Oracle Buys Eloqua

That’s it?  Only $810.8 million?  Not even a whole billion?  I would have thought Eloqua would command a higher price, especially with a market cap in the $4-500 million range.  Lots of people are saying nice things about the deal but I ain’t buying it just yet.

They IPO’d in August at $11.50 per share and raised $90+ million and in the last year had revenues of about $85 million.  So from this perspective the strike price of $23.50 makes some sense.  However, marketing automation is heating up and it’s a good place to hang out a shingle these days so I would have expected more of a premium.

This leaves Marketo and a bunch of smaller companies in the space and curiously opens up the market quite a bit.  Eloqua is a good Salesforce partner but you have to wonder how much longer that will last given that Larry doesn’t even invite Marc to OpenWorld any more.

I think Eloqua’s Salesforce business goes in the tank immediately meaning that Oracle might have over paid given Eloqua’s revenue is somewhat dependent on good relations between the two companies’ sales forces.  So look for Marketo to get a lot more interest from Salesforce (as if they don’t have enough?).

This acquisition clears the field for Salesforce and I could easily see Marc buying Marketo just to make sure he has something in the corral.  If that doesn’t happen, then every SAP and IBM in the world will want Marketo and soon.  Marketo would be a good fit for Salesforce, better than Eloqua in some respects, given the social direction of the Marketing Cloud.

At this stage Oracle is amassing an impressive string of software solutions that it is attempting to forge into some kind of suite.  But maybe not.  This reminds me that the last couple of years worth of Oracle acquisitions in the front office market resemble another spate of acquisitions the company embarked on in 2004-2005.  It ended up buying such names as PeopleSoft and Siebel and each of those companies had bought up many other companies like J.D. Edwards and Upshot to name just two.   I think of that as the Great Consolidation.  Lately things are looking similar.

Seven or eight years ago Oracle was chided for becoming the new Computer Associates and it was widely expected to cease all development and enhancement of the products and just collect the maintenance revenue stream.  That didn’t happen, the company pledged to keep the brands going and today they are.  It also promised to build powerful software that would link everything together in one big, happy mass.  The project was supposed to take 3 years but it reached double that before Oracle threw up its hands and declared victory in a parallel universe.

Fusion is still evolving and the separate applications are, well, separate.  But the focus now seems to be on bringing together RightNow, Siebel, ATG, Eloqua, and the other recently acquired systems under the Fusion umbrella.  Maybe it will work, I dunno.

For now, Oracle may have stolen first base buying Eloqua.  The marketing market is still hot, Salesforce is committed to big time social marketing, Marketo might be a target purchase for them but that’s not certain.  Sooner or later Oracle needs to put some stories together about how its new applications all work together otherwise the CA rumors will start all over.

Cloudforce New York

So, just about a month after Dreamforce, Salesforce.com is coming to New York for one of its regional Cloudforce conferences.  The event will be at the Javitz Center in Manhattan on October 19.  Salesforce is expecting six thousand attendees.

The focus of the event is supposed to be on the newly re-announced Marketing Cloud — the amalgamation, so far, of Buddy Media and Radian6.  I will be briefed under NDA about the news to be announced at the event but that hasn’t happened yet so, hey, let’s speculate.

As many of my colleagues have suggested, the Marketing Cloud is a good and important down payment on a full-featured marketing component but it is heavily weighted toward social marketing.  They expect more acquisitions primarily to beef up the Marketing Cloud’s lack of a conventional marketing campaigns element — the kind that runs traditional marketing programs.  I am not so sure.

Salesforce already has a bevy of more or less conventional marketing partners in the AppExchange like Eloqua, Marketo and others.  It’s true that these vendors are not monogamous but so what?  They have good connectors and integration and are doing everything they can to carpet bomb, er, I mean cover, the Salesforce installed base so why buy what’s free?

My instincts (which are right about half the time — and less when I’m driving according to my wife) tell me that Salesforce is going in another direction.  The company has always exhibited a Blue Ocean Strategy approach to its business seeking out niches that haven’t been named and I expect it to do the same in marketing.

