Even by the standards of Silicon Valley, where the next best thing since the last next best thing is always just around the corner, Marketo generates a lot of buzz five years on from its inception.
Too easily branded 'the Cloud marketing automation' vendor, Marketo's CEO Phil Fernandez in fact has a grander ambition: he wants to create a market sector as well - Revenue Performance Management.
Fernandez, a dyed-in-the-wool Silicon Valley entrepreneur at heart and formerly best known as CEO of enterprise CRM and marketing automation applications provider epiphany, explains:
“Revenue Performance Management is a strategic value proposition. The Chief Revenue Officer is someone who executes and owns everything from the first marketing tweet through to the completion of the sales. Our thought leadership has been about the shift in jobs in marketing and selling. All businesses want to create revenues. You need someone to look at how that can be optimised. You need to have an executive who wakes up each day and thinks 'how do I invest more dollars to create maximum revenue?'. In five years time people will talk about the RPM market. That's what success is for us - to create a new market category.”
It's an interesting claim to stake and a bold ambition. Salesforce.com succeeded by reinventing the sales force automation market, NetSuite reinvents the suite-based Enterprise Resource Planning model, while Workday and SuccessFactors both set out to reinvent the Human Capital Management market. So wouldn't reinventing the Marketing Automation field be a bold enough ambition?
The problem here of course is that this would mean reinventing something that didn't really work out in the first place. Ferndandez notes:
“There were completely failed companies out there like Rubric. Then there were marketing automation companies that are still out there somewhere in some form - like Unica inside IBM or epiphany inside Infor. But the whole category has jumped the fire breaks and now there's a fundamentally next generation view.”
Veteran of Cloud giant SuccessFactors and now Marketo's Chief Revenue Officer - Marketo eats its own dog food when it comes to job titles! - Paul Albright adds:
“Marketing was seen as automated email. and there are people whose mentality is still stuck there. Now everything has changed. It's not the same as ten years ago. Ninety percent of any buying decision is influenced through two mediums - social media and talking to friends. People search the internet, they don't talk to a sales rep or a dealership any more. So companies have to change the way that they both market and sell to customers. Marketo was created to take advantage of social technologies - we're built for social and built for search. The traditional Chief Marketing Officer (CMO) is going the way of the dodo. Today's marketing leaders need to be more like COOs and if COOs want to stop getting their butts kicked by the CFO, then they have to be more credible in what they do than anyone else.”
Fernandez picks up the meme:
“There really was no mature, measurable marketing system until email marketing went large. At epiphany we had one of the first mass email systems. Advertising hadn't yet been 'Google-ised'. It was pre-Enron, pre-Sarbanes Oxley, so there wasn't the same drive for accountability of data and information. People were frustrated at the marketing spend and the lack of information about its effectiveness. CRM and marketing were two independent, monolithic things that were not connected up. One of our huge differentiators now is the integration we have with CRM.”
That integration is, to date, primarily centred on one CRM vendor in particular: Salesforce.com. Fernandez explains:
“We did a deliberate integration thing there. Even five years ago, the Salesforce.com ecosystem was an amazing thing. Our products are of course our own destiny, but we took a decision to build a business on the basis of building on that Salesforce.com ecosystem. Everyone in there has made a decision to go Cloud, to have their data outside their firewall and so on. So a lot of work has been done. We do have customers who do Oracle and SAP and Microsoft and NetSuite, but we have really focused on the Salesforce.com ecosystem. And Salesforce.com does us a great favour by continuing to grow at such a rate. It's worth remembering that even as they've done so well, Salesforce.com is still only 14% of the total CRM market, so we will continue to expand with them. Some 70% of Salesforce.com customers fit our market profile. ”
Given that Chief Revenue Officer is still a job title not seen in the majority of firms, who is the buyer for Marketo services? Is it the marketing team or does the functionality of the offering reach beyond those walls? Does Marketo, with its CRM-integrated friendliness, intend somehow to be the peace-broker between the eternally-tense realms of sales and marketing? It's a tension that is all too familiar, admits Fernandez.
“Once sales gets a lead, then marketing better not get involved with new campaigns and offers and get in the way. That's still the mentality out there. In the real world we can have the sales guy talking to the customers, but we don't then want the customer going to the web site or attending the webinar or whatever as that might get in the way of the sales conversation. But from the customer's eyes, that hand-off between sales and marketing is utterly felacious. Frankly as a sales person you will make money better if you work with a leader from marketing. But they are two mind sets. Marketing is more strategy, sales is more greedy - but together they can be more than the sum of their parts. ”
That surely requires a shift in corporate thinking that in turn demands a maturity of approach? Fernandez agrees:
“One of the interesting things about Marketo has been the maturity journey we've seen. The marketing team can run Marketo for campaigns to make revenue without moving outside of that box. But there is a bigger world out there. One of our major customers has rolled us out in two divisions globally - that's a C-suite decision taken about how their teams work together and very much a strategic decision that needs a system like Marketo to underpin their need for new business techniques and approaches. Our number one buyer is still a VP of Demand Marketing or Web Marketing or some such. We sell to marketing, they get better leads. Then we can expand out to sales and then across to different business divisions. At epiphany we would come in with uber-marketing systems, but really they were stupid science projects. Here, alongside marketing, we now pursue sales buyers and we have more and more sales people saying that they need to have this functionality. And we have our C-suite customers with our analytics offerings."
Certainly the Marketo message appears to be finding favour with some major enterprises, including McKesson, PayPal, EMI and BT. The firm also has European expansion very much on its mind with the opening up of a sales and support operation at its Dublin-based European headquarters, headed by long-time Salesforce.com veteran Fergus Gloster, a canny move given the firm's strategy of targeting the Salesforce.com installed base.
But this current focus on Salesforce.com does raise what some might argue is a potential problem in the future: what happens if Salesforce.com gets into marketing? Since the acquisition of Heroku last year, Salesforce.com CEO Marc Benioff has openly pondered on the emergence of what he has dubbed "the Marketing Cloud', floating the idea past Wall Street analysts.
So what happens if Benioff wakes up one day and decides it's time for the Marketing Cloud and it's going to be coming from Salesforce.com? Fernandez has thought about this:
“Within Salesforce.com I don't think Marc totally believes in this category. Salesforce.com is a very sales-centric culture in which telemarketing has very much pervaded their view. I think they are aware of this space we're in, but there is a 'we're not quite sure about this' mentality. It's also a very different type of application. There's a long learning curve to go through and we have a head start there. We are far enough along that they probably don't want to build something. Now if my phone rings one day and Marc says 'It's time', well who knows? ”
Fernandez is almost certainly correct. To date there have been musings out of Salesforce.com about marketing, but no real signs that it's something that has the clarity of focus needed to productise something in the market - yet. But Benioff is keeping his powder dry, still dropping vague hints about a Marketing Cloud - he did it just last week during Salesforce.com's Wall Street analysts call - which in turn leads to more questions for Fernandez:
“Financial analysts are always calling up and saying 'what do you think he means by this?'. The degree of people asking that question is really very high. But every day we are a bit bigger. Let's see how much runway we have and when we hit escape velocity. This is a huge market - every CEO in the world wakes up each morning and asks how to grow revenues."
And there's one last thing to add. Asked about a Salesforce.com move into this space, Fernandez chuckles:
“Well we own the Marketing Cloud trademark, so…”
tags for Marketo: more than just a Marketing Cloud
