Yesterday's News: Marketo Plans IPO, Eloqua Eyes B2C

There were two bits of news from Marketing Automation Land yesterday: Marketo announced it has filed a draft registration statement for an initial public offering, and Eloqua CEO Joe Payne was quoted as saying his company plans to expand into business-to-consumer marketing.

The Marketo news is long-expected. CEO Phil Fernandez said last September that the company planned an IPO for first half of 2013, so they are pretty much on schedule. Of course, it’s still possible that someone would purchase the company instead, but the asking price is probably too high, and the prospect of an IPO just made it higher. No word on timing of the actual filing. Hopefully this means we soon get to see a filing statement with lots of juicy financial details…my mouth is already watering.

I have little doubt that Marketo can manage a successful IPO.  But it's less clear it can survive long-term as an independent company.  Previous marketing automation leaders including Eloqua, Unica, and Aprimo all ended up as part of larger organizations.  The fundamental reason is that marketing is ever-more-closely related to other business activities, as companies strive to provide an integrated customer experience.  Clients prefer to buy complete, integrated suites for all customer-management functions.  They good news for marketing automation vendors is that they can plug a gap that many big vendors need to fill.

This makes Eloqua's plan to pursue B2C marketers even more interesting.  Perhaps it they aren't really plans -- it was just a comment in a phone call, which I didn't hear myself.  But my immediate reaction is that Oracle already has a B2C marketing system, cleverly called Oracle Marketing and derived from its Siebel acquisition.  I've never heard an enthusiastic comment about the system, but as I recall from the last time I looked at it -- many years ago -- it was reasonably capable.  The only reason I can see for Oracle to use Eloqua as a B2C product is that Eloqua is a true SaaS offering, while Siebel was originally engineered for on-premise deployment and is still largely oriented that way.

This is pretty much consistent with a presentation last week by Oracle CEO Mark Hurd, along with Payne and Oracle EVP for Product Development Thomas Kuria. They set out a broad vision of customer experience management that included content management, social relationships, marketing, e-commerce, sales, and customer service, with Eloqua as the marketing component.
 

I wholly agree with the theory.  As I wrote recently in Why is B2B Marketing Automation Growing So Slowly?, today's marketing automation manages just one slice of the customer life cycle, and indeed just one slice of the acquisition cycle. Marketers need a broader system that itself fits into a larger puzzle. Oracle’s presentation showed they understand this quite clearly, and see exactly how Eloqua contributes to a solution. In this context, using Eloqua for B2C makes sense, since there’s no distinction between a B2B marketing cloud and B2C marketing cloud.


But the real world is more complicated than the picture suggests. B2B and B2C marketers have different requirements. Eloqua is more flexible than most B2B marketing automation systems but still can't match a good B2C system. The biggest issue is data structure: Eloqua is built around a standard model based on CRM systems.  It does let users add auxiliary tables but even those are subject to some constraints. A true B2C system can accommodate any data model. There are also issues of scalability and of specialized needs such as programs with hundreds or thousands of segments. It’s hard to imagine Eloqua competing in the top tier of B2C. It might be able to support mid-size B2C systems, but that doesn’t seem to be Oracle’s intent.

Oracle’s diagram might make  you think they have actually addressed this issue by replacing Eloqua’s own database with a “customer experience foundation” that includes data management and integration, along with automation, decisioning, collaboration, and business intelligence. That would be really great: one database to serve all the customer experience business functions, including marketing. But, alas, that’s not how Oracle does it. Each component of its customer experience cloud is a separate software application, many of which were purchased. Oracle does some data synchronization and sharing of certain functions, but that’s it.

So we're back to where we started: with an essentially separate Eloqua that is is engineered for B2B marketing automation.  Oracle has the money and engineering talent to rebuild Eloqua to meet B2C needs, but their track record for enhancing acquired products isn't good.  If Oracle wants a serious B2C cloud marketing product, it will probably need to buy something else.

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Top Five Metrics for Revenue Generation Marketers

Marketing measurement is a perennially popular topic. I myself have just completed a white paper on Top Five Metrics for Revenue Generation Marketers, sponsored by LeadMD, and touched on it in a separate Gleanster study, Revenue Performance Management - The Evolution of Marketing Automation. With both of these on my mind, I also paid new attention to Eloqua’s list of five key revenue performance indicators (listed in the ‘Take a tour’ graphic on this page). The obvious question was whether these three sources agreed about what’s important.

The answer is: not exactly. The following table compares the top metrics from each paper, with analogous items on the same row:

The only item that’s clearly shared across all three lists is the number of leads generated, and even that takes a bit of squinting to include Eloqua’s measure of “reach”, which is really the number of leads currently at different stages. You could also argue that close rate and conversion rates are pretty much the same thing, and therefore also present on all three lists. (Again, a bit of squinting is required). Three of the other items appear just twice (return on investment, revenue, and time to close). The remaining three occur just once.

What accounts for the inconsistencies? I’d say mostly it’s the nature of the lists. The Gleanster list is from a survey of what marketers actually do: it’s no accident that nearly all items are quite easy to calculate. (Return on investment is a glaring exception, and I very much doubt that 73% of marketers actually calculate it today. So let’s just assume that figure is aspirational.)

The other two lists are prescriptive: that is, they show what an expert feels should be done, not what marketers actually do. Look closely, and you'll see that the lists are quite similar.  Four of the five measures are shared.  Even the two non-matching items are related: my fifth item is cost and Eloqua's is return, which is a combination of cost and revenue. 

The apparent difference between the lists is that mine looks more simplistic. It starts with a three-part formula for calculating revenue: (number of leads) x (close rate) x (revenue per closed lead). A fourth factor, cost, combines with revenue to create return on investment. The fifth factor, time, is needed to forecast revenue by period.