That means they’ll concentrate on the myriad ways to market in the social world.  If they make an acquisition — and I bet there’s nothing on the radar right now — it will be to beef up social marketing not conventional stuff.  That would mean companies like HubSpot or Awareness or Nearstream or others (some in the CRM Idol contest) that use a healthy dose of new age thinking and social media to access and communicate with customers.

So, what to look for in New York?  In addition to October baseball, I think you’ll see elaboration of the basic message doled out at Dreamforce.  The San Francisco session was packed with information and image-making and there really wasn’t time to unpack all of what the Marketing Cloud means for customers.  I think Cloudforce is the place where the unpacking will happen.

Salesforce has been great at three-pronged marketing for a long time.  That’s where they tell you what they’re going to tell you, then they tell you and finally the circle back to tell you what they told you.  I think they’re at part two and Cloudforce New York will be more of a deep dive.

I could be very wrong but that’s what it means to speculate.  Right?

2.5 Trillion Reasons for RPM

A couple of weeks ago, Marketo announced its research-based belief that its form of revenue performance management (RPM) could help grow global GDP by $2.5 trillion by 2015.  I love it when emerging companies talk about big plans this way.  It reminds me of the young plumber who upon seeing Niagara Falls for the first time says, “I think I can fix it!”

But there’s something to this proposal that ought to be taken seriously and when you talk about trillions of dollars you are presumably talking seriously.  Global GDP in 2011 is predicted at $68.65 trillion by the International Monetary Fund and the Marketo announced figure was spread over three years.  But that’s a lot of improvement no matter.

To put this into perspective you have to back up and ask about the assumptions involved and Marketo was kind enough to anticipate the questions and perform a little research.  According to the announcement, Marketo did some analysis of its customers’ revenues as they took advantage of the company’s marketing automation, sales effectiveness and analytics tools.

Side note: No one’s crown jewels were harmed in the analysis.  Having a big pile of relatively homogeneous data for analysis is a side benefit of multi-tenant cloud computing.  Multi-tenant cloud computing could provide important analytic benefits like this to all users if we could only 1) Put down some ground rules governing the use of the aforementioned crown jewels, thus creating a data commons; and 2) Get over our hang-ups about maintaining the pristine nature of our data in clouds.  Really, it’s like the five year-old who can’t stand seeing the peas touching the mashers on the plate.  But I digress.

The three tools, marketing automation, sales effectiveness and analytics, combine to provide the tools a company needs to implement revenue performance management strategies.  RPM is still a relatively new idea but other companies like Eloqua, with whom Marketo competes and Cloud 9 Analytics (a Marketo stable mate in venture capitalist Bruce Cleveland’s menagerie) are conspiring to give the idea critical mass.

In the nub, RPM is simply about using the data that is routinely given off by our business processes as fodder for the analytics engine.  Too often the data goes unused or simple reporting engines choke on the abundance.  But an analytics engine spits out all kinds of ideas like what to offer the customer based on its experience, or generally offering insight that a human eye might miss but which a statistical model would discover easily.

So, two and a half trillion bucks over three years averages out to a bit less than one percent a year.  In percentage terms that is not much but the existence of all the zeros in a trillion will get your attention.  After all, that’s growth and incremental improvements like this are how markets and economies grow.

More importantly, the ROI can be stunning.  Given the fact that RPM would not be applied evenly across big corporations and lemonade stands, the places where it could make a difference would notice the change.  Moreover, the cost of implementing RPM where it’s needed would be much less than the incremental gains, especially with modern cloud computing delivering the tools cost effectively.

I am not an expert on RPM, yet.  I am more like the one eyed man in the land of the blind.  But my thought is that we ought to get familiar with this idea, which is essentially applied analytics.  Our economy is still climbing out of the recession and the jobs numbers that I have seen for May are disappointing.  Every recession ends with some new product or idea taking off and leading the way.  I haven’t seen the big new idea yet but maybe this is it.  Regardless, a little investigation won’t cost anything.

