Major Events in Digital Messaging this Week + Healthcare | Port25 Solutions, Inc.
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Fred Tabsharani

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Major Events in Digital Messaging this Week + Healthcare

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Oracle buys Responsys: My Take

The voracious appetite for the cloud-based marketing automation space continued on the heels of the SalesForce + ExactTarget 2.5 billion dollar deal.  On Friday, Oracle announced that it has purchased Responsys for 1.39B on 194M in TTM revenues.  That’s 7.7x revs, (or earnings) which is a little less than Oracle paid for Eloqua in terms of a multiple.  As I understand through industry sources, there was a bidding war for Responsys by both Oracle and SAP and in the end Responsys chose Oracle.  The message from Oracle’s acquisition of Responsys is simple: It needs to double its Cloud Application sales to $2-billion level asap.

SAP is also looking to buy a cloud-based marketing automation company, and there will be only two clear choices.  Either Silverpop or Marketo. I have written about this before, and for investors who want to make a little pocket change before the deals goes down, I’m betting on Marketo as the bride to be.  Since Oracle purchased two companies, Eloqua for it’s B2B clients and Responsys for it’s B2C ecosystem, Responsys investors earned a 40% premium on the announcement at a share purchase price of 27.00 per share.  Marketo’s stock rose 11% to 36.62 per share on the news.  Look for a target buyout range of 45-50.00 per share for Marketo.  That’s a 25-35% premium to investors.  So if you have a little spare change, I think Marketo is a good play.

SAP is also looking at bulking up its cloud strategy with similar revenues.  If aggressive enough,  buying both SilverPop and Marketo to compete with Salesforce and Oracle is an option, but the price tag could be as much as 3.75 billion dollars for both companies and I don’t think SAP will pay that much, but they are hungry.  Marketo’s capitalization sits at 1.4B currently, so assuming a conservative 1.75B valuation for Marketo will put that at a 25%% premium for Marketo’s investors.

SAP needs to play this with kit gloves.  If they choose Marketo which is B2B heavy, they might shoot themselves in the foot, because Silverpop has a more balanced customer portfolio.  However, one great thing going for Marketo is that they have the inside track on healthcare messaging as they have several customer wins in healthcare using their platform.   Since healthcare has adopted the SMTP protocol, Marketo has more healthcare companies using their platform than any other ESP or MAC , which makes them very attractive.

Marketing to Healthcare

The healthcare industry accounts for 20% of the US GDP, as compared to the retail sector which makes up roughly 66% of GDP.  Communicating digitally within the healthcare industry through it’s various  regulations will be a complex task knowing that physicians, healthcare providers, and insurers will each engage differently with your marketing and transactional messages.  Automation for these three segments of an industry that’s in it’s infancy in regards to appreciating digital messaging will require the full extent of Marketo’s platform, including a security agent built within an SMTP server.  We need to remember that the healthcare industry has utilized faxes, personal visits and phone calls from reps, since the beginning of time to transmit messages.  They aren’t use to what we’ve been providing the retail industry with immersive smart data, personalization and dynamic content through the advances of email over the years.  So, always, be sure to test your automation tracks on a subset of this target audience.

Bottom, line,  it really looks like Marketo will the be the next ESP/MAC to fall.  But I wouldn’t be surprised to see both Silverpop and Marketo get gobbled up here before the first quarter of 2014 is complete.  Besides SAP, NetSuite is also looking to acquire a cloud-marketing automation play.  Finally, look for more international consolidation in this space as well.

 

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