Adobe confirms acquisition of Marketo for US$4.75bn

The hefty deal, which was rumoured last week, is one of the largest to ever occur across the marketing technology landscape

Adobe has confirmed its acquisition of Marketo, paying US$4.75 billion to acquire the B2B marketing automation player.

The deal, announced today, will see Marketo become part of the Adobe Experience Cloud, providing a strong B2B marketing automation platform to join the enterprise martech stack. The news comes just a week after rumours began circulating about a potential acquisition, as well as two years after Marketo was acquired by private equity firm, Visa Equity Partners, in a deal worth US$1.8 billion.

The purchase price of US$4.75 billion is a hefty price tag on Marketo, which reported revenue of US$321 million last year, and makes this acquisition one of the largest to occur across the marketing technology lumascape.

In a statement, Adobe said the acquisition brings together the analytics, content, personalisation, advertising and commerce capabilities of its own customer technology cloud, with Marketo’s lead management, and account-based marketing technology for B2B organisations.

Adobe executive VP and general manager of digital experience, Brad Rencher, said buying Marketo will help widen Adobe’s lead in the customer experience space across both B2C and B2B, “putting Adobe Experience Cloud at the heart of all marketing”.

As part of the deal, Marketo CEO, Steve Lucas, will join Adobe’s senior leadership team, reporting to Rencher. He commented that both companies shared an “unwavering” belief in the power of content and data to drive business results.

“Marketo delivers the leading B2B marketing engagement platform for the modern marketer, and there is no better home for Marketo to continue to rapidly innovate than Adobe,” he said.

The deal is subject to customary purchase price adjustments and conditions and is expected to close in the fourth quarter of Adobe’s fiscal year. Until the deal closes both companies will continue to run independently.

Marketo now boasts of 5000 customers globally, mostly in the B2B sphere, as well as an ecosystem of 500 partners. Adobe, meanwhile, has largely built its base of clients in B2C-oriented organisations.

In a blog post, Lucas said a common thread in customer conversations throughout the past two years has been the request to deliver and be part of a seamless end-to-end customer experience. "Today, we’re one step closer to making this a reality for our thousands of customers and partners worldwide," he said.

"Adobe and Marketo both share an unwavering belief in the power of content and data to drive business results. Together we will deliver an unrivaled solution that will place customer experience and engagement at the heart of digital transformation. This announcement is a momentous occasion for Marketo, as it signals the next phase of our company’s growth.

"Marketo’s exceptional lead management, account-level data, and multi-channel marketing capabilities will combine with Adobe’s rich behavioral dataset to create the most advanced, unified view of the customer at both an individual and account level. The result will be an unprecedented level of marketing engagement, automation, and attribution power, all with a goal of delivering end-to-end, exceptional experiences for our customers, where and when they want them."

As previously reported by CMO last week when rumours first emerged, the deal was neither a surprise nor expected by industry analysts. IDC principal analyst, Gerald Murray, said Adobe gains significant revenue as well as a mid to enterprise B2B customer base through the deal, the latter of which should be a good match for its Magento commerce base. Adobe acquired Magento in May for US$1.68 billion, purchasing its way into the ecommerce space.

"But there are obviously huge functional overlaps in the marketing campaign management space making it doubtful that it will be entirely additive," Murray said. "Marketo is also tied to Google cloud, while Adobe is committed to Microsoft Azure. That will need to be reconsidered.

"Under private equity ownership, Marketo has been under greater pressure to cut cost and boost bottom line performance. But is it a good match? It's certainly a surprise. If Adobe wants to be the customer experience system of record I'd think they'd want to look into capabilities outside marketing like the Magento deal."

Constellation Research founder, Ray Wang, was all for the deal, and also noted the growing battle between Google and Salesforce on one side, and Adobe and Microsoft on the other.

"The common data model is appealing to CIOs and this gives Adobe the ability to go head-on with Salesforce on the marketing cloud," he claimed. "We are ultimately seeing a battle between Adobe/Microsoft and Google/Salesforce."

Overall, Wang saw the combination bringing a lot of credibility for creative to commerce from B2B2C and giving both vendor's customers the opportunity to start consolidating the larger parts of their marketing stack.

"It's nice to see Adobe back in the game of bringing outside talent and tech into its stack. It's a better use of cash than stock, buy backs and dividends," he added.

CEO of account-based marketing (ABM) vendor, Engagio, Jon Miller, who was a co-founder of Marketo, noted the positives in the two sides coming together.

“With this move, Vista [and Marketo employees] get a great exit, and Adobe gets a stronger position in B2B. Adobe has long been a leader in B2C marketing, but has been a non-player in B2B. I think this highlights the fundamental fact that B2C marketing and B2B marketing are very different beasts that need different technology approaches," Miller told CMO.

With even further specialisations coming into the B2B space, such as ABM, the distinction between the two will become even more important in coming years, Miller predicted.

"So you can expect to see even more bifurcation between B2B and B2C,” he added.

Raab & Associates principal, David Raab, saw Adobe facing tougher competition in B2B there than B2C due to Salesforce and Oracle/Eloqua being so entrenched.  But with Marketo boasting of the most clients of anybody in the B2B marketing automation space, so it’s the strongest entry point for Adobe. 

"But I don’t see much synergy between the two businesses. Marketo has some enterprise clients but the strength is in the mid-market, which is a tough place to make money," he commented.

Follow CMO on Twitter: @CMOAustralia, take part in the CMO conversation on LinkedIn: CMO ANZ, join us on Facebook: https://www.facebook.com/CMOAustralia, or check us out on Google+:google.com/+CmoAu  



Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.
Show Comments

Latest Videos

More Videos

More Brand Posts

What are Chris Riddell's qualifications to talk about technology? What are the awards that Chris Riddell has won? I cannot seem to find ...

Tareq

Digital disruption isn’t disruption anymore: Why it’s time to refocus your business

Read more

Enterprisetalk

Mark

CMO's top 10 martech stories for the week - 9 June

Read more

Great e-commerce article!

Vadim Frost

CMO’s State of CX Leadership 2022 report finds the CX striving to align to business outcomes

Read more

Are you searching something related to Lottery and Lottery App then Agnito Technologies can be a help for you Agnito comes out as a true ...

jackson13

The Lottery Office CEO details journey into next-gen cross-channel campaign orchestration

Read more

Thorough testing and quality assurance are required for a bug-free Lottery Platform. I'm looking forward to dependability.

Ella Hall

The Lottery Office CEO details journey into next-gen cross-channel campaign orchestration

Read more

Blog Posts

Marketing prowess versus the enigma of the metaverse

Flash back to the classic film, Willy Wonka and the Chocolate Factory. Television-obsessed Mike insists on becoming the first person to be ‘sent by Wonkavision’, dematerialising on one end, pixel by pixel, and materialising in another space. His cinematic dreams are realised thanks to rash decisions as he is shrunken down to fit the digital universe, followed by a trip to the taffy puller to return to normal size.

Liz Miller

VP, Constellation Research

Why Excellent Leadership Begins with Vertical Growth

Why is it there is no shortage of leadership development materials, yet outstanding leadership is so rare? Despite having access to so many leadership principles, tools, systems and processes, why is it so hard to develop and improve as a leader?

Michael Bunting

Author, leadership expert

More than money talks in sports sponsorship

As a nation united by sport, brands are beginning to learn money alone won’t talk without aligned values and action. If recent events with major leagues and their players have shown us anything, it’s the next generation of athletes are standing by what they believe in – and they won’t let their values be superseded by money.

Simone Waugh

Managing Director, Publicis Queensland

Sign in