More on Salesforce and Radian6

All the chatter about the Salesforce acquisition of Radian6 is quite interesting.  A couple of postings from people I respect make good points.  First Joe Payne, CEO of Eloqua:

“Conspicuously absent from Salesforce’s network of role-specific “Clouds” is one that centers on the marketing function.  Is the Radian6 acquisition the beginning of a Salesforce Marketing Cloud?  Someone on the investor conference call asked Marc Benioff whether this was the first move toward business-to-consumer.  His answer was worth noting: ‘We’re really seeing the beginning here of the Marketing Cloud.’ Given the excitement we have seen around Revenue Performance Management – a discipline that requires both sales and marketing data – in the executive suite, it is not surprising to see Salesforce moving this direction.

And here’s Jon Miller CMO of Marketo:

“Personally, I think Salesforce will continue to make acquisitions “around” the marketing automation space (such as Jigsaw and Radian6) without moving directly into the category; I also would not be surprised if they bought an email service provider.  Salesforce has never shown much interest in a “Marketing Cloud;” they seem more interested in Chatter, the Force.com Platform, and Service Cloud 3, and I suspect future acquisitions will focus on augmenting those capabilities more than in marketing.

It reminds me of the old joke, if you want three economic opinions ask two economists.  We’ll need to wait a while to know which is right but I’m betting on Payne’s analysis more or less.

IMHO Salesforce has been deficient in marketing for a long time.  Perhaps that’s because marketing’s business processes have been more amorphous compared to sales and service.  But more likely, it was because Salesforce grew up selling to emerging tech companies that were selling new category products.  Your marketing needs in such a situation are rather minimal.  But today, there is much less category formation going on — that will likely change with the introduction of the tablet PC— but for now, companies wanting to sell, and who doesn’t, need to market like many of them never have.

Marketing and customer intimacy have driven the social CRM market for several years and the demand destruction caused by the financial meltdown a couple of years ago tipped the scale.  That’s why ideas like revenue performance management are so important today and in order to do RPM you need tools.  So it’s not surprising that Salesforce bought Radian6.  It was time.

 

Beagle Research Group Recognizes Video Pioneers

Announces first annual Short Tale Award™ for Excellence in Video Use

Stoughton, MA, February 8, 2011 — Beagle Research Group, today announced “The Beagle Short Tale Awards” for 2011.  Beagle gives the annual awards for various aspects of video production and use by front office software companies in sales, marketing, service and education.  Denis Pombriant, Beagle’s managing principal said, “We believe video is profoundly changing the way companies communicate with customers and prospects and this award brings recognition to the pioneers as well as encouragement to those using the medium.”  The award is given for excellence in short videos (typically under six minutes) that are produced during the prior year (2010).

This year’s software vendor winners include Eloqua, Microsoft Corporation, NetSuite, RightNow Technologies, Sage North America, SAS, Salesforce.com, Zuora and a special award to Jess3 a creative agency.  The grand prize for Strategic Use of Video went to Salesforce.com, which produced, among others, a video quantifying the effectiveness of its video library as a sales and marketing tool.  Pombriant also said, “At this stage of a trend we often see unsubstantiated claims of effectiveness for a new technology.  Salesforce, provided the needed proof.”

A full report including links to all winning videos is available at www.BeagleResearch.com.

About Beagle Research Group

Beagle Research Group, LLC is an analyst, consulting and market research organization focused on emerging front office software companies.  Beagle Research investigates market trends and provides analysis and insight to vendors and buyers of front office computing solutions.  Our content is presented in articles, blogs posts and free downloadable reports at multiple locations across the Internet.  The Beagle Short Tale Award and logo are trademarks of Beagle Research Group, LLC.

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New approaches for front office

We’re coming back.  We aren’t out of the proverbial woods but we should be on the upswing from the long downturn.  According the Labor Department the U.S. economy added 103,000 jobs in December bringing the unemployment rate down to 9.4 percent.  Jobs are traditionally a lagging indicator so even better.

