In the past year, a number of major email service providers—particularly, and most prominently, Campaign Monitor—have expanded via acquisition. What should associations know, and what are the pitfalls to avoid?
A couple of years ago, you might recall, there was a really aggressive cycle of mergers in the association vendor space.
Now it’s email marketing’s turn to go through the M&A wringer.
This is thanks, in large part, to Campaign Monitor, which isn’t the biggest household name in the email marketing space (that honor goes to podcast-famous MailChimp) but has made itself hard to ignore due to a series of acquisitions within the past year. Since last June, Campaign Monitor’s parent company, CM Group, has acquired four other email vendors that target different audiences, including Emma and Delivra last summer and Sailthru and Liveclicker last week.
These platforms each have different specializations, including personalization, design, and scale, that match the needs of different users. But the point is clear: If you want to get a tool that just does email marketing, you suddenly have a mega-vendor to lean on.
Hey, This Looks Familiar!
Associations have seen this kind of vendor activity before, of course, especially regarding software specific to its sector. Case in point: The spring of 2017 gave us a single news cycle that produced an AMS mega-vendor, a company called Community Brands. In my piece about the initial formation of Community Brands, I noted parallels to the offseason wheeling and dealing seen in some sports leagues.
Since then, Community Brands has extended itself to a network of 19 different brands (20 if you count Community Brands itself) that address different enterprise software needs—including for associations, nonprofits, and K-12 education. And other companies in the space, such as Personify, have extensively expanded their reach through acquisition. (Personify was itself acquired by an investment firm last year.)
It’s likely that, if you work at an association, you’ve run into this situation in the past few years—maybe even more than once!
A Sign of Saturation
While things have calmed down of late, the trend highlights the way that technology vendors build themselves up vertically to offer solutions that fit a wide variety of needs in a given space. (Compare it to a company that sells both $200 laptops and $3,500 laptops, because it knows there will be audiences for both.)
It also reflects when a sector might be oversaturated with options. This can definitely be said about email marketing, where merger and acquisition news was already common but feels like it’s taking a new tone going into 2019.
How do vendors deal with that saturation? In the case of Campaign Monitor, they scale up in a way similar to what we saw with Community Brands in the association space.
“Bringing these brands together makes it possible for us to provide marketers with the ideal solution for their needs as they navigate the complex and rapidly changing environments in which they operate,” CM Group CEO Wellford Dillard said in a news release.
But Campaign Monitor’s strategy is not the only way this plays out: Late last year, the email marketing platform Adestra was sold off to Upland Software, an enterprise work solution, in a $60 million deal.
As sizable as that deal was, it was nothing compared to Adobe’s purchase of Marketo last year, a nearly $5 billion acquisition. At the time of that merger, Ad Age suggested that the move was a play to take on efforts by Salesforce “to offer marketers one-stop, cloud-based services that make sense of voluminous data and automatically take action whenever consumers or clients engage through channels such as search, social media, email, and video.”
We don’t know how any of this stuff is going to play out in the end, but we at least know what these companies want out of it.
What Associations Should Consider
As long as associations need vendors—and as long as venture capital and investor interests help drive the growth of such firms—association professionals are going to have to deal with these kinds of situations, roll with the punches, and potentially keep meeting new faces at the companies they work with.
That’s nothing new. But in the case of email, it reflects the realities of a problem I wrote about last summer: Currently, there’s too much choice in the market. Campaign Monitor swallowing up companies that have widely used solutions that likely don’t have much more room to grow on their own is a classic scheme used to maximize value of mature products. If this smaller email tool no longer meets your needs, they have a bigger one that checks all your boxes.
The acquisitions of Adestra and Marketo by much larger technology companies stand out not because of the email tools themselves, but because they represent portfolio plays. If Adobe can convince you to stay in its ecosystem—because it can now offer you effective solutions for everything from graphic design to data-driven marketing through email and all sorts of other platforms—that’s a win for them.
But is it a win for you? One thing I worry about when vendors choose to merge is that it can lead to a decline in the quality of service to smaller clients—or at least an increase in focus on the largest ones.
It doesn’t have to be that way, of course, and it highlights the importance of having a personal relationship with your vendor. If you’re just using a service and you don’t have existing personal relationships with the people who run it, an acquisition will probably be be a bigger shock to your system.
Minimize the shock factor. Keep those vendor relationships strong.