IBM Corp. is reportedly in acquisition talks with Silverpop and a deal is imminent, according to multiple sources. IBM is said to be offering about $270 million, which is about triple Silverpop’s estimated annual revenues of $90 million. Representatives from Silverpop declined to comment and IBM officials were not available to respond to the reports.
Silverpop is focused on supporting interaction with buyers through email, social networks, mobile and web sites — capabilities that are lacking in IBM’s Unica Marketing Operations offering.
“IBM gets an enterprise-class B2C email engine that is competitive with ExactTarget and Responsys,” said David M. Raab, Principal, Raab Associates in an interview with Demand Gen Report. “It also, obviously, gets a mature B2B marketing automation solution, which is quite different from B2C marketing automation.”
Observers say that the $270 million valuation seems low compared to other recent deals in the marketing automation space. “The three-times revenue valuation is much lower than what we’ve seen in other recent deals,” Raab said. “ExactTarget and Responsys both went for six- and seven-times revenue, and Marketo’s market cap is something like 13-times revenue, and that’s after the stock fell sharply in the past two months.”
Jeff Pedowitz, President and CEO of The Pedowitz Group, added: “For IBM, it bolsters their marketing offering, and it bolsters the credibility of the marketing automation space overall. They needed something to complement their marketing offering, and Silverpop is strong in campaign execution. Silverpop is solid on email and the company stacks up nicely against ExactTarget.”
“Silverpop — both through its marketing automation and through its multi-channel, inbound-to-outbound, digital engagement and nurturing engine — has grown to a very mature state and fills that nicely,” said Adam B. Needles, Chief Strategy Officer at ANNUITAS. “It also gets native integrations with Salesforce.com and also with Microsoft Dynamics, via Coremetrics.”
Pressure Builds On Independent Vendors
Pedowitz noted that the prospect of Silverpop being acquired puts additional pressure on independent marketing automation vendors such as HubSpot and Marketo.
While Silverpop’s email capabilities are its strength, Pedowitz points out that its integration capabilities are not fully developed. “In addition, their analytics are weak, they have no sales enablement and their multichannel offering is OK. However, there is the potential there for IBM to do something with it.”
IBM’s purchase of Silverpop also may help the company stand out against key competitors such as Oracle, which has completed a series of acquisitions to build up its B2B and B2C offerings. However, IBM’s sales strategy for marketing automation will differ from Oracle’s approach, Pedowitz explained. “IBM will use their existing presence and add this capability in as part of their managed services. Oracle will present the entire Marketing Cloud and sell the vision that they are the platform of choice for today’s modern marketing executive.”
Raab added that IBM is focused on enterprise sales and generally deals with the mid-market through resellers rather than directly. “So this is more about offering an additional product to existing clients — which is pretty much everyone — than gaining new clients. In other words, they are already a significant player.”
Needles concluded: “IBM’s legacy around change management consulting and ‘solutions’ mindset is a value-add when it comes to selling Silverpop not just as a marketing automation platform but as an engine for Demand Process and as a packaged part of demand generation solutions.”