0 IBM Interact Adds Interactions to Enterprise Marketing Management

My continuing tour of real time interaction managers landed with the good folks at IBM two weeks ago, where I caught up with what’s now IBM Interact. The product was originally launched more than a decade ago by Unica as Affinium Interact.*

The concept of Interact has stayed quite consistent over the years, although the underlying technology has been overhauled several times. The general trend of the changes has been closer integration with other components of the IBM/Unica marketing suite. For example, the original Interact had its own flow chart interface, but the system now uses the same segmentation interface as IBM Campaign. The two modules can also share segment definitions, offers, and interaction history. There’s also some integration with other IBM marketing products, notably the Product Recommendation component inherited from IBM’s CoreMetrics acquisition.

Interact's concept is the same as other interaction managers: touchpoints send it data about a current interaction; the system uses rules, models and data to select one or more offers; and the offers are sent back to the touchpoint for delivery. The differences among these systems are matters of nuance: Interact stores its own permanent customer profiles, while some other systems must re-load data from external systems during each interaction.  Interact assigns fixed scores to offers within each segment definitions, while other systems use scoring formulas shared across segments (although Interact can do that too).  Interact can create self-training predictive models, not all competitors have this option.


A couple of other features seem more or less unique. Interact determines whether customers are eligible for an offer using either qualification rules or Campaign-generated “white lists” and “black lists”; other systems use rules alone. Interact can also assign offers at global, segment, or individual levels, while other systems don’t provide all those choices.

It’s unlikely that any of these differences make Interact significantly more powerful or easier to use than competitors. In practice, the system’s major appeal will be its close integration with Campaign and other IBM products. It is now part of the IBM’s Enterprise Marketing Management (EMM) group, which includes both Unica and Coremetrics, both acquired in 2010. This group supports IBM’s larger strategy of selling systems that use huge quantities of data to run all aspects of large organizations. The company has identified marketing organizations as a major potential market within this strategy and is spending aggressively to both develop that market and take advantage of it.

You might think that Interact plays a central role in IBM’s marketing ecosystem: after all, real-time interactions are the epitome of data-driven marketing. But just a tiny fraction of IBM’s 2,500 EMM customers use Interact (actual figures are confidential) and most deployments seem to be focused on specific -- dare I say tactical? -- applications in one or two channels. The company’s EMM focus seems to be more on analytics and outbound marketing: for example, its most recent EMM acquisitions were Tealeaf Technology (Web experience analysis)  and DemandTec (merchandising analysis) . But it does report increasing interest in Interact among its clients, and high hopes for future growth.



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*A year’s free AARP membership to everyone who remembers the Affinium brand and can sing the jingle.**

** Okay, just kidding.  There never was an Affinium jingle, so far as I know.

0 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.

0 RedPoint Offers Broad, Deep B2C Marketing Automation

On days when I have nothing else to be cranky about, I sometimes fuss at how business-to-business software vendors hijacked the term “marketing automation” despite its long and relatively honorable history describing systems for consumer marketing. Oracle’s recent agreement to purchase Eloqua reinflamed that wound, since much of the commentary ignored Oracle’s extensive existing suite of consumer marketing systems.

More productively, the deal also shifted discussion from components within a marketing suite to where marketing systems fit within the larger world of unified customer management. This perspective has always been part of consumer marketing, where the classic description of Customer Relationship Management (CRM) was “marketing, sales and service”. That formula fell out of favor when the most prominent CRM system became B2B-oriented Salesforce.com, whose very name reflects its origins in B2B sales automation.

One reason that B2B perspectives have dominated the recent discussion of marketing automation is that the major B2C marketing automation products have receded from view after being absorbed by larger corporate platforms: Unica is part of IBM, Aprimo is owned by Teradata, Portrait Software is owned by Pitney Bowes, Epiphany is owned by Infor (which last month acquired marketing resource management leader Orbis Global, a bit of news I'd missed), Alterian is owned by SDL, and SAS is owned by, well, SAS. This diminishes most products’ independent profiles (Aprimo is the exception), although they are still selling nicely. Even some of the less prominent B2C products have been acquired recently: Conversen by Experian and Entiera by FICO, although neither of these are enterprise software vendors.

The net result of all this harvesting by big buyers has been to clear the ground for the next crop of B2C marketing automation systems. These fill a demand for powerful but moderately-priced options by both marketing services providers and mid-sized companies. Those buyers often find that systems from big enterprise software vendors become too expensive or require too many ancillary components from their corporate parents.

One vendor taking advantage of this opening is RedPoint. Founded in 2006 by veteran CRM consultants and technologists from Accenture, the firm has created an exceptionally extensive marketing automation product including not just campaigns and content management, but also database maintenance, which isn't usually part of marketing automation.  Although IBM, SAS, and Pitney Bowes provide a similar scope, RedPoint is unique in having built all those components itself and keeping them tightly integrated.

The data features are especially impressive. RedPoint offers a rich set of standard data management features including loads from files, databases, and semi-structured formats like XML and EDI; transformations including regular expressions, file splits, and table joins; batch and on-demand process flows.  There's also a novel option to use Web service calls for on-demand data appending, a particularly noteworthy concept.  Beyond those, the system provides specialized functions to manage customer data including name/address parsing, standardization, and matching. Users can apply the system's built-in rules for these or modify the rules to meet their own preferences. All data functions are managed with a sophisticated workflow engine that allows fast development of new marketing databases -- often in a matter of weeks, not months.  This removes (or at least shrinks) the single greatest obstacle facing many new marketing systems.