Most importantly this was not a one-time event.  October and November each showed upticks in employment and the revisions announced at the same time as the December numbers paint a story of improving jobs growth through the fourth quarter.  The revisions looked like this—October: from +172,000 jobs to +210,000; for November +71,000 from +39,000.

So that’s all good and you have probably digested this news and moved on wondering when it will effect you.  Fair question.  Coming out of recessions we always seem to find a new wrinkle to make us just a bit more efficient at our jobs.  People get re-hired but the jobs they are hired for are not quite the same as the jobs they left.

I see a lot of this in the front office.  I have been speaking with expert in various front office disciplines recently and they’ve given me some things to think about.  In sales for instance Anneke Seley, co-author of Sales2.0, tells me that her clients are moving to web and phone strategies.

Phone and web might not be right for everyone but it fits many cases for some important reasons.  Prices have taken a beating in the recession, which means that vendors have smaller margins to work with so anything a vendor can do to reduce overhead is worth a try.  Reducing the field sales effort—if and only if it can be done without damaging the revenue stream—is a great way to save on overhead.

This does not mean giving up on field selling, it simply means doing a little less by judiciously picking your spots and supplementing with a combination of automation (social networking, analytics) and different job types.  And that is why I say people get re-hired but the jobs they are hired for are not quite the same as the jobs they left.  If you are in selling you might find yourself doing more phone work and on-line demos before you meet the customer in person.  If you are a sales manager, maybe you are thinking of adding inside people rather than field people.

If you are really thinking strategically you are looking for better ways to identify the people you want to spend time with regardless of whether it’s on the phone or at a conference room table.  In this vein, I was blown away by one statistic from Eloqua recently.  According to the Eloqua Benchmark Report of its customers, users reported being able to reduce the size of their campaigns an average of 41% without sacrificing leads simply by using their automation.

Now, automation can only do so much and the point of automation is that it imparts a new and, hopefully better way, to do something, a method.  The results Eloqua cites are methodological so my point is that similar results are within the grasp of anyone employing the right combination of social technologies and analytics.  This takes nothing away from Eloqua, which had the sense, the right combination of products and the customer base to perform the analysis.  Good for them.

Another statistic that impresses me, which I pass on for your benefit and possibly amazement, comes from a Salesforce video on how to use on–line video for B2B marketing and sales.

According to Salesforce they receive more than 7,500 hits per day on their video library.  By their math, if the average view lasts two minutes, it’s like having an extra 46 “hyper-efficient” reps on the phone.  Holy &^%$ Batman, that’s a lot of reps!

Now, the fine print here is that Salesforce has been building its video library for several years and today has a stash of over 1,500 of them online.  They seem to add several per day lately and I don’t know how they do it.  There’s no reason you can’t start today to invest in a video library too though it might require slightly different skill sets than you have in a marketing department focused on events, PR and brochures.  Seems like the mantra plays out again, people may get re-hired but the jobs they are hired for are not quite the same as the jobs they left.

What impresses me is that the Salesforce video in question appears to be a primer for anyone who wants to check it out—customers, partners, competitors, it doesn’t seem to matter.  That’s a sure sign that change is afoot.  We aren’t marketing or selling quite the way we did before and, as usual, the first to pick up on this are the ones that will benefit most.

Thor Johnson on Marketing in the Automation Age

Thor Johnson

Our newest thought leader interview features Thor Johnson a marketing guru you’ll want to check out.  Thor’s background includes a Harvard MBA and nearly four years at the helm of marketing in Eloqua’s early days.  That position gave Johnson invaluable opportunity to help define marketing in the age of automation.  The effects of some of Eloqua’s early innovations are still being felt as numerous companies climb onboard the bandwagon that Eloqua created.  But what’s Johnson up to today?  What does he think of the rush to marketing automation?  He’s into some very common sense ideas like accountability which is why this interview is so worth reading if you follow this link.

Social’s Killer App Is Video and Vice Versa

Not long ago, well actually a couple of years ago, I began writing about the need for increased use of video in our communications.  I was mostly thinking vendor to customer communications.

