The MarTech Merger Wave Continues

The Marketing Technology market is rapidly growing and maturing. As in any trending technology sector, new startups are continually launching and old ones are being acquired by older and bigger businesses. Over the past 18 months, there has been a constant stream of mergers and acquisition activity. Private Equity firms and big tech companies are boosting their portfolios with the most promising new technologies. Some deals can be predicted in advance, but many come out of the blue. September saw two of the most unexpected deals yet.

Just last week, MarTech's leading proponent of open source was brought by a private equity firm for $1bn. The buyer in this deal was Vista Equity Partners, owner of Cvent and formerly owner of Marketo. Their target was Acquia, the company created by Drupal founder Dries Buytaert to sponsor and sell services around the Drupal CMS. Vista are not buying the entirety of Acquia, merely a majority stake which will limit their influence a little. Drupal is an independent not for profit foundation with no direct connection to Acquia, but Dries and Acquia are major contributors to Drupal and have a big influence over the direction of the project. For all intents and purposes, a private equity firm now has a major influence over the future and direction of the open source Drupal platform. That's not a situation many open source projects would be comfortable with.

Platform Play

Yet, Acquia are about more than just Drupal. A couple of months ago they brought Mautic, an open source marketing automation system. Alongside that they have a suite of existing services of technologies that extend Drupal such as their Lift web personalisation tool. Mautic is a relatively new project - only 5 years old - and lacks many enterprise features found in Drupal. The plan is to probably integrate Mautic and Drupal into a comprehensive open source marketing technology stack, on top of which Acquia can sell their various ancillary products and services. This would enable them to go head to head with Adobe, who are currently winning a lot of content management deals in the enterprise space because of their integrated stack.

Acquia are not the enterprise content management vendor to have received private equity investment over the past 18 months. Both Episerver and Sitecore have received significant private equity investments in order to boost their positions against competition from the technology firms. Both Episerver and SiteCore have long been known for their ability to integrate with the broader marketing technology stack, which is a major reason for their continued adoption by large businesses.

It is widely believed that the long-term intention of their private equity owners is to sell their CMS vendors to tech firms. Salesforce lack a Web content management component to their tech stack, as do Microsoft and Google. The latter two firms have experience in this space but failed to gain traction as their offerings are non-core and did not receive sufficient executive or development attention.

Predicting AI

Marketing technology mergers are also taking place in the AI and Predictive data sector. Both Mintigo and Lattice Engines have been purchased over the last few weeks in deals that few saw coming. There are a lot of vendors with offerings in this space, so consolidation is long overdue. However, the identities of the buyers and the justifications for acquiring the technology are not what many expected. Both Lattice and Mintigo have been acquired for their AI expertise, rather than any products that actually use them.

Lattice were brought by Dun & Bradstreet back in June, in order to add AI capabilities that D&B are missing in-house. Everyone knows about D&B and their status as the gold standard in marketing data providers, but at the moment they only sell you the raw data without any analysis or relevance scoring attached to it. Lattice have been purchased to change this.

The plan appears to be to combine D&B data with their customer's data in order to provide recommendations and insights about how to intelligently segment individual accounts and contacts. AI based segmentation is a hot topic on the back of the CDP trend, with the major technology firms all building recommendation engines into their marketing automation platforms that recommend specific types of content to send to specific audiences. D&B don't want to miss out on the same opportunity.

A Plan for Mintigo

While the logic in combining Lattice and D&B is clear, the benefits of combining Anaplan and Mintigo are less so. Anaplan are an MRM vendor, and last month they announced their intention to acquire the Mintigo predictive scoring platform. The end result was lots of head-scratching. The benefits of adding AI to MRM are obvious, as it can aid immeasurably in interpreting campaign results and providing recommendations on where budgets should be allocated. The decision to acquire this expertise through buying a company best known for predicting which accounts are ready to buy is less obvious. These are two different use cases for AI, which would require substantially different algorithms and prediction engines.

There is a risk to the market leading position of Mintigo in this deal, because AI is only as good as the results it produces. If Mintigo's data scientists and AI experts are working on Anaplan's AI models then they're not working on tuning their own product. This could make it less effective than the competition. It is far too early to tell if this risk will actually come to pass. Regardless, it is clear that the days of the standalone scoring vendor are now over. Everyone is playing the platform game.