Eloqua’s list breaks those same factors down by stages. That is, instead of a single close rate is has a set of conversion rates from one stage to the next. It similarly breaks number of leads into reach (number of leads at each stage), revenue into value (expected revenue from leads at each stage), and time into velocity (number of days spent at each stage). This makes total sense, and if you read my paper, you’ll see that I recommend breaking the measures into stages in almost exactly the same way.* The reason is that reporting on stages gives much greater insight into what’s working well or poorly, and thus helps marketers to see where they should make changes. Providing this sort of actionable information is probably the most important purpose for any measurement system.

In short, Eloqua and I pretty much agree on what marketers should measure. Now if the marketers themselves would join the consensus.

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* The paper also gives plenty of sage advice on how to actually build a system based on these measures.

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Oracle Buys Eloqua: Winners and Losers for B2B Marketing Automation

Oracle announced today that it has agreed to purchase B2B marketing automation leader Eloqua for $23.50 per share, which comes to $871 million. This was a bit of a surprise, given that Eloqua just went public in August. The stock had been hovering around $17.50 recently, so $23.50 is a 34% premium: reasonable but not exciting. It suggests that neither Oracle nor Eloqua management felt the company was substantially undervalued.

The deal makes obvious sense, in that it gives Oracle a much stronger position in the fast-growing B2B marketing automation industry*.   Oracle does have an existing B2B marketing automation product, based on the technology it acquired from Market2Lead in 2010.  Market2Lead was very good system, but it lacked the huge market presence that Oracle gains from Eloqua. Oracle may also be gaining a more sophisticated “cloud native” platform, since other Oracle products grew largely from on-premise roots.**

So that’s all fine, but what industry observers really want to know is how Salesforce.com will react. Before addressing that, let’s acknowledge that it’s an "inside the Beltway" concern.  Working marketers care more about how this affects the products and services they’ll get as current or potential Eloqua customers.

The jury on that is very much still out.  Eloqua’s press release promises that Oracle will “significantly increase engineering investments in Eloqua products” and “make Eloqua the centerpiece of its Oracle Marketing Cloud”.  But that’s what they all say, eh? It seems more likely that Oracle will slow down Eloqua enhancements as it evaluates the product’s direction and decides how to best integrate existing Oracle technologies. Indeed, the company says as much in its FAQ on the deal: “Oracle plans to integrate several of its key technology assets, such as Big Data and Business Intelligence, to deliver enhanced value to Eloqua’s products.” That may be the best for Eloqua’s customers in the long run, but the changes will take time to deliver and necessarily distract from near-term product enhancements.

The impact on customer service is likely to be even more negative.  Eloqua’s culture is very focused on customer success, and it has been a clear leader in areas like marketer training. Oracle is less customer-focused and generally less nimble (I'm being polite here).  It will be Oracle’s culture that dominates the combined organization.

Small businesses in particular can expect little love from an Oracle-ized Eloqua.  The company had already been pulling away from that market and now will almost surely give it even less attention. One very specific reason is that B2B marketing automation vendors have always touted client counts as a competitive success metric, which encouraged them to sell to a lot of small clients to inflate that number. Oracle doesn’t report client counts, so that motivation will be gone.

What if you're an enterprise marketer?  In that case, this might well be a good thing.  If you look back at my earlier post this week on the industry future, I argued that the major marketing automation systems will become platforms that support a range of independently developed applications, similar to the Apple and Android app stores or the Salesforce.com AppExchange. As part of the Oracle “Customer Experience Cloud”, Eloqua itself will plug into a larger platform: so it’s pretty much the same model but on a larger scale.

The advantage is that this platform (shown in Oracle’s diagram as the “Customer Experience Foundation”) is unequivocally designed to span all customer-facing activities in the company.  A marketing automation platform can't do this because it bumps up against the competing platform of CRM. A platform that truly includes all customer-facing activities can be more powerful than one limited to marketing automation. This applies especially to the data structures, which are limited for different reasons in both marketing automation and cloud-based CRM systems. (The reasons: marketing automation databases are constrained by the need to synchronize the CRM data structures; CRM databases are limited by the challenges of delivering adequate performance at reasonable cost for operational processing.)


Of course, a platform that serves all customer life stages also by definition contains all information about each customer.  This is another Good Thing, since it provides a truly complete customer view and thus enables the best possible coordination of customer treatments across systems and throughout the relationship.

I’m not saying Oracle is guaranteed to fulfill this potential (see my earlier comments under "nimbleness, lack of"). But at least it’s possible. And, just maybe, Oracle managers will see the value of Eloqua’s “appcloud” marketplace and expand rather than kill it. Wouldn’t that be nice?

Okay, now we can talk about Salesforce.com.  There’s a case to be made that this whole purchase is just a way for Oracle’s Larry Ellison to annoy Salesforce’s Marc Benioff: after all, Eloqua isn’t costing that much more than the Hawaiian island that Ellison bought himself not long ago and it might give Ellison greater pleasure.  It’s certainly worth a chuckle at Oracle headquarters that Eloqua was recently selected as Salesforce’s own marketing automation tool.

More significantly, the Eloqua purchase poses an awkward dilemma for Salesforce, which wouldn’t let Market2Lead continue to integrate with Salesforce after Oracle bought it. Taking the same line with an Oracle-owned Elqoua isn’t quite as easy, and in fact is probably impossible. So now Salesforce finds itself forced to give Oracle access to prime customers, which cannot be a pleasant prospect. We’ll see how they handle it.

