The rumors swirled for the last week, but it still came as a surprise when, at 4.05pm ET today, Adobe announced that it had entered a definitive agreement to acquire Marketo, the leading B2B customer engagement platform. The price: $4.75 billion.
The “combination of Adobe Experience Cloud and Marketo Engagement Platform widens Adobe’s lead in Customer Experience across B2C and B2B,” said Adobe in a release. “With nearly 5,000 customers, Marketo brings together planning, engagement and measurement capabilities into an integrated B2B marketing platform.”
The price tag falls far short, for example, of the $26.2 billion Microsoft paid for LinkedIn, but it nevertheless appears to rank among the top 20 most expensive tech acquisitions of all time. Indeed, Microsoft was identified, along with SAP, as a possible purchaser of Marketo, once whispers began to circulate that Vista Equity were looking to sell the 12 year old veteran of the MA space.
Adobe got the top B2B platform, says Marketo co-founder
Jon Miller was one of the three co-founders of Marketo, and spent almost a decade there before helping launch Engagio, where he’s now CEO.This is great news for investors and Marketo employees,” he told us,. “and it’s a sign that there is a lot of money to be made in marketing technology, especially around platforms. Adobe needed B2B and got the top platform, so it will be interesting to see what further moves they, and their competitors, make.”
Competing with Oracle, Salesforce, SAP
Jason Holmes is President and COO at sales enablement platform Showpad; but he spent more than five years as COO at Marketo, and before that was with Adobe. His reaction to the news: “Adding Marketo to Adobe’s current arsenal heightens Adobe’s search and marketing automation data, allowing the business to better compete with Oracle and Salesforce.” But where does that leave SAP? “Marketo’s marketing solutions paired with Adobe will probably push SAP out of the marketing space. While Adobe focuses on B2C and Marketo has succeeded in B2B industries, the acquisition will create a marketing powerhouse that SAP should be worried about.”
Holmes points out that Adobe partners with Microsoft and operates on Azure, while Marketo is based on Google, but says nevertheless that this is a “smart move.Marketo will only further improve the Neolane technology that was acquired a few years ago, and Microsoft will benefit from Adobe’s success.” Neolane was foundational technology for Adobe Campaign.
A View from Forrester
We asked Joe Stanhope, VP and Principal Analyst at Forrester, about how this would raise Adobe’s profile in the B2B market. They now get to “fully participate,” he said; and he had numbers to show the potential benefit. “Forrester is forecasting the global market for B2B marketing automation to grow at a 19.4% CAGR over the 2017-to-2023 period from a base of 1.3 billion in 2017. Although Adobe does have B2B customers, it was definitely a company at the periphery of B2B marketing automation. In order to participate in the B2B marketing automation market, Adobe needed the functionality and market presence that Marketo brings. Marketo has solid products, a good reputation and brand, a large customer base, and is on the short list in just about every B2B marketing automation platform selection.”
He also mentioned the sizable elephant in the room: Microsoft owns LinkedIn — not a trivial factor when it comes to reaching a B2B audience. “The triumvirate of Microsoft, Adobe, and Marketo may offer interesting opportunities in the future, particularly from a B2B standpoint. If you consider the data and media aspects of Microsoft’s LinkedIn business, there are potentially powerful intersections with the Marketo-Adobe solutions for B2B brands.”
Comment from DMN
Are SAP left wondering what might have been, had they dug a little deeper into the corporate pocket? The expanded C/4 HANA offering under the SAP Customer Experience label is still deeply rooted in the eCommerce and retail heritage of Hybris, and buying Marketo might have been a way quickly to leverage their platform as a B2B player.
Microsoft, on the other hand, may stand to reap benefits on the sidelines, through its extensive partnership with Adobe.
Sources I spoke to during the week truly didn’t believe this was going to happen, wondering if Adobe was prepared to pay this high a price, and questioning the ease of integrating Marketo’s tools with Adobe’s system of engagement offering. But happen it did; and to think I’ve been trying to set up an interview with Marketo CEO Steve Lucas about his new book. I have other questions now. — Kim Davis
This is a developing story