Marketo IPO Underscores Growing Value of Marketing In The Enterprise

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We congratulate Marketo on their IPO today, which further validates a very big market that is starting to produce multiple winners.

Marketo’s story is an early chapter in a much larger saga that is just beginning to be written. Marketing automation is no longer a solution afforded only by early adopters or technology enterprises. It has become a present-day necessity for all marketers, regardless of industry or company size.

Consider these facts:

1) The industry is growing rapidly. Annual growth is over 60%. Almost every product purchase involves some activity on the Web and every business is in some measure an e-business. Marketers need systems to effectively promote, monitor, nurture, and measure to increase the effectiveness of their marketing efforts and the efficiency of their budgets.

2) The market is wide open. There is less than 5% penetration of marketing automation systems across all companies. But even this has been enough for the leading vendors to report substantial year-over-year growth and enter the public equity markets.

3) The CRM market is ready for the next wave. The CRM business celebrated its 20th birthday, but the market is still full of energy. It has seen leaders come and go, as technology paradigms shifted to leave incumbents behind. Remember ACT!, GoldMine or even Siebel? Today the CRM industry is over $18B in size and includes three companies with over $1B in CRM revenue (Oracle, Salesforce.com and SAP) and 19 companies with over $100M in annual revenue. But many technologies that are 10 to 15 years old are showing signs of slowing down, thereby opening the door for newer and more innovative ones.

The Future

We see a very bright future for marketing automation. We don’t believe the pundits who think the marketing automation industry is going to consolidate, with small companies being bought by legacy providers. Sure, some acquisitions are bound to happen, but the market opportunity is too large and untapped for any meaningful degree of consolidation. In fact, the role of marketing is changing as rapidly as businesses are moving their marketing operations online, and marketing technologies start to pervade all customer-facing departments.

The focus of most marketing today is the acquisition of customers, but it is starting to shift to customer relationships throughout the entire customer journey. Full-spectrum marketing will occupy a pivotal position throughout this journey, in customer acquisition, retention and expansion.

Perhaps the more appropriate question to ask is: Will marketing redefine the whole concept of CRM? And in that process, will newer, more nimble companies zip past the leaders of today, marking a new ice age for today’s incumbents? We certainly think so.

We have been very fortunate in our timing, and we have benefited immensely from the trailblazing efforts, as well as the mistakes, of our predecessors. Even though we have raised only a fraction of the capital raised by Marketo and Hubspot, we have managed to grow to over 1,500 customers, and we have tripled revenues in each of the last two years, We’re nothing but bullish on our future prospects and expect to lead the next wave of marketing companies entering the public markets.

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