by a month).

In its last two independent quarters, ExactTarget averaged 40.5% year-over-year growth. In its first two quarters as a salesforce.com subsidiary, it averaged revenue growth of just 12.5%. Even salesforce.com itself, with $1.15bn in revenue last quarter, gained 25%, after backing out ExactTarget’s contribution, and 26% the previous quarter.

On a call last year announcing the acquisition, salesforce.com CEO Marc Benioff said the company would take a 12- to 18-month M&A vacation to focus on ExactTarget. For the most part, it’s lived up to that promise. It announced a $133.7m deal for EdgeSpring a few days after the ExactTarget announcement but has been mostly quiet since then – salesforce.com spent just $2.5m on acquisitions last quarter. Since integrating ExactTarget hasn’t been a day at the beach, salesforce.com’s M&A holiday may not end early.

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Oracle’s email marketing acquisition looks like spam

Scott Denne

Contact: Scott Denne Matt Mullen

Oracle spends $1.6bn ($1.5bn net of cash acquired) on email marketing company Responsys – a hefty price tag for an asset that brings few new capabilities to the company.

Much of the technology Oracle is buying duplicates what it already has from its acquisition of Eloqua, which it bought exactly a year ago to be the centerpiece of its marketing efforts. So in that regard, this deal is essentially an expensive tuck-in. Oracle values Responsys at 7.7x TTM revenue – just a click higher than ExactTarget fetched in its sale to salesforce.com, and that transaction was meant to be the CRM vendor’s marketing centerpiece.

Further, Responsys also generates a meaningful portion – 30% – of its revenue from professional marketing services. Nixing the services business would give Responsys a straight price-to-product valuation of 11.3x sales.

The deal isn’t completely without merit, however. Responsys does give Oracle business-to-consumer marketing expertise and a functional, if not differentiated, email marketing product that it didn’t get with Eloqua. And Responsys also posted 26% year-over-year growth in the first nine months of the year, but its $194m in trailing sales is hardly enough to boost Oracle’s stagnating software revenue.

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Marketo buys Insightera to expand automation pitch to CMOs

Scott Denne

Contact: Scott Denne Matt Mullen

In its first deal as a publicly traded company, Marketo spends $19.5m to pick up Insightera, a website automation vendor that deepens its portfolio of marketing automation offerings and gives it technology that its larger competitors don’t yet have.

Marketo is shelling out about $6m in cash, with the remainder in stock, for Insightera, an early-stage company that raised $6.5m in series A funding last summer. The target’s technology enables customers to personalize the content of their websites for each visitor – a technology that many startups, including Demandbase, Dynamic Yield and Causata (acquired by NICE Systems in August), are developing while other large marketing software providers stick to email and social for their automation offerings.

While Marketo faces intense competition in the wake of consolidation in this market, its focus on selling straight to CMOs is an advantage. The acquisition of Insightera provides another product that directly serves that audience. While salesforce.com became a major competitor with its purchase of ExactTarget, it’s approaching marketing software as an extension of CRM. Likewise, Oracle sees marketing as part of a bundle to be sold to CIOs, rather than a stand-alone marketing sale.

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