2013 M&A Predictions in Digital Messaging | Port25 Solutions, Inc.
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2013 M&A Predictions in Digital Messaging

Last week, Exact Target’s  $95M dollar buyout of Pardot demonstrated that the M&A activity within our industry is hotter than ever.  In my opinion, it’s becoming more valuable as partnerships are becoming more targeted and buyouts more segmented.  Not only are the large mature ESPs looking at profitability that complements their particular offerings, but they now also are seeking the companies with subscribers (either B2B or B2C) to balance their portfolio of offerings.  More importantly, buyers are seeking and identifying analogous corporate cultures for a more fluid growth trajectory during the merger phase.

For companies in our industry that intend to go public, balancing the portfolio of client segments between B2B and B2C is becoming a priority.  For example, the Pardot purchase balanced the client ecosystem for ExactTarget as Pardot’s customer base was B2B centric.   With the projection of a $5B dollar marketing-automation marketplace by 2014, it is reasonable to think that that figure will propel mature ESPs to continue shopping our industry landscape looking for niche buyouts.

Here are a few digital messaging industry predictions for 2013:

Act-On’s announcement last month of $16M in additional funding paved the way for their inevitable IPO filing (projected by late 2013).  Between now and then, Act-On may look to purchase a smaller ESP that is B2C centric in order to present a balanced offering.  They are opening offices overseas in 2013, so if I may surmise, perhaps a European ESP that is B2C centric might be on their radar.   If they don’t announce a filing, they could be purchased by Responsys or Silverpop in order to balance their offerings.  This scenario is a distinct possibility because Responsys is heavily B2C weighted, with clients that have much larger list sizes than any other in our industry.  The only major issue I can foresee would be the two companies’ vast difference in corporate culture.   That’s where I think SilverPop can score with an Act-On purchase.

SilverPop will finally announce its much-anticipated IPO filing in 2013.  SilverPop has been a bellwether ESP since 2007, after its acquisition of Vtrenz.  Since then, SilverPop has slowly collected marketshare, and is now overdue for an announcement.  So, their quiet period should end relatively soon

Dyn’s announcement of its 38M in venture funding from NorthBridge Venture Partners has made a splash due to their massive user base.  They will surprise us in 2013.  They have figured out a way to strategically lead the industry in the “infrastructure as a service” (Iaas) segment of cloud computing.  IaaS is one of three main categories of cloud computing services. The other two are Software as a Service (SaaS) and Platform as a Service (PaaS).   Iaas is a provision model in which an organization outsources the equipment used to support operations, including storage, hardware, servers and networking components. The client typically pays on a per-use basis.  A cousin company to DYN and a potential acquisition target is PostmarkApp.  You can consider PostMarkApp a smaller version of DYN’s smtp and inbound services.  It is also important for me to mention that DYN and PostmarkApp are not alone in this space.  Distinct parallels can be drawn with another player on the horizon that seems to only hire the best in the industry: a company called MessageBus.  While MessageBus scored big recently with 11M in a series B round, it’s still in its infancy in attracting itself to a potential suitor.

In short, Message Bus is building native cloud technology that reduces the cost of building and maintaining enterprise messaging applications while increasing customer engagement through improved deliverability.  They are also helping to better define the “inbound” play as well, which is not rocket science, but a good move on their part.   Look for an acquisition of either MessageBus or PostmarkApp by DYN, or some combination of these three companies uniting.  Once again, I’d like to refocus on corporate culture, as the voice and culture of these three organizations seem relatively similar.

ReturnPath announced last month, with the refresh of their website, that they are focused on email intelligence.  While a very broad term for our industry, it promises to be an effective tagline, because it opens up the potential of further revenue streams for ReturnPath. Known as one of the major players in email deliverability and inbox intelligence space, “email intelligence” broadens the scope and suggests that ReturnPath can provide insight into many other aspects of the email space.  One of the vendors it might look at as a possible buyout or merger is Email Data Source, which I believe would be a fitting complement to Return Path’s deliverability tools, as it would attract the retail and marketing subdivision, opening up services for marketers, such as e-commerce monitoring and reporting.  Through monitoring and analysis of online purchase receipts from an additional panel subset of 800,000 consumer inboxes, on top of the 2B current inbox data set,  the two companies can form a potent combination and provide a unique competitive advantage. The insights into marketing and sales trends and specific product sales at major online retailers and subscription services will allow ReturnPath to “project” a filing by late in 2013 or early in 2014.

Disclaimer:  Port25 Solutions, Inc. is proud to be  a technology solutions provider to these distinguished organizations referenced above: ExactTarget, Pardot, PostMarkApp, SilverPOP, DYN, Act-ON, Responsys

 

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