The Eloqua purchase certainly exposes the downside of relying on AppExchange partners to provide significant functionality needed by Salesforce clients.  Yes, Salesforce.com gets to leverage those partners’ efforts, saving its own funds for other, more strategic investments. But if a big partner like Eloqua goes away, there’s some danger it could take Salesforce clients with it. This doesn’t matter when there are plenty of alternative partners to provide Salesforce clients with similar capabilities, which has been the case with marketing automation.  The calculus changes when a few large vendors start to dominate the marketing automation space – especially among enterprise clients, who have special needs that only a few vendors can meet. More concretely, Salesforce now has to think long and hard about Marketo’s future. The expectation has always been that Marketo would remain independent, eventually as a public company. But what if they get bought by potentially serious competitor like SAP or IBM, either before or after a public offering? Salesforce might well decide to buy them itself just as a defensive measure.

As I say, this is really just inside gossip that's not terribly relevant to most working marketers. But who doesn’t like a good soap opera? Stay tuned…

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* Raab Associates estimates the industry grew about 50% this year, to $525 million.  I haven’t come up with a considered estimate for next year, but suspect the rate will fall a bit on a percentage basis, even though absolute dollar growth will be about the same or higher.

** In fact, Oracle has two B2B marketing automation products, the other being Oracle Fusion Marketing.

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Raab Report: Act-On, Eloqua, Pardot, and Marketo Vie to Lead in Mid-Size B2B Marketing Automation Segment

Today I’ll present the third and (mercifully?) final installment in my series of posts on leaders in the different B2B marketing automation sectors, as determined by the ratings in our VEST report. I’ve saved the best for last, in the sense that the small to mid-size sector is the heart of the industry and its most complicated arena.

We define small to mid-size business as companies with $5 million to $500 million revenue. This covers a broad range of marketing users with widely varied needs. Most require the full set of marketing automation functions but apply these in simple ways. They have one to fifteen marketing automation users. This sector generates nearly 60% of 2012 revenue ($200 million) from 33% of the installations (9,400 as of mid-2012). The VEST report provides separate client counts for small business ($5 million to $20 million revenue) and mid-size business ($20 million to $500 million). These account for 16% and 41% of revenue and 16% and 17% of installations, respectively. Although small businesses generally buy lower-priced systems, they have largely the same requirements as mid-size companies.

The leaders quadrant in this sector is quite crowded, with Act-On, Eloqua, Pardot, and Marketo all jostling for position. Silverpop, Neolane, and Genius are all lurking nearby. In case you haven’t caught on to my color coding, blue type indicates that Eloqua and Neolane are leaders in the large company segment, while red type shows the others have their strongest position in this sector.

The variety of users within this segment is reflected by the differences among the leaders. Act-On, Pardot, and Genius specialize in smaller companies than Marketo or Silverpop, which in turn serve generally smaller clients than Eloqua or Neolane.  Act-On’s position on top of the product fit range is a bit misleading: when you look at the components of that score (see below; this comparison chart is another VEST feature), the vendors are all very close.  In fact, the only category where Act-On scores higher than everyone else is pricing.

This isn’t at all to say that the products are equivalent.  Rather, it means they each have different strengths and weaknesses that balance each other out when measured with generic scoring weights. For actual buyers with clear priorities, the difference among these vendors’ scores will almost always be much larger.


As with the other sector charts, the vendors in the upper left are also worth considering: they have strong product fit but relatively low market position.  SalesFusion appears here as it did in the micro- and large-business charts: what can I say, they have rich features at a good price. (And, no, they’re not my client.) eTrigue is the other noteworthy contender; it and LeadFormix are both close to the leader quadrant based on their vendor fit.

If there’s any one lesson from all these charts, it’s that picking the “leading” vendor is no guarantee of making a good choice. Our three sets of weights yield different sets of leaders, and even those vendors have different strengths and weaknesses. I’ve said it a million times but I’ll say it again: there’s no substitute for understanding your own needs and finding out which vendors match them best.

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Kwanzoo Builds Content for Cross-Channel Marketing

I first bumped into Kwanzoo about a year ago at a conference trade show and was frankly puzzled at what they offered. The mechanics were clear: a tool to generate HTML-based forms, surveys, banner ads, and social sharing links that could be used on Web sites or embedded in emails. What puzzled me was the advantage of this over anyone else’s HTML content, including the content that could be generated using standard tools within most marketing automation systems.

Since this particular mystery ranked somewhere between the fate of Amelia Earhardt  and Nacza Lines  in my personal priorities, I didn’t investigate further. But the company reached out to me recently and provided a clearer explanation. Here’s the story.

What makes Kwanzoo special is it creates a sequence of Web pages that can be deployed as a single unit. A typical sequence would be a survey followed by different offers depending on the visitor’s answers. The entire sequence is built in Kwanzoo and deployed as a code snippet which displays the survey and calls the subsequence pages from Kwanzoo when appropriate. The second thing that makes Kwanzoo special is that its pages can be deployed on a client’s own Web site, on external sites and ad networks, embedded in emails, within Facebook, or on a mobile device. Users can also apply Kwanzoo tags to conversion pages to track results.

These capabilities make Kwanzoo substantially more versatile than a conventional marketing automation system, which would rely on campaign flows or manually-embedded links to manage the page sequence and could only deploy on emails or microsites generated by the marketing automation system itself. By contrast, users design the flows by filling out a simple form within Kwanzoo and then receive HTML snippets – simple calls to Kwanzoo-hosted URLS – that can be embedded anywhere. Kwanzoo also provides a powerful editor to build the Web pages and offers.

Data captured by Kwanzoo can be directly posted to Eloqua, Marketo, Constant Contact and Salesforce.com. The Eloqua integration is especially elegant, using an Eloqua Cloud Connector (i.e., a parameterized API call) that makes the Kwanzoo pages available within Eloqua’s own content builder and can read Eloqua cookies in real time to help guide the response selection. Integration is on the way with other marketing automation and CRM systems.

Users can also apply IP-address-based visitor identification to tailor responses to named accounts and different industries.