The system was also designed to scale.  It can work with standard files and SQL databases, with native connectors for SQL Server, Netezza, Oracle, and Teradata. Support for Hadoop, Hbase, PIG, Hive, Cassandra, GreenPlum and other “big data” technologies is due early this year. Clustering is available at all application service layers and the system supports true multi-tenancy (multiple instances running on the same installation).

Campaign management features are equally deep although less unusual.  A drag-and-drop flow builder allows complex, rule-based branches and can react to behaviors during the campaign. Users can define audiences with batch selections, scheduled processes, and “subscription groups” of anonymous individuals (such as Web site visitors) who match specified behavior profiles. Splits can be based on logical conditions, random selections, or auto-generated cells with all possible combinations of specified variables. The auto-generation feature, which can easily produce segmentations with hundreds or thousands of cells, is a hallmark of sophisticated B2C marketing automation systems. It is used for segmentations such as RFM (recency, frequency, monetary value) cells, age/gender/cluster cells, branch or dealer assignments, and product splits.

RedPoint also provides self-training predictive models.  These are currently used within the data management functions and matching algorithms. They will be soon applied to select offers for Web personalization.

Content management includes an editor to create outputs for email, Web, SMS, Twitter, Facebook, FourSquare, LinkedIn and other formats. Users can build shared templates that are later modified for individual projects. Objects can contain Web forms and dynamic content blocks driven by selection rules or mapped to audience segments. The system can generate Web tags to capture user behaviors and can react to those behaviors in real time. It manages approval workflows, version tracking, and precise control over which users can access different objects and functions.

Pricing for RedPoint is based on a combination of deployment services, software licenses, and hosting fees. A minimum system starts around $60,000 per year. There are more than 100 installations, about half sold directly and half through partners such as marketing service providers. The system can be hosted by RedPoint, by a service partner, or by the client.

0 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.

0 Future of Marketing Automation: Grow or Die

‘Tis the season for industry predictions. I’ve already fielded a couple of requests for my thoughts, which usually requires some pondering before I reply. But this time I was able to answer right away because I’ve just finished a white paper on the future of B2B marketing automation, sponsored by Leadformix and available here for free download.

The question answered by the paper is “What will marketing automation vendors do next?” This is different from the perhaps-more-important question of “What will marketers do next?” I don’t claim any particularly deep insights into the latter: they'll continue to adapt to new media and buying habits, I guess. Like everyone else, I’m seeing greater use of social, mobile, and video; more cross-channel campaigns; closer cooperation between marketing and sales; and expanded use of analytics. If I had to predict one thing that isn’t utterly obvious, it's that B2B marketers will be more involved with managing customer relationships after the initial sale. The reason is that post-sales interactions are increasingly automated and marketers have the best tools to manage automated interactions effectively. The task is really the same as a sophisticated lead nurturing campaign: to monitor customer behavior and respond appropriately.

While my vision of future marketing may be rather broad, I think I see the future of marketing automation in clearer detail. This is what’s covered in the white paper. To summarize the argument:

• marketing automation vendors must grow or die. Today’s B2B marketing automation systems are used primarily for lead nurturing. This means they don’t help other marketers who do lead acquisition and marketing administration (planning, budgeting, project management, etc.). They also have limited interactions with sales and service departments, who own the post-sales customer relationship. Marketing automation vendors who want to expand their business need to service these other groups or risk some other system becoming the central platform for marketing management. If that happens, the other systems will slowly encroach on marketing automation functionality and eventually replace it.

• marketing automation can expand in either direction along the customer path: backward to acquisition or forward to sales and service.  Most expansion to date has been towards sales, in the form of add-ons that give salespeople access to information about behavior of their leads. But CRM systems are deeply embedded in sales departments, so they block growth in that direction.  I therefore expect marketing automation vendors to instead shift toward features for acquisition marketers. These would include not just “inbound marketing” through social media and search engine optimization, but also purchasing media such as online and offline advertising.

• marketing automation can also be divided into layers of delivery systems, campaign management, and platform functions.  Delivery systems manage touchpoints such as Web sites, email, and social media publishing.  Campaign management is the rules and models to select names for promotions.  Platform functions are supporting technologies such as the marketing database, planning and budgeting, content management, analytics, and security. Current marketing automation systems do all three to the degree needed for lead nurture campaigns.  Extending to other users will require more powerful platform functions in particular. Whoever controls the platform can best expand throughout the marketing department.

• marketing automation vendors will increasingly fall into two groups: a handful of big platform vendors and larger number of small specialists. The platform vendors will offer a broad range of functions internally and further extend their range by exposing their platforms to third party developers through “app markets”. The specialists will have narrower scope but be very good at serving companies with specific needs such as low cost, marketing services, or  industry editions (for sports, investments, franchises, etc.)  Both types of companies can succeed although the platform vendors will tend to dominate over time.

• new competition will come from outside the industry, especially from delivery systems. This seems counter-intuitive: delivery systems are by definition channel-specific and function-generic (a term I just invented to mean they serve all functions within marketing, sales and service). This means they are in the strategically weak position of selling commodity products without strong ties to any particular set of users. But the delivery vendors recognize this weakness and can afford to overcome it by investing in campaign engines and platform features. This is exactly what's happening when email vendor ExactTarget purchases Pardot or Web content management vendor SiteCore adds email campaigns and a database. It (almost) goes without saying that CRM vendors are also potential competitors: they already have the platform features; what they mostly lack are campaign engines.

These trends have specific implications for marketers who are selecting a marketing automation system.  You'll need to download the white paper to find out what they are.