My logic was three fold, first the technology needed to create video is now available on the desk top.  On the Apple platform, which I am more familiar with, Garage Band for creating music loops, iMovie and iPhoto for movies and stills form the basis of a creative suite that enables a talented but not necessarily expert user to create engaging videos.  The Adobe Creative Suite is also powerful and runs on Windows and the Mac, but for my money is unnecessarily complex, but you need Adobe or something like it to do some of the more advanced graphics.  The challenge for the developer is to keep the video in a duration range of three to five minutes, and of course, to be engaging.

The second reason is slideshow burnout.  There are now many books on the market about that attempt to upgrade average people’s slide presentation skills because those skills are deficient today.  PresentationZen by Garr Reynolds comes to mind and there are many more.  Sending someone a slide deck as if it was a fully articulated document or mock video, exposes the deficiencies of pictures only or pictures with too many bullet points on a single slide.  Information was getting into, but not out of, slides and something had to be done.

The third reason that video creation is important involves transportation.  Slides were created as speaking aids in a live setting and while we make great efforts to use them via web conferences, something is inevitably lost.  But transportation is becoming difficult to justify, but fuel prices continue to rise and, in a recession, most organizations are in some ways restricting the frequency or type of employee travel.

It’s important to note that the above discussion includes an important caveat—most of the video coming to market today, thankfully, does not involve untrained people in front of a camera.  Instead today’s video is largely animation and stills activated a la Ken Burns.  It works well.

I have been impressed by a small crop of videos available on the Dreamforce website put there by Salesforce and some of its partners in anticipation of next month’s conference and I want to share them with you in case you haven’t been following.

The first video is posted at The Var Guy.com.  It’s a straight up recording of an interview in June with Red Hat CEO, Jim Whitehurst titled Red Hat CEO: Cloud Can’t Exist Without Open Source.  It’s a good example of old style video that puts a person in front of the camera for three and a half minutes to make a few points.  Watching is faster than reading the attached Q&A but it lacks the engagement factor that I mentioned and it makes three and a half minutes seem like a long time.

Next on the list is The State of Cloud Computing from Salesforce.com.  It’s all animation and looks like it was developed completely on a desktop; it is the type of video we should all aim at.  There are no people on screen but a narrator tells the story over a musical sound track that ducks whenever he speaks.  The piece gets its work done in only 3:09, an important criterion in an attention starved world.  Given Salesforce’s marketing budget, you can bet this was not inexpensive though I wonder how it compares to other things like white papers and webinars.  The video makes the case for cloud computing in all its forms and only brings in Salesforce and SaaS towards the end, placing it squarely in the larger context.  A good job.

Eloqua offers a very good video, The Future of Revenue, which discusses the importance of new ideas in business.  Most of the 3:41 is table setting, intertwining the stories of several advancements in business over the last century before attempting to place Eloqua in the historical context as the next big thing.  The video is effective and I didn’t have trouble with attending to it because it draws you in as any good video should.

The last in this list is by Jess3 titled The State of the Internet .  Like the previous two, it’s a desktop effort and it has a musical sound track but no narrator and none is needed.  It is a compilation of data about Internet use attractively presented.  And while the numbers are impressive, the video is nearing its first birthday so the data represents, if anything, lower values than today.  At five minutes, it’s on the outside edge of tolerability for this kind of thing but the information is so compelling and the video so fast paced that you forget about time.  My favorite statistics are 81% of email is spam and 84% of social networking sites have more women than men.  Reminds me of a book.  Hello, ladies!

So this is a small smattering of videos but I think they point out a direction for the future.  As vendors continue to find ways to differentiate themselves in the minds of their customers, video that can entertainingly tell a story or provide step-by-step instructions for fixing a common problem, will become vital to most organizations.  The cost of production tools has dropped to the point of mass affordability, and distribution is layered on the Internet so it is free.

There are easy ways to make video viral and the need for a sophisticated approach to content distribution in an information-overloaded world is abundantly clear.  Video plus social networking may be the thing we’ve lacked with simple text delivery in a social medium—regardless of how elegantly it has been presented.  And strange as it sounds, video just might be the killer app for social media and vice versa.