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Here’s what Salesforce’s acquisition of Datorama means for the marketing landscape

Who is Datorama?

Up until this month, Datorama was a low-profile Israel-based startup that ran a marketing analytics platform for enterprise clients, agencies, and partners.

Just six years old, it has raised roughly $50M in funding to date (primarily from leading investors Lightspeed Venture Partners and Marker) and boasts a blue chip list of clients around the world, including IBM and FourSquare. The firm brings in an estimated $25M in revenue each year, and now has more than 300 employees, primarily in its Tel Aviv headquarters.

Datorama’s platform was originally designed to help consolidate advertising and marketing data into one consolidated interface, which makes it easier for campaign managers and data analysts to optimize their marketing efforts.

Over time, they have added additional features to their platform, and it’s now a fully-fledged marketing intelligence engine that uses artificial intelligence to extract insights from data sets of any size.

Its “Insights Engine” is an always-on analytics platform that suggests opportunities for optimization as it finds them – something that most marketing analytics platforms just don’t do today. The product also has extensive integrations with nearly all major marketing automation platforms, ranging from Marketo to Pardot – and even Facebook.

Datorama operates in a crowded competitive landscape

Even though Datorama’s platform is quite advanced compared to other vendors, that doesn’t mean it’s without competition. Key competitors in the space include analytics heavyweights like Tableau and GoodData, but from a machine learning perspective, neither platform have managed to innovate on the technology side quite like Datorama has.

Datorama also has the advantage of being able to integrate a variety of different data streams into its platform. In a world where data is more fragmented than ever, Datorama’s platform has a key advantage in the space due to how efficiently it’s able to aggregate disparate data sources and extract insights from them. This is particularly critical for marketers.

In an Econsultancy survey published last year, just 30% of marketers reported that more than half of their data is useful. It’s clear that this is a key pain point for many in the space, and Datorama has arguably done the best job of solving the problem of data siloing for marketers so far.

All that said, the status quo of Datorama as an independent company shifted this week when Salesforce announced that it had signed an agreement to acquire the marketing platform for an estimated $800M.

As part of the agreement, Salesforce will reportedly be setting up a development center in Tel Aviv that will be focused on creating further features for their Marketing Cloud product. It’s one of the largest exits in the marketing space so far this year, and as such, it’s worth taking a look at why the Datorama acquisition took place, and what Salesforce hopes to get out of the deal as well.

Why is the Datorama acquisition such a big deal for Salesforce?

Acquiring Datorama is a prescient move for Salesforce, because it enables the company to immediately get in front of rising competition in the AI-driven analytics space. Datorama’s proprietary platform and technical expertise will likely prove to be an asset to Salesforce’s Marketing Cloud – and as more small-to-medium sized companies continue moving their key business operations into the cloud, Salesforce will continue to benefit as well.

This is a strategic acquisition by Salesforce – they get the benefit of having another great development team onboard, while gaining increased analytics capabilities at the same time. Both of these factors increase the platform lock-in value for marketing departments, making Salesforce that much more of a no-brainer for prospective clients.

Over the past several years, the number of marketing service providers has increased dramatically (by 27% year-on-year, as illustrated by Scott Brinker’s Landscape report), but despite that, actual spending by marketing departments is going down. This is because companies have wised up to the proliferation of subpar tools on the market, and are now thinking more strategically about their investment decisions. At the same time, the number of data streams being used to make marketing decisions is also increasing – and this is making it more difficult for marketing departments to make decisions about where to spend their budgets.

First and foremost, Salesforce’s acquisition of Datorama is significant because it represents a broader trend of consolidation within the marketing industry. CRM and analytics providers are realizing that the siloing of data has become a serious problem in the marketing space, and many firms are looking to solve that by creating platforms that merge multiple streams of data into one unified interface that can rapidly surface insights to marketers.

In fact, according to one researcher, “the average Datorama customer uses 70 disparate data sources” to make decisions. Companies like Datorama act as an enabling layer for customers to extract insights, and that capability is likely quite attractive to Salesforce as well.

What’s more, Salesforce recognizes that having clean, accurate data is a key priority for its customers. Having Datorama inside its fold will provide significant benefits for customers already in the Salesforce ecosystem, not the least of which is more accurate tracking of their marketing data – even if it’s stored outside of Salesforce today. As the trend of industry consolidation seems set to continue, Salesforce’s acquisition of Datorama will help it face the rising tides of competition while giving its customers enhanced analytics capabilities.

As an added bonus, it’ll also boost the firm’s already-sizable presence in Israel after two other acquisitions of Israeli startups in the past. These synergies with the local ecosystem will serve Salesforce well as it looks to build out its Marketing Cloud capabilities further.

What does the future hold?

Looking forward, it will be fascinating to see what Salesforce does after this acquisition.

Some have speculated that the Datorama acquisition is simply a dressed-up play for engineering talent, while others argue that it represents a more concerted effort to build out its Marketing Cloud suite with enhanced analytics capabilities

In assessing the gaps in Marketing Cloud’s capabilities today, it seems that this acquisition is more likely the latter – and though the Datorama and Salesforce teams both stand to benefit, it seems likely that the biggest winner in this deal will turn out to be the consumers themselves.

The post Here’s what Salesforce’s acquisition of Datorama means for the marketing landscape appeared first on ClickZ.

Reblogged 3 months ago from www.clickz.com

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