There has been a great deal of activity in the CRM (customer relationship management) industry of late when it comes to marketing automation. Just over the past couple months Salesfoce.com bought Exact Target (who had not long before acquired Pardot), Marketo had a very successful IPO and Adobe announced their intent to purchase Neolane. But most of these moves had the big enterprise in mind, so what does this mean to small businesses and their marketing automation needs?
Raghu Raghavan, CEO of marketing automation platform provider Act-On, joins Brent Leary for a discussion on what the impact of these moves means, if anything, to small businesses. He shares his take on how the proliferation of channels is impacting marketing for small businesses and how marketing automation can help improve their likelihood for marketing success at a time of rapid change.
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Small Business Trends: Can provide us with a little bit of your background?
Raghu Raghavan: My interest in this whole space probably started some 12 to 13 years ago. I was one of the two founders of Responsys, which back then was one of first SaaS companies before the word SaaS was even being used.
We built a very nice, multitalented platform for doing email marketing back in the day. One of the things that struck me all along was that email was always going to become a part of a much bigger picture with respect to marketers.
When I started Act-On, there was a lot of interest in a more robust view of marketing. I think Eloqua for ten years had been talking about marketing automation and what it would mean. I think they educated the market.
When Marketo came into the market they basically challenged a lot of the assumptions. Marketing automation always was along the lines of “SAP meets marketing.” It was like a big ERP implementation, nine months to set up, and Marketo came in and
challenged that. They came with a fantastic approach to the market and we wanted to do some of those things.
When we started Act-On, Salesforce was dominant. We were working on our platform to be used everywhere. Marketing automation was starting to be talked about more widely, so it was a fantastic time to enter into a new market that was barely penetrated. Act-On is a company that has the founding engineering from Responsys, it has a lot of deep knowledge about SaaS. We came in, we saw the all of the things that had not been done right in this space, and I think it allowed us to build a company in an whole new way to attack what we saw in the monsters market.
Small Business Trends: How has the proliferation of all of these different channels, formats and social networks brought on the need for marketing automation?
Raghu Raghavan: I think in a huge way. That is a great question. Because I think that is one of the driving factors for marketing automation that no one really talks much about. You know a little bit of history, it helps to be around this space for a long time. If you look at companies like Unica, part of the new Enterprise Marketing Management (EMM) group at IBM, and Aprimo, old line companies – I shouldn’t say old line, they are not that old, but they are now old line companies. They actually set out to solve a problem that big companies had, which was multiple channels.
For big companies the channels were email, the Web, dealer networks – it was all of their other physical touch points, re-sellers and “what-have-you.“ Well if you look at companies now, if you look at all of these channels it is sort of like that. So the technology for multi-channel behavior management had been done in a different domain.
What happens now is that there is a need to engineer all of this down to a format where a small company, with a relatively small number of employees in marketing can actually make sense of all of this. Every company we talk to tries everything. They try to tweet; they create a Facebook Page; they blog; they do things on the website. The interesting thing with marketing now is to say, ‘What should I be doing? Am I doing enough, because there is no universal answer of what is the best thing for anybody?’
Marketing automation has come along and created a forum where there is a lot of things you can do pretty quickly, lots of power tools. So now the real question is, ‘How do you use them wisely?”
The great thing about marketing automation is it takes the focus away from the individual tools and shifts the focus towards what the market is trying to achieve.
Small Business Trends: Are you seeing main stream traditional businesses starting to jump in here?
Raghu Raghavan: Yess. I think that you raised the question of affordability. It is interesting because the two companies that basically challenge the status quo on that were Pardot and us. Pardot and Act-On basically went and said, ‘Look, you can do sophisticated things without spending a lot of money.’
What is starting to happen here in terms of visiting the mainstream, is you know historically, if you look at Eloqua and if you looked at Marketo, guys who have been in this market for a while, the bulk of their customers were high tech companies, and high tech companies tend to be early adopters of technology. But in 2012 and certainly in 2013, this technology is widely adopted. We have customers in every imaginable industry, segment and nook that you can imagine. We have a customer that sells hazardous material, disposal equipment, gloves and drums and radioactive suits and what-have-you.
Now, you tend to not think of these as companies that traditionally adopt this technology. But with the advent of all of these channels, people used their Facebook at home, and started to see ways in which they could use Facebook for work. Or the way people tweet and how they can use this for work.
This technology has become completely consumerized. It is no longer in the domain of high tech users. It is consumerized in consumers.
Small Business Trends: Everybody has been talking about Salesforce acquiring ExactTarget. Then, just a couple of weeks after that, a company that hadn’t been getting a lot of attention when it comes to marketing automation, was Adobe. They purchased a company called Neolane. With these things, is it going to even up the ante, in terms of everybody now knowing they need marketing automation?
Raghu Raghavan: I probably have a contrarian view to this and might even be controversial. What is happening here is the evolution of biology of companies that have run the gamut of what they can do, basically getting bought. I mean ExactTarget technology is not pushing the limit of anything, this is a done deal. It is old stuff. Salesforce buying them clears the field for newer companies to come in and do newer and more exciting things.
The thing that becomes interesting is people read the stuff in the press and they become even more desirous of trying these things. If they search ‘market automation’ they will find lots of dynamic companies that have stuff they can use right away.
Yes definitely, we are seeing an uptake in interest. Certainly, the companies that want to acquire these technologies already are interested in all of the companies in this space. People like Marketo, Hubspot and us are all the topic of conversation. But every day business has less to do with this and more to do to with the fact that there are lots of companies out there that need this stuff, don’t have the stuff and don’t read the trade press. This 5% number that I quoted is actually very true. If you look at the companies that are ready for marketing automation in North America alone, the penetration is minuscule.
In every state of engagement with a customer, our technology is relevant. It is engaging with customers that you don’t know yet; anonymous visitors to your website. Just because they are anonymous doesn’t mean you can’t start to track their behavior and give them interesting stuff to look at.
The application of marketing to help sales reps close the business faster, or the application of marketing to take an existing customer and grow them, and upsell them. The ability to use marketing to have your reference customers take action on your behalf by awarding them – this entire gamut of customer engagements is where we expect to be.
Small Business Trends: Where can people go to learn more?
Raghu Raghavan: Come to our website, Act-On.com .
This interview on marketing automation is part of the One on One interview series  with thought-provoking entrepreneurs, authors and experts in business today. This transcript has been edited for publication.