Marketing Tech Startup Acquisitions are on the Rise

The advertising and marketing industry has come a long way since the print days made famous by Mad Men. There is now a solution for every possible marketing strategy you can think of, and tech startups are capitalizing on the online marketing boom. In 2016 there were 3,874 marketing technology solutions available to consumers with various niches including advertising, content, social, e-commerce & sales, data, and management. By having so many directions to go in the marketing industry, tech startups are being built with one specific solution in mind, and they can focus all of their efforts on that goal instead of trying to be an all-inclusive marketing company.

The all-inclusive marketing firm mindset is a thing of the past for startups, and it is reserved for the marketing giants like, Salesforce and Hubspot. When a tech startup excels in one thing, it garners the attention of these marketing giants along with others inside and outside of the industry. The attention often leads to an acquisition and consolidation.

In 2016, there were 398 marketing startups acquired by larger companies, but only 22% of these acquisitions were done by major marketing companies. Other industry leaders in publishing, IT, and consulting are acquiring tech marketing startups to bolster their internal marketing department and bring an added level of technical sophistication into their companies. Below are three of the most noteworthy acquisitions from 2016 and the first quarter of 2017.

Deloitte Acquisition of Heat

One of the consulting firms that acquired a tech marketing startup was Deloitte when the consulting powerhouse purchased Heat in February 2016. Deloitte saw a need for digital marketing back in 2012 when it started its own creative branch, Deloitte Digital. Deloitte realized it was leaving money on the table every time a client went elsewhere for marketing, so it brought marketing in-house and started producing high-quality content. The acquisition of heat has allowed Deloitte Digital to create yet another department to handle marketing.

“Deloitte Digital has created a new market category called creative digital consulting. Adding Heat’s extraordinary and award-winning creative capabilities is the perfect compliment to our market-leading and long-established digital business.” –Andy Main, Deloitte Digital CEO

Heat was founded in 2004 and rapidly expanded to a staff of over 100 people. Chairman and Executive Creative Director Steve Stone was the founder of Heat, and he has been at the forefront of the company’s growth in the digital marketing world. Heat had a giant 2015 with campaigns for Madden NFL 16 and Star Wars Battlefront along with eight Cannes Lions awards.

Salesforce Acquisition of Krux

Salesforce spent over $4 Billion in 2016 acquiring companies, and a big chunk of that came from the $700 Million acquisition of Krux in the third biggest acquisition of the year. Salesforce put an emphasis on increasing its data and predictive analytic capabilities in 2016, and Krux could be the key to that success. Started in 2010, Krux is a SaaS platform specializing in data analysis, analytics, and machine intelligence. The software helps marketers effectively target customers.

“Krux and Salesforce together will empower every company to deliver more relevant and valuable consumer experiences across every touchpoint.” — Tom Chavez, Krux CEO

Adobe Acquisition of TubeMogul

Adobe has been known as the software many marketers use to create the ads, but has been acquiring marketing tech startups to aid in the advancement of its Media Optimizer Product. The $540 Million deal came just after TubeMogul announced third quarter results showing a 21% year-to-year growth. TubeMogul specializes in creating compelling video ads and also offers advertisers a platform that allows them to measure video ads with an automated system. This system creates a plan for the advertiser to help them buy and alter video advertising moving forward based on the results.

With the acquisition of TubeMogul, Adobe will give customers a ‘one-stop shop’ for video advertising, providing even more strategic value for our Adobe Marketing Cloud customers.” –Brac Rencher, Adobe Executive Vice President

Demandbase Acquisition of Spiderbook

Demandbase is widely regarded as the leading provider of Account-Based Marketing (ABM) in the industry, and the acquisition of Spiderbook only widened the gap between the closest competitor. Demandbase’s suite of marketing solutions is designed to simplify personalized digital advertising and marketing though ABM to target company accounts as their own market. The goal of Demandbase to bring that technology to individual companies to target consumers in the same way.

Spiderbook is the brainchild of former Oracle employees who teamed with a group of data scientists to implement machine learning and linguistics to discover and categorize potential buyers within targeted accounts. By utilizing this technology, Demandbase will not be able to identify accounts by analyzing billions of webpages for various markers that will create profiles and accounts.

“We have watched Demandbase create and grow the ABM category. They are clearly the dominant force within Account-Based Marketing. By joining Demandbase, we can now reach more B2B marketers and bring more value by having our solutions fully integrated.” –Alan Fletcher, Spiderbook CEO

Hootsuite Acquisition of AdEspresso

Hootsuite is arguably the most commonly used social media management tool available, and its acquisition of Facebook advertising partner AdEspresso was the first blockbuster acquisition of 2017. Hootsuite makes it possible to update all of your social media profiles from one platform, saving many people countless hours. Before acquiring Adespresso, there was no way to advertise from Hootsuite to your social profiles, which was keeping many people away from the platform.

Adespresso was founded in 2013, and it quickly gained funding due to the effectiveness of its targeted advertising technology. With AdEspresso, an advertiser can test and optimize ads through different creatives to maximize engagement and ROI.

Hootsuite announced the launch of Hootsuite Ads on the same day they announced the acquisition of AdEspresso. Hootsuite Ads will debut on Facebook and Instagram, and there are plans to incorporate more social media platforms in the future.

“Social advertising has become a vital aspect of marketing; companies are looking for ways to reach an active, engaged audience while getting more mileage from content and advertising spend. With AdEspresso, we’re bringing our users a simple, powerful, battle-tested solution that delivers measurable ROI.” –Ryan Holmes, Hootsuite CEO

Analysts Agree: Marketing Tech Consolidation is on the Rise

The evidence from 2016 suggests that many big companies want to be exactly Rencher was referencing: a one stop shop for customers. Merger and acquisition activity in the marketing technology sector is at its second highest point next to the start of 2015, and it is showing no signs of slowing down. The name of the game in the industry is specialization and innovation. If you can create a marketing solution and do it better than your competition, you are going to attract attention from these large companies. The success doesn’t come overnight, and it takes a lot of hard work, but rest assured that acquisitions are happening every day.

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