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Why Salesforce believes marketing automation drives its growth

Smita Nair

Salesforce overview: A key enterprise cloud computing company (Part 3 of 6)

(Continued from Part 2)

Salesforce growth

We can partly attribute the growth in Salesforce’s (CRM) revenue to ExactTarget, which contributed around $194 million to total revenues in fiscal 2014. Salesforce completed the $2.5 billion acquisition of ExactTarget last year. ExactTarget is a leading cloud marketing platform used by more than 6,000 companies, including Coca-Cola (KO), Gap (GPS), and Nike (NKE). ExactTarget’s solutions enable marketers to integrate customer data from any source to power digital marketing campaigns across multiple channels, all while leveraging sophisticated marketing automation capabilities. The acquisition is expected to accelerate the growth and leadership of the Salesforce Marketing Cloud, together with earlier acquisitions of social media monitoring leader Radian6 for $326 million and social media marketing software company Buddy Media for $745 million, coupled with advertising via Salesforce’s Social.com.

The rationale for the acquisition is that the dramatic increase in consumer and business use of social networks, mobile devices, and new digital technologies is causing a revolution in marketing, as budgets previously spent on traditional media were moving to digital campaigns. Gartner estimated that by 2015, consumer technology companies will have switched one-third of their traditional marketing budgets to digital, and CMOs (chief marketing officers) will outspend CIOs (chief information officers) on information technology by 2017. Marketing was the fastest-growing CRM category in 2012, growing at 21% (more than four times the software industry forecast norm in 2012), according to Yvonne Genovese, managing VP at Gartner’s Marketing Leaders Research. Genovese said, “We believe this growth will continue and marketing will be the largest growing CRM category through 2017.” IDC predicts the overall market for automating marketing will grow from $3.2 billion in 2010 to $4.8 billion in 2015.

With ExactTarget, Salesforce also gained access to marketing automation provider Pardot, which ExactTarget acquired in 2012. Pardot offers a software-as-a-service marketing automation application that allows marketing and sales departments to create, deploy, and manage online marketing campaigns that increase revenue and maximize efficiency. Pardot features certified CRM integrations with salesforce.com, NetSuite (N), Microsoft’s (MSFT) Dynamics CRM, and SugarCRM.

Analysts compared Salesforce’s acquisition to Adobe’s (ADBE) acquisition of Neolane and Oracle’s (ORCL) acquisitions of Eloqua and Responsys in the cloud-based marketing automation space. IBM (IBM) also recently acquired the marketing automation company Silverpop. IBM’s release said Silverpop extends IBM’s client base to power the marketing capabilities of 8,000 organizations in more than 50 countries around the world. Leading companies—such as Mazda, Stonyfield Farm, and Advanced Micro Devices—use Silverpop to engage customers in both business-to-business (B2B) and business-to-consumer (B2C) scenarios. Pardot competes with Marketo (MKTO), which provides cloud-based marketing software platform, Hubspot, and InfusionSoft.

Continue to Part 4

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