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Salesforce Buys Digital Marketer ExactTarget for $2.5 Billion

Salesforce Buys Digital Marketer ExactTarget for $2.5 Billion
By Jennifer LeClaire

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"Marketing was the fastest growing CRM category in 2012, growing at 21 percent -- more than four times the software industry forecast norm in 2012," said Gartner's Yvonne Genovese. "We believe this growth will continue and marketing will be the largest growing CRM category through 2017." Salesforce.com is purchasing digital marketer ExactTarget for $2.5 billion.
 


In a move to bolster its digital marketing capabilities, Salesforce.com is making another blockbuster acquisition. The CRM platform developer has agreed to buy ExactTarget for $2.5 billion in an all-cash deal that values the stock at $33.75 per share. The deal is expected to close in late July.

A global company headquartered in Indianapolis, ExactTarget makes marketing software used by businesses to personalize e-mail and text messages and to run social media ad campaigns. It has 6,000 customers, including Coca-Cola Co., Nike Inc. and Gap Inc.

Salesforce.com sees the acquisition as another puzzle piece in its quest to build out a marketing platform that crosses e-mail, social, mobile and, of course, the Web. But is ExactTarget's tech worth multiplied billions? Salesforce offers some reasoning for its big bet, starting with the rapid increase in consumer and business use of social networks, mobile devices, and new digital technologies.

"The CMO is expected to spend more on technology than the CIO by 2017," said Marc Benioff, chairman and CEO of Salesforce.com. "The addition of ExactTarget makes Salesforce the starting place for every company and puts Salesforce.com in the pole position to capture this opportunity."

Capturing Shifting Budgets

Industry research firm Gartner estimates that by 2015, consumer technology companies will have switched one-third of their traditional marketing budgets to digital, and chief marketing officers will outspend chief information officers on IT by 2017.

"Marketing was the fastest growing CRM category in 2012, growing at 21 percent -- more than four times the software industry forecast norm in 2012," said Yvonne Genovese, managing vice president of Gartner's Marketing Leaders Research. "We believe this growth will continue and marketing will be the largest growing CRM category through 2017."

Once the acquisition is complete and the software integrated, Salesforce.com said its customers can extend their investments in sales, service and social marketing. Meanwhile, ExactTarget's customers can access new social marketing capabilities, and will be able to leverage Salesforce.com's sales, service and platform solutions to transform their end-to-end customer experience.

Disrupting the Market

Brad Shimmin, a principal analyst at Current Analysis, said Salesforce has many faces, depending upon which angle you look. From a line of business software perspective, it looks like SAP or Oracle. From a social networking perspective, it looks like Jibe Software. And from a commerce platform perspective, it looks like a Microsoft, Google or Yahoo.

"It's easy to see Benioff putting those pieces together and trying to disrupt the established marketplace," Shimmin told us. "Whether they can succeed at it or not depends on if they can leverage their existing customer base and product set."

As Shimmin sees it, if Salesforce can quickly and efficiently pull in ExactTarget's technology and make it valuable to existing customers using its social media monitoring or CRM tools -- and break the silos that typically exist between marketing, sales and support, for example -- this acquisition could be a major boon for the company.

"This acquisition lines up well with how Salesforce has gone to market before," Shimmin said. "It all comes back to the value of Big Data and the transparency that it engenders within companies because they are able to break down those data silos and put two and two and two together where they weren't able to add them up before. That can lead to new revenue models or the ability to market to specific customers."
 

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