ExactTarget Inc., which grew up as an e-mail blasting company focused on consumers, is trying to entrench as a one-stop shop for clients seeking to smartly interact with all manner of customers, from individuals to other businesses.
That’s the motivation for the two acquisitions Indianapolis-based ExactTarget announced Thursday night.
ExactTarget said it would spend $116 million to acquire Atlanta-based Pardot LLC and Indianapolis-based iGoDigital. The two companies have nearly 160 employees combined and should add roughly $25 million in revenue to ExactTarget next year.
ExactTarget, which has 1,500 employees, is on pace this year for revenue of more than $275 million.
The deals were warmly received by Wall Street analysts and gave the company’s stock a modest boost Friday morning. ExactTarget’s shares jumped 2.3 percent when markets opened, although they gave up some of those gains later in the morning.
“We like that Pardot expands ExactTarget’s footprint into B2B marketing automation, because many companies are seeking a one-stop-shop suite for their marketing technology needs,” wrote Jeff Houston, an analyst at Barrington Research in Chicago, in a research note to investors. “Pardot will also help the company shake the mischaracterization of being just a B2C 'batch and blast' e-mail marketing solution, in our opinion.”
ExactTarget had served business-to-business clients before its acquisition of Pardot. Since June 2011, it has partnered with California-based Marketo, a business-to-business marketing company, to offer a suite of marketing automation services for businesses.
Such software is necessary these days because corporate purchasers often will check out another company’s products through multiple digital channels before ever making contact.
So firms such as Pardot, Marketo and Eloqua have developed tools to track the activity of customers that sign up for an e-mail, open an e-mail or download a white paper, and then rank them for interest based on their total level of engagement with the company’s digital marketing.
Such software can automatically send messages or offers to customers based on those that appear to be the most promising buyers. And companies like what they’re seeing. The marketing automation market was predicted to grow from $3.2 billion in 2010 to $4.8 billion in 2015, according to details released Thursday by ExactTarget CEO Scott Dorsey.
“The incremental market potential represents an awesome opportunity,” Dorsey said during a conference call with investors, “and one that we believe will accelerate as marketers are able to unlock the value of B2B and B2C marketing automation, all from one integrated platform.”
ExactTarget’s partnership with Marketo will end because Pardot is a direct competitor, even though Pardot has built its business focusing on smaller firms. However, analysts thought ExactTarget likely would take Pardot’s technology into its core group of middle-market customers and, down the road, to the largest companies as well.
ExactTarget’s acquisition of iGoDigital represents a long-term strategy to make marketing across e-mail, websites, social media and mobile devices personal for individual customers, Dorsey said.
IGoDigital has already has helped such companies as Amazon, Staples and Wal-Mart recommend products to customers based on their personal information, their previous buying habits or their online queries.
But the real potential for ExactTarget is to use that technology to make real-time sales offers to customers not just on websites, but also through e-mail, Twitter and other digital channels, Forrester analyst Rob Brosnan wrote in a blog post about the deals.
“Our research shows that behavioral personalization is the biggest concern in customer relationship marketing,” Brosnan wrote. He added, “If ExactTarget can successfully transition to real-time offer management, it will become a much more significant competitor in the cross-channel management space.”