Article: Why Digital Marketing Companies Have Become Tasty Acquisitions

Date: November 13, 2014 12:24 PM

By: Barry Levine, Contributor to Venture Beat

What’s driving the acquisition of digital marketers?

Last month, technology services company Cognizant bought interactive marketing agency Cadient, and tag management vendor Ensighten picked up marketing analytics firm Anametrix. In September, Alliance Data, owner of email vendor Epsilon, acquireddigital marketer Conversant.

In July, LinkedIn announced its purchase of B2B digital marketer Bizo, and Pricelinesnapped up hotel marketing platform Buuteeq in June. IBM purchased digital marketer Silverpop in April.

Last year, Salesforce bought digital marketer ExactTarget, PricewaterhouseCoopersgot interactive marketer BGT Partners, and Adobe landed marketing automation firm Neolane.

You get the idea. While each of the deals comes with its own particular reasons, the question is whether there is a common reason.

It’s like the early days of the Internet, LiquidHub CEO Jonathan Brassington told VentureBeat. His Wayne, Penn.-based IT integration firm recently bought digital marketer Foundry9.

He compared these waves of marketing acquisitions to “the merging of the Internet professional services firms” in those early days, acquisitions that built Razorfish, USWeb, and Sapient.

“Back then,” he said, it was an “e-business strategy [to create] multi-disciplinary firms” that might include analytics and a digital marketing or ad agency, in addition to the IT division that built websites.

The main driver at that time, Brassington said, was the rush by most businesses toget a website, and later the rush to have ecommerce capabilities. The professional services firms wanted an “integrated multi-disciplinary capability” so they would no longer have to act as a general contractor supervising a variety of vendors.

Now, he told us, “the momentum is the shift of power from the enterprise to the consumer, [from] the Information Age to the Age of the Customer.”

Companies are now “in an arms race to build customer service [and experience] access across multiple channels,” he said, because the customer can quickly and easily move between retailers and service providers.

The key pillars of a modern integrated digital provider these days, he said, are social, mobile, analytics, and cloud — and the first three often involve some kind of digital marketing technology.

In other words, Brassington said, when customers can easily and quickly move to a competitor, and when so many products have become price-drive commodities, the companies with the best customer experience will win.

And digital marketers, which create and manage customer expectations, become essential players in creating and managing the best customer interface.

Stacey Bishop, a partner at investment firm Scale Venture Partners, told VentureBeat she agrees that digital marketing firms have become increasingly important. Her firm’s digital marketing investments include Hubspot, Sailthru, Demandbase, and Bizible.

She pointed out that the new Age of the Customer, where buyers are educating themselves and making purchases later in the sales cycle, now means that most “ofthe [sales] funnel is in the hands of marketers, not sales.” She points to a Forrester Research finding that 75 percent of the buying cycle is completed by the customer before the sales team gets involved.

“The customer is in control when deciding to engage with a vendor,” Bishop told us. This represents a “changing of the buying cycle, [in which] much more of buying is about marketing.”

In that environment, she said, the key business need is “how do I get in front of the customer” to answer their questions, stimulate demand, and so on.

And getting in front of the customer is what marketers do.

View full article here: http://venturebeat.com/2014/11/13/why-digital-marketing-companies-have-become-tasty-acquisitions/