Where has recent M&A activity left the Campaign Management market?

As the credit crunch loosens its grip on our economy, M&A activity is starting to pick back up. Also in the marketing technology market – even in the campaign management market (for ease of use, it’s defined here as vendors in Forrester’s Wave: “Cross-Channel Campaign Management”), which has been pretty slow in relation to M&A activity in the last couple of years. Sure, Unica made a successful launch into web analytics by ways of acquisition and Alterian made a leap into Web Content Management and Social Media Listening Platform. But no players in the campaign management space were bought by bigger companies.

So, having seen two players being picked up within the last short while is noteworthy and arguably gives food for thought for other players on this playing field. And in the close to it, which is space that Agillic occupies.

First, Portrait were acquired by Pitney Bowes and subsequently Unica by IBM. Two out of eleven in the most recent Forrester Wave on the space, with Unica being generally perceived as the market leader.

Also, Alterian added social media consulting company, Intrepid, to its recent acquisition of social media monitoring platform,Techrigy. Perhaps not a huge M&A that will change the industry, but worth a comment.

Portrait & Pitney BowesI am so happy not to be working for Portrait. This must be a top ten candidate for ‘the worst acquirer for a CCCM company’ title. Every market analysis for the last five years has stated that inbound marketing capabilities and digital skills are crucial. And what happens? A massive print-based company goes and buys Portrait. They only recently went directly into the CCCM space by acquiring Million Handshakes and have struggled to integrate them. Now, Portrait becomes a small piece in a quite big puzzle focused around integrating its analytics capabilities into PB. I think it’s fair to say that enhancing the already limited digital capabilities in Portrait (the quite sophisticated email marketing tool they bought with Million Handshakes) is not the top priority for PB. This certainly leaves Portrait’s claim for fame in this space wanting as Forrester quoted Portrait clients for ‘stressing the need for stronger capabilities in the online channels’. Good news for Portrait’s closest direct competitors, SAS and Teradata, who were competing on data and analytics capabilities. But surely others will benefit as well. Portrait’s campaign management footprint was strongest in Scandinavia (as Million Handshakes was originally Norwegian), so vendors with a strong Northern European presence are likely to be ready to pick up any unsatisfied customers. And of course, there will be a few of those as investments in product roadmap get reprioritized. But in a broader picture, it will not make much of a difference to most marketers.

Unica & IBM
In mid-August, Suresh Vittal and Joe Stanhope of Forrester wrote an insightful blog on this acquisition (http://blogs.forrester.com/joseph_stanhope/10-08-13-suresh_vittal_and_joe_stanhope_consider_news_ibm_acquiring_unica) pointing to the very obvious conflict between Unica’s NetInsight and the recent acquisition of Coremetrics. My key takeaway from that: IBM are not fools and have not paid a stupid multiple on revenue from a product, where they already owned an equally strong competitive product. So with roughly 125M USD of revenue in 2009 and a sales price of 480M USD, multiples are close to 4. And perhaps more than four for the actual campaign management business. Interesting if you are VC-backed company in the marketing automation space. Such as Agillic (figured I’d make sure everyone got it).

But back to Unica, its customers and its competitors. As with Portrait, the acquirer’s commitment to the acquired company’s product roadmap is to be questioned. IBM has acquired Cognos, iLog, Lombardi, Initiate, SPSS, Sterling Software, Coremetrics, and now Unica since 2008 (thanks, Suresh and Joe), so investments in integration with current IBM marketing technology suite are likely to be made before investments in further enhancing Unica’s own suite. Unica have made a number of small-to-medium-sized investments in a strong strategic move to broaden its offering across the spectrum of especially digital marketing. Integrating these acquisitions seamlessly into the Affinium suite is a task not yet completed if customer testimonials and industry analysts are to be trusted, thus leaving Unica’s future competitiveness weakened. At least in the short-to-medium-term. Obviously, tapping into IBM’s customer-base will propel Unica ahead in the campaign management space and hopefully IBM’s entry will change the dynamics in the space in the long run. One likely outcome is further consolidation if ‘IBM-size’ muscle is going to be a ticket to compete in the space. I’m guessing that Alterian, Neolane and Responsys are all hoping this will be the case as they are probably the most likely targets for acquisitions.

Another possible outcome is that the differentiation within the space increases and is split into two macro segments: An enterprise-focused segment consisting of Unica/IBM, Portrait, SAS, SAP, Oracle, Infor(Epiphany) and Teradata focusing on enterprise applications and an end-to-end (or one-stop-shop if you prefer) delivery from one vendor. Of course, this segment will continue to pay attention to online capabilities – but not nearly as much as the other macro segment, the SaaS-focused segment. This segment, made up chiefly by Alterian, Responsys and Neolane but with potential new entries like Eloqua (currently all B2B) or salesforce.com (also mainly B2B), is likely to spend much more of its energy on integration with numerous digital applications. Responsys recently announced a partnership with eCommerce platform, eCommera, and other similar initiatives are being launched by other players. At Agillic, we are piloting a number of new applications in collaboration with key partners, including an eCommerce app, a CRM-retargeting app and a cross-channel advertising and marketing analytics app. Our partners have already made integrations with Facebook, foursquare and adservers. So I’m guessing we haven’t seen the last of this. From a personal point of view (or a “PVTS Point-of-View” if you will) I find this segment to be not only much more dynamic and interesting, but also much more in touch with marketers.