Kwanzoo says this versatility addresses some critical pain-points for marketers, including needs to create content and capture data across multiple channels and to create more personalized interactions. True enough.  But the system has its limits, most notably that sequences are limited to a couple of steps, a few data inputs, and a handful of actions, and that it doesn't maintain its own marketing database.

In other words, Kwanzoo is more a bridge between different marketing channels than an integrated marketing system. It’s easy to imagine Kwanzoo-captured data making its way back to multiple systems (marketing automation, CRM, Web site, mobile, etc.), which is not the ideal situation. There’s certainly a market today for this approach: Kwanzoo has landed about 25 clients since its launch in 2010 and seems to be growing nicely. Still, you have to wonder whether integrated platforms will eventually add similar capabilities tied directly to their own databases, making Kwanzoo’s external bridge less necessary.

Or, even more directly, will Adobe offer pretty much the same capability?  They already have the dominant tools for content-building (Dreamweaver, etc.) and Web visitor tracking (Omniture), which are the two key pieces of Kwanzoo's offering.  I long ago predicted that Adobe would combine these to create "smart content" that would adjust to customer behavior, although so far Adobe hasn't listened.  But they could.

But that’s Kwanzoo’s problem, not yours or mine, eh? At the moment, it’s worth a look. Pricing is based on number of impressions and starts as low as $499 per month to put Kwanzoo units on Web pages.  It quickly rises to $2,499 to embed units in emails, post data other than basic lead capture, support mobile formats, and use IP-address information for targeting.  

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ExactTarget and Eloqua Stake Their Claim To Centralized Customer Management

You probably saw ExactTarget’s June 13 announcement of its strategic partnership with Marketo and Eloqua’s June 21 announcement of its new AppCloud marketplace for connectors with other systems. So did I. But it took a little while to connect with the vendors to get the details, so I’m only now ready to write about them.

Both announcements shared a theme of integration between core marketing platforms and other marketing systems. That Eloqua sees itself as the center of a marketing infrastructure isn’t surprising, although it does show how far we've traveled from the once-common view of marketing automation as an auxiliary to the sales automation “system of record”. ExactTarget’s aspiration to a central role was less expected, since its original and still primary business is email delivery. But ExactTarget has added mobile, Web pages, and social in recent years. They've been pulling these together with an “Interactive Marketing Hub” in beta since last September, which is now used by 500 of their 4,000 clients. The IMH, as we cognoscenti call it, combines ExactTarget's email, mobile, Web pages, Web visitor tracking, and social media with external touchpoints as well as Salesforce.com and Microsoft CRM.

The IMH sports a slick user interface with a very nice dashboard showing real-time updates of summary statistics for each channel. It also provides a central marketing calendar of campaigns across the channels. The underlying database can be simple lists, as in traditional email system, or a proper multi-table structure acting as the primary marketing database. As Captain Planet used to say, The Power Is Yours.

It’s perfectly sensible for ExactTarget to move in this direction, since it otherwise risks being pushed to the unprofitable edges of the marketing world as a commodity email engine. In fact, the real head-scratcher was why ExactTarget would deal with Marketo if it had ambitions to occupy the same central turf. (Marketo’s motivation is obvious: to gain broader distribution.)

ExactTarget’s answer was refreshingly honest: IMH lacks key B2B marketing automation features including lead scoring, advanced segmentation, and multi-step campaigns. The campaign engine will be improved before IMH's official launch this September, but other specialized B2B features probably won’t be added. ExactTarget also sees Marketo as the first of many partner applications for IMH, further clarifying that they see it in the central position.

Eloqua’s AppCloud is obviously modeled on Salesforce.com’s AppExchange and other application stores. The goal is for third parties to extend the value of a core platform by building tools that enhance it. In Eloqua’s case, most of the initial applications are connectors with other systems for Webinars, social communities, messaging and data acquisition. These will be joined over time by apps that add functionality within Eloqua itself. The AppCloud is an extension of Eloqua’s earlier Cloud Connector initiative, which provides APIs for external systems to access Eloqua data and functions. Basically, AppCloud makes it easier to find and deploy those connectors.

I did ask Eloqua how AppCloud relates to its Revenue Performance Management positioning. This felt like a pretty clever question until I later saw it was addressed in the AppCloud press release. Oh well. The answer came smoothly enough: AppCloud makes it easier to gather the activity data needed for Revenue Performance Management analysis. That makes sense, although AppCloud implies a more active integration with external systems than simply reporting against them.

Both the ExactTarget and Eloqua announcements reflect a strategy of positioning their products as a company’s primary customer management system. If you recall my post last week on Adobe and Oracle announcements, those firms also wanted to place themselves at the center of the customer management universe. So does pretty much everyone else.

Obviously they all can’t win this game. At the end of the day, I’d still put my money on the big CRM systems as the logical central repository for customer data. But I do believe that many auxiliary systems will continue to feed data to the central system and somehow coordinate treatment decisions with it. Connectors created to service ExactTarget, Eloqua, and others will make it easier to integrate the peripheral systems with whichever product ends up in the middle. So it’s all good.

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Eloqua10 Offers a Much-Improved Interface and Revenue Reporting

Summary: Eloqua10 provides much-needed update to Eloqua's user interface and a new reporting infrastructure for “revenue performance management”. Neither change is revolutionary but both substantially improve the company’s competitive position within the crowded B2B marketing automation industry.

Eloqua is slated to officially release its long-promised Eloqua10 system on November 21. The main changes are an updated user interface and a new foundation for what the company calls "revenue performance management".

Let’s start with the interface. Previous versions of Eloqua were very powerful but notoriously difficult to learn and use. The company took this criticism to heart and began work more than two years ago on a new approach. The primary goal was to speed and simplify user navigation, which its research found was the root cause of 70% of user problems.

