Adobe has fired a shot across several bows with its $4.75 billion deal to buy Marketo, which will help it compete in marketing services against Microsoft, Oracle, SAP and even the great powers of digital advertising, Google and Facebook.
Perhaps more than anyone else, however, Adobe sent a message to Salesforce, widely considered the market leader in business-to-business and sales marketing services. The Marketo deal was announced just days ahead of Salesforce Dreamforce, an annual mega-conference in San Francisco that attacts roughly 170,000. This year's installment starts Monday.
"Adobe clearly stated their intention to expand their Marketing Cloud to compete more effectively with the leading players in marketing automation and customer relationship management space, and this is a first major step down that path," says Ryan Duguid, chief evangelist at Nintex, a workflow automation platform.
The timing is likely largely or entirely coincidental, of course. A move this big doesn't get dictated by PR considerations.
But Dreamforce is Salesforce CEO Marc Benioff's primary vehicle for outlining his vision and new plans for the year ahead. Adobe's agreement to acquire Marketo will now "dominate the conversation" during Dreamforce, Duguid says.
The end game
The companies are racing to offer marketers one-stop, cloud-based services that make sense of voluminous data and automatically take action whenever consumers or clients engage though channels such as search, social media, email and video.
"Adobe was the marketing cloud leader about three years ago," says John Koetsier, VP of Insights at the marketing intelligence platform Singular. "But Salesforce has been growing quickly, and integrating marketing with support and services for a holistic pre-sale to post-sale experience, or the 'full customer journey.'"
"Now, Adobe is sending out a $5 billion signal that it is not just an also-ran," Koetsier adds. "Adobe is here to compete for leadership in the marketing technology space."
Marketo regularly takes clients from Pardot, a Salesforce product, according to Kotsier. "Some marketers even view Pardot as a kind of stepping stone to Marketo," he says. "Now, Adobe owns the 'grown up' product to Salesforce's beginner solution."
Jason Holmes, chief operating officer at Showpad and the former chief operating officer at Marketo, describes his previous employer as a leading management solution for b-to-b marketers. "Marketo is the technology that helps marketing and sales teams find leads, nurture them and ultimately turn those leads into closed business," he says.
Adobe already has an excellent marketing platform with products such as Photoshop, Illustrator, Lightroom and Dreamweaver, Holmes says. "But it has been primarily focused on b-to-c customers whereas Salesforce, Oracle and SAP are firmly driving toward owning the b-to-b space," he says. "This entrenches Adobe as a b-to-b and b-to-c marketing platform, and squarely pits them against Salesforce and Oracle and well ahead of SAP."
Marketo also gives Adobe another massive dataset to help it compete with Facebook, Google and others, says Holmes. Oracle's marketing cloud will stay in the battle with its "combination of Bluekai, Eloqua and Responsys acquisitions," he adds. "It will be a fight indeed."
Meanwhile, in a note sent to investors Friday, Brian Wieser, analyst at Pivotal Research, says Marketo should generate about $400 million in revenue for the 2018 fiscal year.
"For some historical reference, Marketo generated $210 million in revenue during calendar 2015, the last full year during which Marketo was public, prior to going private during 2016," Wieser wrote. "During 2015, Marketo was slightly cash flow positive ... Marketo made some small acquisitions over the past couple of years, but the bulk of revenue growth appears to have been organic."