CMO

Updated: Analysts weigh in on Episerver's plans to take on martech big guns

Episerver acquires experimentation and optimisation software vendor, Optimizely, to build out customer touchpoint optimisation

Episerver is describing its acquisition of Optimizely as putting it on a par with Adobe and Salesforce in the battle to help marketers build out and optimising digital experiences across every customer touchpoint.

The digital experience platform provider has acquired the optimisation software vendor for an undisclosed sum, with the deal expected to close in Q4, 2020.

The nearly 27-year old Episerver business was purchased by private equity firm, Insight Partners, in 2018 for US$1.16 billion, and has purchase two further martech companies since then: B2B commerce software firm, Insite Software, and analytics and personalisation provider, Idio. Optimizely, meanwhile, is valued at approximately US$600 million according to Pitchbook, and has raised $200 million in funding over the years, including a $105 million injection in June 2019. The latter round included $50m in Series D funding from Goldman Sachs and Accenture Ventures.

In a statement, Episerver CEO, Alex Atzberger, described the acquisition as a transformative step for the company and one it hopes will help it set a new industry standard for digital experience platforms.

“The breakthrough combination of Episerver and Optimizely will transform digital experience creation and optimization, enabling digital teams to replace guesswork with evidence-based outcomes,” he said. “This, along with our shared mission to empower growing companies to compete digitally, makes me thrilled to welcome the Optimizely team to Episerver, as we prove there are no extraordinary experiences without experimentation.”  

Specifically, the pair are pitching the combination of Episerver’s digital experiences functionality across content and commerce with Optimizely’s experimentation and optimisation tools as a way for marketers to better respond to demand for personalisation experiences across all customer touchpoints.

Key capabilities include running experiments across front-end and back-end logic with machine learning-powered recommendations, real-time insights on digital experience performance, and measurement tools.  

Optimizely is a 10-year old business boasting of 1000 customers including Nike, Uber and Peloton. It claims to have run more than 2 million experiments for these clients across user journeys. Opimizely CEO, Jay Larson, said Episerver and Optimizely shared vision to optimise every customer touchpoint through the use of experimentation.

“Together, we will enable our customers to do more testing, in more places, with greater ease than ever before,” he stated. “We believe this combination will make experimentation a mainstream business best practice and an essential part of competing and winning customers in an online world. With the combination of creation and optimisation, we look forward to building a new community of digital experience leaders.”

The competitive landscape

Gartner VP and analyst for marketers, Jennifer Polk, told CMO the deal is the latest in a series of acquisitions of personalisation solutions by competitors or larger platform providers.  

“Episerver’s acquisition of Optimizely reinforces the importance of providing a personalisation solution that has the breadth and depth of capabilities marketing leaders need to test, target and optimize content and experiences across channels and use cases,” she said. “Similar to other acquisitions, this one seems to enhance existing capabilities while possibly filling gaps in digital commerce personalisation.”   

According to Gartner’s 2020 Magic Quadrant for Personalization Engines, Episerver was found to be most often used for marketing personalisation, with particular strength in content personalisation, bolstered by its recent acquisition of Idio. Optimizely, on the other hand, lacks the ability to personalise marketing or content across marketing channels and instead focuses on Web optimisation, benefiting digital commerce personalisation, Polk explained.  

“Additionally, with digital commerce personalisation now the leading use case for which reference clients who purchased a personalisation engine, Episerver’s decision to acquire a company that can add to its digital commerce personalisation capabilities could enable the platform to capture greater market share,” she continued.  

"We are seeing increased online buying behaviour among consumers and business buyers so solutions that can support personalisation in digital sales channels may be in even greater demand in the months and years to come.”  

IDC analyst, Gerry Murry, also saw Epicor’s purchase as representative of the kind of deals we will see more of over the next 18 months or so “as formerly lofty valuations come back down to earth on companies serving hard hit sectors like travel, retail, and advertising”.

“The automated testing at scale that Optimizely brings to Episerver will make its content marketing platform more effective and efficient at personalising customer engagement,” he told CMO. “The timing is good as it adds a powerful analytics and differentiated testing layer to the Episerver CDP [customer data platform] offering just as many enterprises are increasing investment in the data and analytics layers of their infrastructures.”

However, Murray also had a warning for marketers around personalisation as an I/O process and failing to recognise the customer’s role in the data utilisation process.

“Marketers put almost all their care and attention into personalising the output half of the relationship but little thought goes into personalising the input side,” he continued. “Customers have nearly as little choice as they do knowledge of all the data collection going on behind the scenes of their digital activity. But they are slowly becoming more aware of and sensitive to the data collection and connect chain that leads to the personalised messaging.

“It is really a ‘magic moment’ when your phone tells you its 17 minutes to pick up your daughter at ballet when you get in your car? Not so much when you have not been allowed to control what data was used from what sources to do that. That prompts a lot of questions about how could they know that and identify you.”

As to Episerver’s claims this deal puts it on a par with Salesforce and Adobe in the CX and martech arena, Polk was less convinced.    

“Gartner’s 2019 Marketing Technology survey showed 32 per cent of respondents used Adobe Target for their personalisation platform. Another 10 per cent used Evergage, which is now part of Salesforce.  While the acquisition of Optimizely may offer some competitive advantages to Episerver in the market for personalisation engines, potentially benefiting existing clients of both companies, it remains to be seen whether or not this upsets the notable market share of Adobe and Salesforce,” she said.  

Additionally, the CX use case for personalisation is the least common use cases among reference clients surveyed for Gartner’s 2020 Magic Quadrant for Personalization Engines, comprising only 10 per cent of use cases cited as the primary use case for which a personalization engine was purchased. 

“Compared to 51 per cent who cited digital commerce as their primary use case or 37 per cent who cited marketing as their use case, the market for personalisation platform specifically focused on CX personalisation seems to be a shrinking market,” Polk added.

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