The new interface is a huge improvement. Users start on a customizable home page, which they populate from a pool of widgets for recently accessed items, favorite reports, upcoming campaigns and other information. System functions are access through tabs that align with typical user roles: campaigns for program designers, assets for content creators, contacts for segmentation managers, insight for managers and analysts, and setup for administrators.

Campaign design has been wholly revamped. The old system used a classic Visio-style diagram that only an engineer could love. Users now drag campaign components into a blank canvas, and then connect and configure them. The esthetics are carefully thought out, with components grouped and color-coded by type:

- audience (segment members)
- assets (email, e-form, landing page)
- decisions (a mix of lead behaviors [clicked email, opened email, submitted form, visited Web site] and attributes [compare contact fields, shared list member, sent email])
- actions (add to campaign, add to program, move to campaign, move to program, wait)

The components are connected with squiggly lines, which probably makes no actual difference but definitely seems more friendly.


More substantively, multiple users can work on the same design simultaneously and the designs can be saved as reusable templates. It’s worth noting that the “move to campaign” action can send leads to a specific step within another campaign – not a new feature but still rare within the industry.

Users can open up assets within the campaign flow and then create or edit them. Eloqua10 introduces a Powerpoint-style design interface that lets users drag objects into place and see the changes rendered immediately. These Powerpoint-style interfaces are increasingly common among marketing automation systems, replacing the older approach of editing blocks within predefined templates. The objects can be text, images, data fields, hyperlinks or dynamic content blocks.

Eloqua10 uses the new interface to create emails, forms and landing pages – an improvement over the older version, which had different design tools for different asset types. One downside of the change is that some assets built in previous Eloqua editions will need to be modified, as will some reports.

However, old campaigns and data should transfer to the new format automatically. This reflects the fact that, once you get beneath the interface, the functionality and data structures are largely unchanged from Eloqua9.

The big exception on the data front is what Eloqua calls “revenue performance management” (RPM), which uses a new analytical database that tracks the movement of leads through stages within the buying process. This database is updated in near-real-time with operational transactions and can also receive opportunity outcomes from sales automation or other external systems.

Unfortunately, Eloqua hasn’t released the actual reports that will be provided for RPM. It does say there’s a list of sixteen, of which some already exist. Reports they’ve mentioned include: the number and ages of leads at each stage in the funnel; relation of leads delivered to sales capacity at local levels; and revenue projections based on existing leads and stage-to-stage conversion rates. I don’t know which of these are already available.

There’s also a “two way revenue attribution” report that shows revenue allocated both by “first touch” and “all touch” methods. Although I’ve previously made clear my objections to revenue attribution in general, I think this approach is relatively sensible. “First touch” reporting is useful for acquisition programs, while “all touch” shows which programs are reaching buyers even if it doesn’t show the programs’ actual influence. With apologies for damning with faint praise, I’ll say Eloqua's approach is better than the illusion of precision created by fractional attribution.

Other enhancements planned for future releases include:

- benchmark reports that let marketers compare their company’s performance with averages for similar firms

- enterprise-level security enhancements such as global log-in across multiple Eloqua instances and item-level asset security

- user interface versions in languages other than English

- a new lead scoring interface and analytics to help build more accurate scoring rules

- Webinar management

- fax, SMS and print-on-demand outputs

Eloqua has a dozen or two customers already running Eloqua10. Other clients will be converted to the system over time to ensure users are ready for the new interface and have converted whatever assets and reports are needed. The company has a suite of new training materials in place and will not charge extra for the conversion.

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LoopFuse Offers Free Marketing Automation System: Another Step Towards Industry Consolidation

Summary: LoopFuse has launched a free entry-level version of its marketing automation system. It's one example of how vendors are now competing to attract new users. Only the winners will survive industry consolidation, which may be here sooner than you think.

LoopFuse today promised to “transform” the marketing automation industry by offering a free version of its system. Although LoopFuse and others already provide free trials, this is indeed different: while most free trials expire after 30 days and often have limited functionality, LoopFuse’s FreeView can be used for as long as you like and provides pretty much the same features as the paid version of the system. The critical constraint is that volume is limited to 2,500 prospect names, 5,000 emails and 100,000 page views per month. In practice, this means that only very small companies will actually be able to use the free system as their primary long-term marketing system.

LoopFuse knows that, of course. When they briefed me last week, they said the main purpose of the new system is really to entice trial among companies just starting with marketing automation. They’ll make their money when users see the value they gain and pay for higher volumes and add-on features.

Personally, I’d argue that the really significant news out of LoopFuse is their newly tiered pricing structure. The entry point of $350 per month (for up to 10,000 prospects with unlimited emails and page views) is much lower than the $1,000 to $2,000 starting price of most full-function marketing automation systems. Prices at higher volumes are also much lower than competitors. This will put substantial pricing pressure on vendors who, in many cases, are already struggling to reach sustainable margins.

Here’s where the free system comes back into play. To make a free product viable, LoopFuse needed to engineer as much cost as possible out of the entire client life cycle. This means it had to be possible for clients to purchase and configure the system, learn how to use it and resolve support issues with next to no involvement by LoopFuse staff. Once this was accomplished, LoopFuse was in a position to charge lower fees to its paying clients as well. Other vendors – notably Pardot – have followed a similar cost-removal strategy. But LoopFuse may have been more focused than anyone else.

This doesn’t mean that LoopFuse’s success is guaranteed. Other vendors have similar price points for the small business market (see my list of demand generation vendors) although I suspect their internal costs are higher.

More important, price is just one factor in picking a system. Features, ease of use, and support from the vendor and business partners are usually (and rightly) the main considerations. The free product should increase the number of companies that try LoopFuse first, which will gain it paying customers down the road. But I think that most buyers will recognize that they are likely to stay with their first system and conduct a careful evaluation before they start.

