Why do Salesforce and Oracle keep buying social and marketing companies?

By Fritz Nelson , written on July 31, 2013

From The News Desk

A great revelation has lodged itself deep inside modern businesses, and it promises to revise the rules around the way customers are discovered, understood, nurtured and acquired, but it also threatens traditional organizational silos and business practices, probably in a good way.

Let’s call it The Customer Cloud, although calls it the “marketing cloud.” Oracle uses terminology like “social relationship management” and “social marketing cloud,” Marketo talks about “marketing automation.” Still others throw around phrases like “demand generation,” “inbound marketing,” and even “content marketing.”

Isn’t there always a little something hyperbolic about marketing marketing?

Whatever it’s called, it is the perhaps the holy grail (or at least “the next big thing”) of modern digital business, and it involves listening to and watching customer behavior, analyzing what buying intentions customer actions and words signal, tailoring products and offerings around that understanding and delivering them across every imaginable digital channel, further analyzing the effectiveness of those efforts and optimizing toward even better results.

Put differently, it is a 360-degree customer relationship enabled by a barrage of real-time and always-on buying signals, and a buyer and seller who both want less friction in the relationship. It is customer acquisition at its digital best.

The technology and business processes needed to pull this off have existed for years: content and social publishing tools, social listening and analysis technology, big data analytics, web analytics, programmable marketing automation systems that can trigger multi-channel offer distribution (web, email, mobile applications, geolocation, social media), and all of the various methods of message amplification (optimizing for search, for instance).

In pursuing this customer cloud for the past few years, has spent almost $4 billion to acquire Assistly for customer support (now, Radian 6 for social media listening, Buddy Media for social media marketing, and Exact Target for marketing automation. Almost in parallel, Oracle acquired Vitrue for social media publishing and campaign management, Collective Intellect for social media listening, RightNow for customer service management, and Eloqua for multi-channel marketing automation. Both companies have been busy integrating the technology, and busy crafting a story around it all (there must be some delicious irony in that).

While Salesforce and Oracle have managed to consume most of the attention, the market is flooded with plenty of other options. For instance, San Mateo, CA-based Marketo is an independent Eloqua competitor that went public in May; its stock has performed well, with a market cap just shy of $1 billion. Marketo CMO Sanjay Dholakia says his company’s technology is “a platform for modern relationship marketing,” and that aims to be “the one customer system of record.”

Hubspot, based in Cambridge, MA, has been around as long as Marketo. The company’s CEO Brian Halligan, a former VC, insists that the marketing playbook is broken because consumers are allergic to marketing, blocking spam and bypassing advertising through DVRs. “It’s nearly impossible to reach a human via traditional marketing,” he says. Hubspot creates what Halligan calls an inbound marketing platform, centered around content. The company wants to “transform business into a modern marketing machine.”

Content creation and amplification has become a common starting point for many marketing organizations. Most are hiring social media experts, bloggers, and video teams, or working in partnership with one of the hundreds of content marketing service agencies that seem to pop up by the day. Halligan likes to say that “marketing is about the width of your brain rather than the width of your wallet,” meaning that good content pulls customers in -- written blogs, infographics, slideshows, video. Halligan says that Hubspot’s slideshare post on Cultural Code generated more than 750,000 views.

The content approach, especially in this social media age, may also require different hiring practices. Erika Brookes, Oracle’s VP of product management for social says her best hires were a radio DJ who was great on Twitter because he had talked in soundbites for his entire career, a standup comic, and a Georgia State undergrad.

Marketo’s Dholakia says that it’s important to hire “conversationalists,” because in traditional marketing, the belief was “we’ll hit you once with some great message,” or even one piece of great content, but now, he says, “it’s got to be a dialog.”

Another challenge: the technology that enables this 360-degree approach is being sold directly to line of business managers or the CMO, not through traditional IT channels. IT typically owns and manages the systems that store key customer data, or through which customers interact with a corporate brand (ie, the web site or customer portal). Brookes says business unit heads and marketers aren’t “just being held accountable to brand, but also to revenue,” and she says she’s seeing more partnerships between CMOs and CIOs. For IT, there’s still the benefit of reducing the cost of customer acquisition; for the marketer, it’s about correlating activity to revenue.

Dholakia also points out that with the cloud, business units can now acquire technology without asking for permission, or without standing in line for IT’s attention. Halligan goes one step further: “We’re helping marketers gain control from IT,” allowing the marketer or business unit to own the customer relationship process end to end. Halligan and Dholakia both say they believe that progressive CIOs are fine with empowering departments and CMOs.

It sounds like a brave new world, and while each of these companies has its share of customer testimonials, with astronomical ROI figures, they all admit that this transformation to the customer cloud is still quite embryonic. (I know! It’s shocking that marketing solutions have been propagated ahead of customer demand.)

Halligan says marketers are merely sticking a toe in, putting up a Facebook page, or a simple blog, or hiring an SEO consultant, and yet still spamming the living hell out of an acquired list like a drunken Nigerian prince (my words, not his). Dholakia believes marketing will need to become “relationship marketers” (aspiring marketers, please, in the name of all humanity, reject that moniker).

Brookes says that “you can’t there from here without having the c-suite on board,” because it represents a transformation in the business, and touches everything from the people that are hired to the technology purchased to the way customers are managed. “Most people haven’t put the customer at the center,” she says.

And that’s just the trick, isn’t it? We’ve talked for decades about listening to customers, about creating customer-centric businesses, but we haven’t really ever listened, by which I mean watched. These customer cloud technologies (or whatever you want to call them) give companies the ability to observe real behavior and intent, scientifically, and then to offer the right product at the right time. In short, to stop guessing and hoping.

Image: Flickr