Ending a week of speculation, Adobe announced its plan to purchase Marketo for $4.75 billion on Thursday. Not only does this move bring Adobe into the B2B space, it could reinvigorate Marketo and offer new innovations in artificial intelligence (AI) for marketers.
“The acquisition of Marketo widens Adobe’s lead in customer experience across B2C and B2B and puts Adobe Experience Cloud at the heart of all marketing,” Brad Rencher, executive vice president and general manager, Digital Experience at Adobe said in a statement.
Adobe, which recently announced earnings of $2.29 billion in the third quarter, is best known for its creative offerings, such as Photoshop, InDesign, and Illustrator. Marketo, on the other hand, is a B2B software marketing powerhouse, offering insights into customers’ online behaviors for more personalized interactions. Combined, the two could be real competition for Salesforce Marketing Cloud and Oracle.
The acquisition indicates a move into the B2B space
Until recently, Adobe has mostly been regarded as a B2C platform, but the acquisition could change all that, according to Jason Holmes, COO of Showpad and former COO of Marketo.
“Adobe has an awesome marketing platform but its priority has been B2C, while its competitors (Salesforce, Oracle, and SAP) have been focused on the B2B world,” Holmes says. “The acquisition of Marketo will put Adobe in both sides of the game, and Adobe is now running a better race against Oracle and Salesforce.”
However, the purchase can only strengthen Adobe’s B2C capabilities as well.
“This is a smart purchase for Adobe,” Holmes says. “With Marketo in its stack, this places Adobe as a full B2B and B2C competitor, and it will take its search, audience, and website data to the next level.”
It also gets Marketo back on track for innovation
Just two years ago, as Marketo’s market value fell, the company was scooped up by private equity firm Vista for $1.8 billion. Since then, some have found the company’s once-innovative approach a bit stalled. But a partnership with Adobe could be just the thing to spur change.
“Acquisitions always look good from a strategic angle – that’s why companies get acquired,” says Justin Gray CEO and founder of LeadMD and Marketo’s very first Platinum Partner. “But Marketo has fallen off from innovation pace since its IPO, so this is an opportunity to give the platform and the engagement concept that drives it, a real shot in the arm.”
This could also mean big things for AI
One of the most exciting aspects of the acquisition, according to Gray, is the potential for combining the machine learning power of Adobe’s Sensei with the Marketo platform for AI-based solutions that leverage data from both platforms to create more meaningful engagements with consumers.
“The true innovation potential is in the coupling of Marketo and Adobe’s AI product, Sensei, in order to make the powerful platform more accessible,” Gray says. “Marketing execs are struggling to harness the power of best practices to generate real results. Adobe’s focus on innovation and solutions like Sensei can accelerate the bridge of this gap.”
The deal should be final in Adobe’s fourth quarter and will see Marketo CEO join the company’s senior leadership team.