For evidence that a free entry-level product does not automatically drive out higher priced systems, consider the hosted CRM market. Salesforce.com easily dominates despite the presence of surprisingly capable free products like ZohoCRM and FreeCRM .

Whatever the result for LoopFuse, the new offering is part of a larger pattern within the industry. Marketing automation (more precisely, B2B marketing automation) has now passed beyond the pioneer stage where fundamentally different approaches compete for acceptance. At this point, we all pretty much know what a marketing automation system does and, truth be told, the major systems are functionally quite similar.

Competition now shifts from building a technically better system to surviving the inevitable industry consolidation. This requires finding ways to attract masses of new customers as they enter the market.

LoopFuse’s price-driven approach is one such strategy. But many vendors have recently taken others:

- Eloqua, Silverpop, True Influence and at least one other vendor I can’t name are planning new interfaces that they believe will substantially improve ease of use, which they see as the critical barrier blocking many potential buyers. I’m skeptical that truly radical improvements are possible but am certainly eager to see what they come up with.

- LeadLife has embedded best practice hints throughout its system, another way to support adoption by users who lack marketing automation knowledge.

- Infusionsoft has repositioned itself as “email 2.0” rather than marketing automation. They believe this makes it easier for their target customers (under 25 employees) to see them as the next logical step beyond standard email.

- Genius.com added a new Demand Generation edition that falls between its basic Email Marketing and full-blown Marketing Automation products. This is another way of easing the transition from basic email marketing.

- LeadForce1 launched a solution that uses advanced text analysis to measure user intent, and thus provide much better guidance to salespeople than conventional behavioral analysis. Although their approach is based on superior technology, it's still a way to attract customers by offering radically greater value than competitors.

- Marketo now calls itself a “the revenue cycle management company”, giving equal public weight to lead management, sales insight and analytics. They still haven’t briefed me on this or their features to support large enterprises, but they seem to be seeking larger, more sophisticated clients who will presumably provide higher profit margins. Given how many other vendors are targeting small businesses, this certainly makes sense. But Marketo will also find itself competing with established marketing automation vendors like Aprimo, Neolane and Unica. who are entering this market from a different direction. It will also be competing with Eloqua, Silverpop and, perhaps most dangerously, the Market2Lead technology recently purchased by Oracle.

The Market2Lead-Oracle deal raises the other major question facing marketing automation vendors: what role CRM vendors will play? In addition to Oracle, CDC Software (owner of Pivotal CRM and MarketFirst) recently invested in Marketbright.

Of course, the really big question is whether Salesforce.com will make a similar move. There have been off-and-on rumors along those lines for months, followed by stout (if not necessarily credible) denial from Salesforce.com that it has any interest in that direction. I’ve tended to take them at their word, but Oracle and Salesforce.com are blood rivals, so Oracle’s move could easily prompt a Salesforce.com reaction.

Oddly enough, no seems to consider whether Microsoft will enter the game. That's surely a possibility, and would move towards a certainty if its two big on-demand CRM rivals both added marketing automation products. We might even see Google and Intuit participate: both already sell to small business marketers.

My fundamental conclusion is that the B2B marketing automation industry is about to enter the long-predicted stage of vendor consolidation, and that this will move quite quickly. The survivors will serve particular market segments: primarily small vs. large businesses, plus possibly some vertical industry specialization. The window for new entrants is rapidly closing, so any new player will need a major differentiator that creates a clear advantage and distinct identity.

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Eloqua SmartStart Speeds Marketing Automation Deployment, But It's Still Work

Summary: Eloqua's SmartStart gets marketers rolling in less than one week. It does require extensive preparation, but Eloqua leads you through that too. Let's face it, folks: putting a good demand generation program in place is real work.

Eloqua last week announced a money-back satisfaction guarantee for clients who participate in its SmartStart deployment program. Skeptical creature that I am, I wanted to hear the details before writing about it. By happy coincidence (OR WAS IT?), Eloqua Director of Key Accounts Jill Rowley scheduled a talk with me a few days later and filled me in.

SmartStart is a two-to-five day paid consulting engagement that helps new Eloqua clients fully deploy their systems. It’s not to be confused with the free QuickStart program (which I wrote about last May) which provides a smaller set of services. More than 150 Eloqua clients have now completed the SmartStart process, which is delivered by both Eloqua’s own professional services group and certified consulting partners.

The scope of SmartStart is indeed impressive. By the end of the program, marketers have initial email, forms, landing pages, Website tracking, CRM integration, reporting, and either lead scoring or nurturing programs. One key is preparation – the on-site sessions are preceded by extensive information gathering and technical groundwork, guided by Eloqua templates. This covers CRM integration, adding Web tracking scripts to company Web pages, assembling images and email formats, data cleansing, landing page subdomain set-up, specifying forms content and designing the lead scoring matrix. The process also includes a marketing maturity assessment that helps to define long term plans for improving the client’s marketing operations.

Rowley said most small companies can assemble the necessary information in a few days, although larger organizations take longer. Similarly, the SmartStart process itself works best for firms with relatively simple marketing operations, which Rowley said has less to do with size than numbers of regional offices and lead scoring programs, CRM integration, and existing automation. The single biggest challenge is the complexity of rules that govern CRM data synchronization, which can get very detailed when companies want different treatments in different situations.

The other key to the program is concentration during the SmartStart execution itself. The primary system administrator must devote full time to the project, while other users are brought in as needed. Because most policy decisions are made in advance, the company’s chief marketer doesn’t need to be constantly present.

The price of SmartStart varies from $4,000 to $19,000 depending on the version of Eloqua and type of CRM integration. Although that particular bit of information isn’t published, Rowley did point out to me that Eloqua’s Web site now shows basic price data, which used to be a closely-guarded secret. Pricing rules have also been vastly simplified.

