Understanding IBM's Plan To Support Online Marketing, Advertising
- by Laurie Sullivan @lauriesullivan, September 3, 2010
IBM Software Group's strategy to support marketing services for companies and agencies continues to take shape as Big Blue waits for Unica to join the company, pending regulatory review. It should close by the end of 2010.
In August, IBM announced its intention to acquire the company for $21 per share in cash or a net price of approximately $480 million to build out tools that analyze and predict customer preferences and develop more targeted marketing campaigns. Behavioral targeting will become another service it will provide.
Unica serves more than 1,500 clients such as WPP, Best Buy, eBay, ING, Monster.com, Starwood and US Cellular to help improve marketing and brand awareness. Through the Coremetrics acquisition, IBM clients can tap Web analytics to measure the effectiveness of their marketing campaigns and the shopping habits, likes and dislikes of their customers.
WebSphere Commerce, IBM's cross-channel e-commerce software, provides the foundation for the technologies it acquired to support marketing. The acquisitions of Coremetrics and Unica, which fit into this bucket, are backed by IBM's Business Analytics and Optimization Consulting organization, a team of 5,000 consultants and a network of analytics solution centers -- an overall investment of $11 billion in acquisitions during the past five years.
Although Craig Hayman, IBM industry solutions general manager, declined to reveal the price for Coremetrics, he did say IBM invested $1.4 billion to acquire Sterling Commerce of the $20 billion acquisition budget IBM Chairman Sam Palmisano plans to spend during the next five years.
Through the tools gained from the acquisitions, IBM hopes to give marketers a better understand of their customers, greater ability to deliver social campaigns, improve visibility through analytics, consolidate fragmented marketing practices and increase the ability to respond quickly to market changes. It's about predicting what clients want before they need it. "Marketers don't have an accurate view of their customers," Hayman told MediaPost on Friday.
The worldwide business integration and commerce services market represents a $5.2 billion opportunity that is growing in double digits each year, according to Gartner Research.
Application services has become a multibillion-dollar business for IBM. Marketing will become part of this.
Hayman, who will lead IBM deeper into marketing services, says the conversation and terms used to describe success must shift from the amount spent on advertising and marketing campaigns to outcomes. He believes the acquisitions give IBM a lead to make a change.
IBM will create one marketing and sales team, partner program and go-to-market strategy. It will become more apparent following the close of the Unica acquisition.
I have commented in several blogs on the IBM-Unica acquisition that the purchase does not signal IBM's return to the application space. IBM consciously exited 'applications' - perhaps defined as those with significant business work flow - more than 10 years ago, since Gerstner saw more opportunity as an independent integrator, instead focusing software chief Steve Mills on OS, middleware, and other infrastructure software layers. Although Unica would counter this strategy, I believe the transaction signals the 'big boys' recognizing that Internet and digital applications are no longer a hip distraction of the young, and are, in fact, a main stream marketing application. More important, IBM recognizes that access to customer data is critical to online marketing, that online marketing is now central to web development platforms (IBM's bigger IT bet), and that Unica's transaction engine is a feeder system to that data. Look no further than Adobe/Omniture. Oracle and SAP should be moving quickly if they can rethink how software is monetized beyond licenses.