It is no longer just major technology vendors who are buying up independent developers. Several significant deals this year have revealed an appetite among investors for a slice of the growing marketing automation market.
In June, private equity investment firm Thoma Bravo put down $3 billion in cash to acquire data visualisation and analytics firm Qlik, while in April, Marlin Equity Partners paid what looks like a bargain $90 million to buy out the marketing applications business from Teradata.
While a long way off the $525 million which Teradata paid in 2010 to acquire Aprimo as the basis of its marketing autmation offering, followed by an undisclosed sum to get email marketing specialist eCircle in 2012, it still shows a clear belief that there is value to be had from the deal with a big return in the future. Thoma Bravo must have a similar view, since its deal was at a 40% premium to Qlik’s share price at the time.
According to Seth Boro, a managing partner at Thoma Bravo, “Qlik’s platform blends best-in-class associative analytics and visualisations with data governance, scalability and interoperability. We are excited by Qlik’s product roadmap and confident that we can apply our experiences working with market-leading software companies to accelerate Qlik’s growth and market share across all geographies.”
Qlik’s vision was evident at its Qonnections 2016 customer event in Orlando, Florida on 2nd May “It gives users the ability to focus on free-form analysis without having to pre-condition the data. That opens up lots of avenues,” said James Fisher, global VP, sales and marketing, at Qlik when he spoke to DataIQ earlier this year.
Two major product launches will have helped to make the vendor look especially appealling. Qlik Sense Cloud Business put the application onto a software-as-a-service basis with a low cost of entry and subscription model to eliminate capital costs. Qlik Sense Enterprise 3.0, meanwhile, was launched at the same time with enhanced governance tools for enterprise-scale users keen to configure the tool within their existing IT infrastructure.
“Governance has become the key to deployment in those environments, not just for analysts, but also to gain the trust of IT. They are looking for ways to enable anybody to use data in self-service analytics,” said Fisher.
The cloud-based SaaS is trying to do something different, meanwhile. “When you look at the BI market and cloud-based vendors, their only difference is that they are based in the cloud. What we’re looking to do is use the power of our associative model and what that allows us to do, but build that into the cloud. We have seen a lot of organisations trying to get their data into the cloud, but struggling with how to tap into different data sources. It is important to us not to leave behind what makes Qlik so special,” he said.
An interesting facet of Qlik’s development was the introduction of Qlik DataMarket in 2015, offering curated data products for a wide range of uses, such as financial data, currencies and weather. That means analysts, BI teams and others can bring together a wide range of information sources, both internal and external, without having to leave the application or worry about whether the different data models will match.
Fisher sees this growing expectation about using third-party data sources as one of the four forces shaping the market for BI and analytics because of the consequences of moving outside the data warehouse. That plays to the strengths of how Qlik’s associative model works, because the data engine creates real-time associations among all results sets.
However, he is cautious about some of the hype surrounding the concept of data-centricity and data democratisation. “What concerns me most is the misconception that there is a big rush to self-service. Everybody it talking about it, but I think for organisations with traditional BI and embedded analytics, they don’t want to leave behind what they have done previously, they just want to extend their trusted information sources. It is an additive process and they have to make a big investment,” said Fisher.
Speaking at the Teradata Marketing Applications Connect 2016 customer event in mid-June, a pumped-up Eric Hinkle, operating executive at Marlin Equity Partners, saw a strong future for marketing automation. For comparison, he noted that, “e-commerce sales have reached $500 billion, which is just 7.3 per cent of retail sales, so there is much more to come.”
“The rise of omni-channel customer experience poses the question of how you best build that for the brand, engage your customers, drive demand. That is a massive market opportunity and TMA is well positioned to capitalise on this growth,” said Hinkle. Investing in the software business will include the creation of a new user interface - one of the main criticisms levelled at the current offering - as well as a new branding.
Marlin specialises in carving out a domain from within a larger organisation, something Hinkle says the investment firm has got down to a science. The vision for TMA is not modest, either: “We are working to change the future of marketing technology.”
Jon Williams, managing director UK and Ireland, will be one of those hoping to bring about this change. Interviewed at the conference, he told DataIQ: “There will be a new, clear brand positioing away from the Teradata brand with its data warehouse connotations. We have got a great legacy of successful marketing technology products and clients - some of those are still strong brands in the market, like Aprimo, which clients continue to reference. For us, this is a good opportunity to build a new brand which is marketing-focused.”
One of the reasons for Marlin’s optimism about TMA’s chances is the expanding nature of marketing’s challenges and technology needs. Cross-channel data and real-time decisioning are transforming the way this function works and increasing its need for external support as well as new automation tools. “No-one can be good at everything,” said Williams. “We have knowledge from our customer base and know what good and bad look like, so we can provide guidance on how to get there.”
The one question which went unanswered about the investment is what database underpinnings TMA will have once it leaves its analytical data warehousing parent. According to Williams, “one of the issues with a traditional data warehouse is that it is fairly static from a marketing point of view - it is not always-on, whereas marketing needs to react in real-time. Traditional data warehouses don’t support that need.”
A new generation of database options is likely to fill the gap. As he noted, “using DMPs integrated into channels allows data to be collated in real-time and integrated back into the marketing eco-system. We are looking at how to do real-time decisioning once information comes in a channel-agnostic way.”
Demand for marketing automation is evident wherever you look, whether it is multi-channel marketing applications or data visualisation and self-service analytics tools. Investors have seen that demand and are moving in on available assets in order to cash in. The result should be better tools and support for users.
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