That money-back guarantee? It’s good for six months and applies only to future portions of a subscription: so if you pay for a year and cancel after four months, you get refunded for the remaining eight months. That’s not quite a full refund, but it puts Eloqua on par with competitors who allow month-to-month agreements without an annual contract.

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Marketo Sales Insight Expands Salesforce Access to Marketing Data

Summary: Marketo's new Sales Insight ranks prospects for sales people, based on recent Web and email activities. It lets Marketo sell seats to sales departments, which could be more lucrative than selling its core demand generation system. But I expect the sales automation vendors to take the business for themselves.

Marketo today officially launched “Sales Insight”, an application that makes prospect activity history directly available to sales people from within Salesforce.com. I had a personal demonstration last week (are you impressed?), but there’s an online demo that seems to cover pretty much the whole product. Features include:

- a ranked prospect list, based on measures of interaction intensity (represented by one, two or three flames) and prospect value (up to three stars). The idea is to help the sales rep decide who to call first. Users can drill into the details of each account, including Web activities, emails and score history.

- a list of “interesting moments” for each prospect, showing activities that the company has deemed significant. The moments are set up as real time triggers within Marketo. They can be linked to a specific campaign or defined more generically (e.g., three Web site visits in two days). I found this the most interesting capability in the system, because it fills a middle ground between summarizing all activities and providing the item-by-item detail. It does depend on marketing setting up the definitions, rather than letting sales people create their own. But, then again, how many salespeople really want to do that?

- a “lead feed” feature that can send “interesting moment” alerts via RSS, SMS, email, iPhone and other mobile devices. Sales people can select the individuals and accounts to monitor and the types of activities that trigger alerts.

- an option to send emails and add prospects to Marketo campaigns.

- ability to track anonymous Web visits within the sales person’s territory, using IP lookup to identify the visiting company and location. This can be integrated with Demandbase and Jigsaw to download the names of contacts at those firms. The system can also open a window to LinkedIn to let the sales rep find network contacts of her own.

It’s irresistible to compare Sales Insight with Eloqua Prospect Profiler, launched two weeks ago (see my review), which also gives sales people access to prospect activities gathered by the marketing system. The products are designed around slightly different scenarios: while Marketo starts with a list to help the sales rep decide who to call, while Eloqua aims to help the rep understand a prospect she has already selected. Still, both systems provide views into the data and both let salespeople receive alerts about prospect activities.

There are some subtle differences. Marketo is a Force.com application that works only with Salesforce.com, while Eloqua works with several CRM products. Eloqua lets sales people define their own alerts rather than relying on marketing to predefine the “interesting moments”. Marketo lets sales reps send emails and add prospects to demand generation campaigns. Eloqua provides interesting graphs of activity trends. Marketo includes the anonymous visitor tracking.
It’s hard to say which product will be more appealing to sales people, but that probably won’t matter: any significantly attractive feature in one product will (and should) be quickly copied into the other. Competitors without any equivalent product are more at risk, but, you can bet they'll quickly add something similar if it becomes an issue.

What really matters is that these products provide an opportunity for the marketing system to integrate more deeply with sales. This is THE big industry trend right now, so much so that we’re probably due for some clever nay-saying. The attraction to vendors like Marketo and Eloqua is quite clear: they can expand the size of their installations by serving new customers within existing clients.

This could have a substantial impact on total revenues. At Marketo’s price of $49 per seat, a 20-user license would bring in another $1,000 per month. (Genius.com's Genius Pro, a somewhat similar tool that helps sales people track prospect activities, is also priced at $49 per seat.)Compare this with maybe $2,000 per client per month earned by most demand generation vendors. Figures like these radically change the economics of the demand generation business. They also explain why some vendors have been willing to sell to new clients at very low prices.

But these figures also raise the specter of sales automation vendors moving in the other direction. An average Salesforce.com seat is around $100 per month these days. From the Salesforce.com viewpoint, adding marketing automation for $1,000 to $2,000 per month per client isn't particularly exciting. But if that same application also justified another $49 for each seat, you're starting to talk real money.

Of course, this has always been the threat inherent in demand generation vendors’ symbiotic relationship with CRM in general and Salesforce.com in particular. I’m increasingly convinced that it’s just a matter of time before sales automation and demand generation / marketing automation do merge – and it will almost certainly be sales systems swallowing the marketing vendors, not the other way around.

That will put the business marketing world pretty much where consumer marketers have already landed: most companies will use the marketing features of their CRM vendors, except for a relatively small number of businesses with marketing needs so advanced that they can really need the special features of a “best of breed” system.

In support of this view, it’s worth noting that demand generation systems for small businesses already routinely include their own sales automation system. This integrated model will likely filter up into larger companies, even as CRM vendors add marketing automation features and move down from above. Vendors offering just marketing automation or just sales automation will be trapped in the middle – rarely a pleasant place for a vendor to be.

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Pedowitz Group Offers Free Support for New Eloqua Clients

The Pedowitz Group announced this morning that it was offering $15,000 in free consulting services and guaranteeing a five-day implementation to new clients who purchase Eloqua demand generation software . (Click here for the announcement.)

(If you’re not familiar with The Pedowitz Group, President and CEO Jeff Pedowitz ran the professional services group at Eloqua for several years before starting the company. The firm also works with Marketo, Silverpop Engage B2B and MarketingGenius depending on client needs. )

My initial reaction to the announcement was to wonder if it would be interpreted as evidence that Eloqua requires a lot of consulting to implement. Certainly that’s how I’d spin it if I were a competitor. But then again, maybe I wouldn't, because it focuses attention on how much support is really needed to deploy other systems.

On the surface, this is a strength of vendors who promise free implementation and deployment within a few days. But the reality is that most marketers need outside help to design their email campaigns, nurture programs, scoring rules, and CRM integration. This has less to do with learning the software than with knowing what works and how to apply it to their own business.