You can argue that there are two approaches to developing technology. You either build moats or you build bridges. The first approach is classic enterprise thinking: you try to cut out other applications and build a self-sufficient entity within your moat. You acquire if you find your proposition to be lacking. The other approach is SaaS. You have a number of API’s and allow for easy integration with other systems, because you realize that your technology can never be sufficient in a world that evolves and develops so damn quickly. Needless to say which one I believe in.

Alterian & IntrepidAlterian’s acquisition of Techrigy (which became a product labeled SM2 in the Alterian suite) was a bold move into social media and the first of companies in this space to venture into this territory. Predominantly, social media is a space occupied by creative agencies and technologies that are either custom-built or tailored to cater to these agencies’ needs. So a gutsy move by Alterian. But might also be an explanation why they have not had a lot of success in getting the traction they had hoped for. Insiders have led me to believe (there you go, the first bit of industry gossip even though I tried to steer clear of it) that SM2 has been very hard to get off the ground. Retrospectively, it makes sense: brands want to buy hyped social media services from cool, young, groovy and creative people. Not from MSP’s who are what Alterians partner network consists of. There are lots of great things to be said of MSP’s, but cool and groovy are not amongst them. This makes the Intrepid move seem logical. But it also jeopardizes Alterian’s quite successful MSP strategy as they in theory start competing with the MSP’s for services. Maybe their analysis is that the MSP’s were never very interested in SM2 anyways, so no channel conflict. Let’s hope so – for Alterian’s sake.

I suppose the question is whether acquiring Intrepid is another bold and offensive move or a desperate and defensive move to try and get some kind of value from a poor investment. I’m not quite decided. But one thing is for sure: if my previous hypothesis of Alterian being a potential acquisition target as the market diversifies to include a more clearly defined high-growth SaaS segment to which Alterian belongs, then I would be a pretty concerned Alterian shareholder. Why? Well, multiples for a services company (Intrepid) is about 20% of those of a SaaS company. So, potentially Alterian just sliced their valuation quite significantly. But of course that’s very speculative.

On a final note: Since the SaaS/online segment would be smaller but with higher growth figures, it would suddenly appear more interesting to various types of investors. Or at least there are a few of us in Agillic, who would hope so.

As always: share your thoughts on the above.

Democracy of Branding

First blog-post ever. Intimidating to say the least. Well, here it goes.

The paradox: I'm blogging yet I hate social media. For the life of me, I cannot understand what people use Facebook for, why anyone would want to be the mayor of anything on foursquare or how they find the time or the energy to tweet ten times a day. Nevertheless, I cannot seem to make it go away, so I am trying to embrace the little things about it that I do like. For instance, I understand strategic positioning of brands and I can see the benefits of perceiving one self as a brand. And thus, I can see the benefits of e.g. blogging as a part of the strategic positioning of the brand Peter Vilsholm Therkildsen Schlegel (I'm pretty confident that a branding consultant would tell me to get a new name but that's not happening).

So - social media is probably going to stick around long enough for me to have to deal with it. Personally and professionally. This blogpost is about the professional aspect of it. Or the branding aspect to be more specific. I have a proud background with one of Europe’s leading branding consultancies, Kunde & Co, and have a firm belief that a brand needs to be a true reflection of a company’s core beliefs, values, characteristics and aspirations. And it needs to be articulated elegantly and consistently. Especially the latter caused great controversy in the agency sphere in Scandinavia as many creatives found to eliminate their artistic freedom and make campaigning boring as everything looked very much alike. However this – and the mass media – gave the brands the option of communicating their brand with a high degree of consistency. Now, everyone with an internet connection can be a brand spokesperson and destroy the consistency.

Social media evangelists have argued that brands are social constructions that have always been the sum of consumer perception anyway. True. But companies arguably had more control in the past. So what do we do, when this comforting level of control has been reduced or even eliminated? What is the strategic approach to the ‘democratisation of branding’?

Short answer: you develop consistency and control over the audience that you can, your employees. And then you set it free. Internal branding is the key to increasing influence of your brand. Forget about control – it’s gone. But you can influence it. You can ensure that your employees really and genuinely understand and believe in your brand values. You can exemplify how those values are executed in real life scenarios. You can encourage living the brand. And if you are doing a good job of it – creating what Jesper Kunde labeled a Corporate Religion – you set it free. You encourage your employees to engage with consumers on social media (and in real life!) and watch the positive effects of the brand democratisation. You watch people contributing to your brand equity because they have been exposed to your brand values. It’s not that everyone will suddenly start tweeting, blogging or updating about all the wonders of your company. But those that do share their opinion will be far more likely to share a positive opinion. And those that encounter other people’s negative opinions, will be far more likely to counter them with their own positive one.

Your brand has been democratized and there is little you can do about it. But you can work strategically with this new paradigm. Not by sitting back and giving up control, but by empowering your company’s key assets: your employees. Branding as a strategic discipline has shifted from being a marketing and communication discipline to being much more of an internal discipline. Democracy is all about putting power in the hands of the people. But no harm in guiding the people to the best of your abilities.

Is this ground-breaking news? Hardly. But is certainly means that the traditional ad agency will need to reinvent themselves to be the masters of branding strategy and implementation. Otherwise, HR consultancies will seize the opportunity.

Finally – it’s a blog. So comment. Please.