Was IBMs Hand Forced by Industry to Acquire Silverpop

What does IBM’s acquisition of marketing automation email provider Silverpop do for Big Blue? 

Depends on who you ask.

It’s either a strategic move that harmoniously boosts Big Blue’s digital marketing platform.

Or, perhaps, it’s an acquisition IBM had to make because everyone else is adding software capabilities in the digital marketing era.

Strategy or Follow the Leader?

Atlanta-based Silverpop is a “great partner” for IBM, a perfect integration match between Silverpop's SaaS-based platform and IBM’s vision to offer behavioral marketing and personalization abilities to its enterprise marketing management customers, said Hiral Jasani, digital media industry analyst from Frost & Sullivan

“Big Blue has officially set foot in the cloud-based digital marketing automation arena,” Jasani told CMSWire. “It will now compete with Oracle, Adobe and Salesforce in the race to be a leading enterprise marketing solution for global companies. Silverpop’s highly scalable marketing automation platform has strong adjacencies with IBM Unica’s campaign management and marketing asset management capabilities.”

However, Cory Munchbach of Forrester Research told CMSWire the move is simply IBM’s way to keep up in an acquisition-heavy space and will not prove successful until it demonstrates true integration.

“It's a clear move that follows on what we saw from Adobe, Oracle and SFDC last year with their acquisitions,” Munchbach said. “There are five things we think Silverpop adds to IBM, but as with all these purchases they don't mean much beyond checking the box for another capability until they show what they do for integration. For now it's a ‘we are keeping-up -with-the-Joneses story for all these acquisitions.”

What Does IBM Say?

Big Blue gloated over its prize. Only IBM offers a platform of integrated and natively owned technologies that span all four customer engagement disciplines of marketing, analytics, commerce and content, according to Geoff Galat, vice president of marketing for IBM Smarter Commerce

customer experience, Was IBM's Hand Forced by Industry to Acquire Silverpop?

“Now with Silverpop,” Galat told CMSWire, “we will add even more breadth and depth to our offerings by infusing an even higher degree of personalization for marketers in B2B and B2C organizations of all sizes.” The acquisition “strengthens our established leadership position in the market, which we have been heavily investing in since 2008,” Galat added.

It also further demonstrates IBM's investment and leadership in Smarter Commerce, cloud and big data analytics, Galat said.

“IBM will continue to evaluate multiple factors when considering potential acquisitions; chief among those is delivering superior client and shareholder value,” Galat said when asked about future deals. “We identify companies that complement and enhance the IBM portfolio to better provide an end-to-end solution for our clients, while delivering shareholder value and returns consistent with our financial model.”

What About Integration?

But there’s the continuing integration theme in reaction to the Silverpop deal this week.

Atri Chatterjee, chief marketing officer for Beaverton, Ore.-based Act-On, a direct competitor in the marketing space with IBM and Silverpop, said integration is key behind these acquisitions.

“It’s about tying the technologies together to make the whole greater than the sum of its parts,” Chatterjee told CMSWire. “With marketing automation, specifically, it is a system that when integrated with other systems, be it CRM, CMS or another, converts that static data into smart data."

Dale Renner, CEO of RedPoint Global, a Wellesley, Mass., competitor in the marketing automation space, said that with the proliferation of customer touch points and the explosion of data, companies find it increasingly difficult to keep pace with marketplace dynamics.

“Regardless of the hype about marketing clouds,” Renner said, “no one vendor is ever going to be all things to all people. Just because vendors offer a suite of products doesn’t mean they talk to one another or talk to other applications or channels. In fact, the more products a vendor adds to the cloud, one could argue, the less optimized that cloud becomes due to each product needing its own database, business rules and content as well as having its own user interface delivering an application-specific and inconsistent user experience.”

IBM's Integration Response

So what of these integration charges from the industry? The proof is in the pudding, and in IBM’s case this week, the pudding is in the capabilities of the 500-employee email marketing provider out of Atlanta.

Can it successfully integrate across Big Blue’s existing platforms?

“Until the deal closes, Silverpop will continue to operate as an independent company, so it is premature to discuss specifics around integration roadmaps,” Galat said. “We expect the deal to close in the second quarter.”

However, Galat added, IBM has done its due diligence as it usually would for any acquisition.

“We feel confident that Silverpop's underlying cloud-based marketing automation technology will integrate quite well with our open platforms and be infused throughout our marketing solutions," he said. "We have a long history of successful integrations of acquisitions in the marketing space such as Tealeaf, Coremetrics, Unica and others, and we expect no less with Silverpop.”

Email Play?

IBM needs email capabilities? As IBM’s Blair Reeves blogged this week, Big Blue may have already had an email service provider (ESP) capability with its eMessage product (inherited from the acquisition of Unica). 

However, “Silverpop adds more sophisticated email campaign capabilities combined with a slap-your-momma simple marketing automation platform in its Engage module,” blogged Reeves, a product manager for IBM Digital Analytics and SaaS marketing tools.

Munchbach of Forrester blogged that Silverpop’s email service capability is stronger than Unica’s, and Constellation Research’s R. Ray Wang agreed when reached by CMSWire.

“Though questions remain,” Munchbach added, “about how Silverpop’s ownership and storage of data will work with much larger clients with existing data warehouses.”

Cheap Deal?

On the revenue front, Reeves blogged the deal for Silverpop was for $270 million, though IBM did not disclose financial terms when asked by CMSWire. That would put it behind other notable acquisitions in this space: Salesforce’s $2.5 billion on Exacttarget, Oracle’s $1.5 billion on Responsys, Oracle’s $870 million on Eloqua and Adobe’s $600 million purchase of Neolane.

“Oracle, Adobe and Salesforce may be building strong businesses, but not necessarily near-term profitability,” Reeves wrote. “Their acquisition strategies seem to be one part business case, one part (big surprise!) marketing, which is pushing a valuation bubble for enterprise marketing technology firms that bulges or wanes depending on the suitor.”

Silverpop Examined

Silverpop includes a client-base of about 2,000 companies, approximately 70 percent of which are B2C, according to TrustRadius, a crowd-sourcing community that says it collects reviews from “real users” of software. It added that many of Silverpop’s clients use robust marketing automation features more commonly seen in use with B2B companies.  

The provider grew 40 percent from 2011-2012, TrustRadius reported.

Silverpop’s strengths, based on TrustRadius’ data from user reviews, are:

  • Strong email capabilities reflect the product’s legacy as an email marketing platform
  • Application Programming Interface (API) is generally considered effective
  • Lead scoring module is relatively sophisticated

Its areas for improvement include:

  • User interface is dated and needs an upgrade
  • Although clients like having an account manager, client services is uneven
  • Onboarding
  • Email sending delays
  • Reliability

“The acquisition is about delivering on mass personalization at scale and identity,” Constellation’s Wang told CMSWire. “While IBM has an army of assets in play for marketing, the reality is that you need mass personalization at scale to deliver on relevancy and context. Silverpop brings this and their ability to effectively keep identities in context regardless of how that individual is engaging inside a brand and potentially with other brands. The benefit of Silverpop is that it's not limited to just B2B or B2C. It's been effective for customers across all types of companies.”