Yes, some products really are easier to use than others, especially for simple programs. That's one reason Pedowitz works with several vendors. (Download the Raab Guide report on Vendor Usability Scores for more on this.) And yes, some marketers will get their system running with no more than telephone support.

But it’s just plain silly to think that most marketers can quickly deploy sophisticated demand generation programs without some expert help. This is what’s highlighted by the Pedowitz Group offer – and it’s a discussion that vendors selling the dream of an instant deployment should probably avoid.

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Ranking the Demand Generation Vendors by Popularity (Yes, Life Really Is Just Like High School)

As you might imagine, I’ve been trying to decide how to expand the set of products covered in the Raab Guide to Demand Generation Systems. My original plan had been to add several marketing automation vendors with significant presence in this market. The tentative list is Unica, Aprimo, Alterian, and Neolane.

But I’ve also been approached by some of the other demand generation specialists. My original set of products was based on a general knowledge of which companies are most established, plus some consultation with vendors to learn who they felt were their main competitors. So far the original list of Eloqua, Vtrenz, Marketo, Manticore Technology and Market2Lead has proven a good set of choices. Yet there are so many more vendors I could add. How to choose?

The general rule is pretty obvious: pick the vendors that people are most interested in. We do, after all, want people to buy this thing. Of course, you want some wiggle room to add intriguing new products that they may not know about. Still, you mostly want to the report to include the vendors they are already asking about.

But although the general rule is obvious, which vendors are most popular is not. Fortunately, we have the Internet to help. It offers quite a few ways to measure interest in a vendor: Web searches, blog mentions, Google hits, and site traffic among them. All are publicly available with almost no effort. After a close analysis of the alternatives, I have decided the Alexa.com traffic statistics are the best indicator of vendor market presence. (You can read about the analysis in fascinating detail on my marketing measurement blog, MPM Toolkit.)

The table below shows the Alexa rankings and share statistics for the current Guide entries, the four marketing automation vendors already mentioned, and a dozen or so contenders.

	Alexa	Alexa
	rank	share
Already in Guide:
Eloqua	20,234	0.007070
Silverpop	29,080	0.003050
Marketo	68,088	0.001700
Manticore Technology	213,546	0.000610
Market2Lead	235,244	0.000480
Vtrenz	295,636	0.000360
Marketing Automation:
Unica / Affinium*	126,215	0.000850
Alterian	345,543	0.000250
Aprimo	416,446	0.000220
Neolane	566,977	0.000169
Other Demand Generation:
Marketbright	167,306	0.000540
Pardot	211,309	0.000360
Marqui Software	211,767	0.000440
ActiveConversion	257,058	0.000340
Bulldog Solutions	338,337	0.000320
OfficeAutoPilot	509,868	0.000200
Lead Genesys	557,199	0.000145
LoopFuse	734,098	0.000109
eTrigue	1,510,207	0.000043
PredictiveResponse	2,313,880	0.000033
FirstWave Technologies	2,872,765	0.000017
NurtureMyLeads	4,157,304	0.000014
Customer Portfolios	5,097,525	0.000009
Conversen*	6,062,462	0.000007
FirstReef	11,688,817	0.000001

The figures themselves need a little explaining. The Alexa rank is a “combined measure of page views and number of users”, with the most popular site ranked number 1, next-most-popular ranked number 2, etc. (In case you're wondering, the top three are Yahoo!, Google and YouTube.) Alexa share represents “percent of global Internet users who visit this site”. The rank and share figures correlate closely, but share is probably for comparing sites, since the ratio directly reflects relative traffic. That is, a share figure twice as large as another share figure indicates twice as many visitors, while a rank that is one half as large as another rank doesn’t necessarily mean twice as much traffic.

The figures for the existing vendors, in the first block of the table, give pretty much the ranking you’d expect. One wrinkle is that Vtrenz is owned by Silverpop, so Silverpop.com presumably siphons off a great deal of traffic from Vtrenz.com. On the other hand, Silverpop is a major email service provider in its own right, so a large share of the Silverpop.com traffic probably has nothing to do with Vtrenz. In any event, I’ve listed both sites in the table. Vtrenz is clearly a major vendor, so nothing is at stake here except bragging rights.

What’s more interesting is the figures for the Marketing Automation group. Unica is quite popular, while the other vendors are much less visited. This doesn’t particularly surprise me, although seeing Alterian, Aprimo and Neolane rank well below Manticore Technology and Market2Lead is odd. Perhaps these vendors are more obscure than I had realized. Still, they are much larger firms and do much more marketing than Manticore or Market2Lead. Interestingly, the other measure I found somewhat credible, IceRocket’s count of blog mentions, ranks Alterian, Aprimo and Neolane considerably higher than Manticore and Market2Lead. (See the MPM Toolkit post for details.) So the marketing automation vendors are probably a little more important to potential Guide buyers than the Alexa numbers suggest.

But my real concern was the Other Demand Generation group. Here, the Alexa figures do provide some very helpful insights. Basically they suggest that Marketbright, Pardot, Marqui and ActiveConversion, are all pretty much comparable in market presence to Manticore and Market2Lead. I spoke with Marketbright and Pardot this week and connected with ActiveConversion some time ago. Based on those conversations, this seems about right. (Marqui is a special case because they fell on financial hard times and the assets were recently purchased.) Rankings fall off sharply for the other vendors on the list, providing a reasonable cut-off point for the next round of Guide entries.

Of course, nothing is set in stone. Perhaps one of the smaller vendors can convince me that they have something special enough to justify including them. Plus there is still the question of whether I should invest the effort to expand the Guide at all, and what sequence I do the additions. But, whatever the final result, it’s nice to have an objective way to measure vendor market presence.

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