There’s a battle for the cloud.
With a wink, Marc Benioff’s Salesforce snapped up social media monitoring tool Radian6 in 2011 and made waves about a year later by digesting social media management platform BuddyMedia. Salesforce commercialized the cloud for B2B, but it’s moved it’s price point upstream.
A few weeks ago when I checked, a new prospect couldn’t get in the door with Radian6 for less than $10,000 per month — on an ecommerce model! Today, when I checked, the price point was down to $5,000 per month, or about $60k per year, which means Salesforce is experimenting with pricing. Even so, that’s not small change for the company that led the movement to ban software.
Arch rival Oracle, which made its mark on that upstream territory with client-server implementations, has surely taken note. The company led by Larry Ellison yesterday, announced its intent to acquire Eloqua, which went IPO just a few month ago, for a 31% premium on yesterday’s stock price.
Media sources, that include even the prestigious Wall Street Journal, often cite an ostensible prediction from research firm Gartner that says CMOs will spend more on IT than CIOs by 2017. Gartner has clearly promoted this prediction, but we have not seen the firm publish peer-reviewed research on the topic. And yet this is believable because the cloud has usurped the CIO; if all the technology resources a company needs are hosted in the cloud, then in theory, all a business needs is a helpdesk for end users.
So what do these acquisitions, and this spending power mean to marketers? Here’s a few thoughts.
1. Tools are only useful to craft, but don’t replace it. Marketing is part art and part science. Tools can help triage, mine, and analyze the science, but they cannot replace the art. The elegance of Apple did not come from social media monitoring. Red Bull’s decision to invest in a skydive from space was not a result of CRM analytics. Boeing’s Dreamliner didn’t write 787 over the skies of North America because of a Facebook contest. The magic of the marketing craft does not lie in a tool, but between the ears of the marketer.
2. Automation only opens the door to nurturing. For some marketers, marketing automation is simply an excuse to send a different sales pitch by email. This may have worked in in previous years, but the sales cycle has changed; people want to be invited to dance, not have their own dance interrupted. Automation provides businesses with the opportunity to nurture prospective prospects one step at a time. This means placing a greater emphasis on high quality content that provides information of value to the reader. Trust the process: good content marketing and creative PR is a natural trail of digital breadcrumbs.
3. No tool has cracked the social CRM code. Ever look at your Facebook Page’s analytics? Can you tell who among your company’s fans are also customers? How about your Twitter followers — do you know who among them are existing customers? Chances are you don’t because none of the vendors have cracked this code. This is a huge problem. While Facebook fiddles with terms of service and experiments with $1 messages, it overlooks the business model staring them squarely in the face: businesses would pay to know more about their fans. It’s the antithesis of Google’s model. Most social media services collect email addresses, and they could easily match this with data in a businesses CRM system allowing them to better understand their customers on social media. The possibilities for better service are incredible: marketing automation could trigger an account manager to reach out to a complaining customer on Twitter, rather than having the PR or support staff react and triage. Almost every business leader knows it’s a heck of alot cheaper to nurture and upsell existing customers than it is to find new ones — and good customer service is good marketing.
4. Be careful about the tools you buy. If CMOs are on the cusp of outspending CIOs, they’d be well advised to listen to the CIO experience, or be destined to repeat their mistakes of a decade ago. Case in point: any business with a Salesforce licence combined with an Eloqua implementation ought to be considering alternate courses of action. In IT sectors, this is an age old question on which consultancies like Gartner and Forrester have based businesses: do you risk buying a cutting edge technology from a startup that could be acquired tomorrow, or do you buy from Big Blue. There are benefits and drawbacks to both, but I’d venture to say, marketers across verticals are going to be paying a whole lot more attention to waves and quadrants.
5. The battle for the marketing cloud is just getting started. Salesforce and Oracle may be getting all the headlines for the marketing cloud today, but SAP, Adobe, Intuit and Microsoft are contenders or possible contenders for this space. There are dozens of small cap companies and startups playing in this space as well. This is especially true if Saleforce is indeed moving upstream, because it leaves an incredible vacuum within the SMB space. These are the businesses that aren’t going to pay $60,000 a year for social media monitoring — the smaller firm with $30 million in annual revenue, a $2 million marketing budget and three people in the marketing department.
As for the specific battle between Oracle and Salesforce, Forrester Research wrote in an analysis of the acquisition that the “other guys,” which to me means Salesforce, lost this skirmish. “It might be temporary, but lets’ face it, Oracle trumped you today,” wrote analyst Lori Wizdo. In other words, Larry just winked back at Marc and that’s a dangerous weapon in the battle for the cloud.