Making sense of Salesforce.com's $2.5bn gamble

You’ll see a lot of things today in the news…in your social feed…as you move around town…as you attempt to understand your children…that will fundamentally not make sense to you. The headline today announcing Salesforce.com’s acquisition of ExactTarget should not fall into that category.

You may work hard to fully comprehend a sum of money like $2.5 billion in cash, but if you spend about two minutes thinking through the reasoning of this move, you should get yourself quickly to a head-nod, and be able to move about your day. Here’s why.

Begin with fact that the technology needs of today’s marketing executives are increasing rapidly. Our recent survey of marketing executives indicates that 10.4 per cent of revenue is budgeted for marketing, and is expected to grow six per cent in 2013. With projected technology investments a major part of marketing budget growth, Salesforce.com has been building out the “big rock” components of their marketing cloud since the acquisition of Radian6 in March 2011. The cloud got more crowded when Buddy Media was acquired last year. With today’s announcement, Salesforce.com rounds out the components of their marketing story.

Is email a $2.5 billion part of the engagement story?

Sure it is. Email communications remain a critical part of how organisations engage their audiences. Whether communications are transactional or marketing in nature, they reach consumers semi-seamlessly across devices, can leverage the big data companies are increasingly collecting and harnessing, link actions taken tightly back into the consumer record (feeding the grand insight loop), and meaningfully drive to other components of online and offline programs. Regardless of company size, audience, or industry, email is a hard-working vehicle that many companies are still working to perfect. In short, getting closer to a leading email company makes sense if you’re a company built on helping your customers engage their customers better.

Why ExactTarget? 

With a marquis customer list, and the ability to support robust email marketing programs, they offer Salesforce.com and their customers the capabilities needed to build out the marketing cloud. In fact, when existing Salesforce.com customers were seeking support for complex email requirements, the folks in San Francisco would point customers east to the folks in Indianapolis…often enough that integration via the Salesforce.com APIs already exists.

It appears that the distance will shrink between the two companies, though there are still a lot of details to be worked out. There is overlapping functionality that must be reckoned with. There are ExactTarget customers who work with Salesforce.com’s competitors who are certainly pondering the impact on their current setup. These are two brands, rich with equity, which will live alongside one another…for now. All of this will need to be dealt with.

However, there are also CMOs who are feeling increasing pressure to drive value into the organisation, who are saddled with increasing influence over the business, and who are working hard to make sense out of the providers and solutions that support their digital marketing initiatives. This announcement will give them some additional food for thought.

More will certainly come, along with our official position on the announcement. However, knowing the players involved in the deal and the market being served, this move far from a head-scratcher.

Julie Hopkins is digital marketing specialist and research director at Gartner.