CRM Software Quotes
CRM search»Marketing Software»Act-On Software Review


Act-On Software Company Review

 

Act-On Software Company Viability Analysis

Headquartered in Beaverton, Oregon, and with satellite offices in Roseville, CA, Menlo Park, CA and Bangalore, India, Act-On Software is a small, privately held company backed by Trinity Ventures, U.S. Venture Partners and Voyager Capital.

As with several small marketing automation software companies, Act-On Software has been venture financed over multiple rounds. The company received initial funding in about March 2008 of approximately $2M from Cisco Systems and WebEx founder Subrah Iyar. In November 2010, the company raised a Series B round of $4M co-led by Seattle-based Voyager Capital and Silicon Valley-based US Venture Partners. In June 2011, the company acquired a Series C venture funding round of $10M led by Trinity Ventures.

Act-On Software chooses not to disclose company revenues or specific financial performance, thereby making company viability judgment highly speculative. However, some factors and accomplishments which suggest Act-On's longevity will continue at least through the short-term include the following:

  • Act-On is achieving very impressive revenue and customer acquisition growth. The company claims to be the highest growth marketing software provider in the industry, and while that may or may not be true depending upon which competitors you consider (i.e. HubSpot), there is no doubt that the company's growth is inspiring.
  • Act-On Software shows the ability to innovate. The company updates its cloud marketing software product as frequently as every two weeks. New marketing software capabilities such as progressive profiling and Social Media Insights/ Competitor Insights suggest the company intends to advance the product as fast as possible.
  • The Act-On software product delivers a compelling value proposition for its target market. When considering acquisition costs, time to value, add-on costs (or the lack thereof) and Total Cost of Ownership (TCO), it's hard to beat the financial proposition that Act-On offers.
  • The company is fortunate to have a veteran founder and CEO. Raghu Raghavan has been around the block a few times, knows the email marketing industry better than most, has a solid vision for what Act-On aspires to achieve and is a proven leader.

As they say in the financial services industry, past performance is no guarantee of future results, and Act-On faces a number of business risks and competitive challenges including the following:

  • Despite impressive growth, the cash burn is high and there is always the obvious vendor viability risk when the company is unprofitable. Act-On Software achieved revenue of about $5 million in 2011 and hopes to be profitable by 2012. We find it doubtful profitability will be achieved in this timeframe.
  • The company is being out-invested in terms of R&D, product advancement and geographic expansion by its most direct competitors (Eloqua, Marketo, HubSpot, etc.) by a multiple factor. This disproportional spend is certain to separate the distance among marketing software products, although the timing of such is uncertain.
  • As Act-On Software caters to the SMB market, it is more susceptible to be encroached by a plethora of new start-ups as well as existing players advancing their marketing software solutions. This encroachment is clearly underway and will as clearly challenge pricing and erode margins in the months and quarters to come.
  • For nearly all marketing automation software publishers, including Act-On Software, the most critical risk is Salesforce.com and the CRM software vendors at large—and their timing to enter the marketing automation software industry directly. The current industry of small but growing marketing software vendors will incur sudden impact when (not if) Salesforce.com expands the marketing software functionality in its CRM software product, to include lead management and marketing automation, and effectively introduce a new Marketing Cloud beyond what has already been touted. In fact, CRMsearch.com believes such occurrence is imminent and will incur over two phases in parallel. In phase one, Salesforce.com delivers a social marketing cloud that then later morphs with marketing automation. In phase two, several other CRM software vendors build or acquire marketing automation and embed the new capabilities within their flagship CRM products. For CRM vendors who choose to create their own marketing automation, the solutions will not match the functionality and automation of the existing marketing software products, but many customers will nonetheless accept a "good enough" solution that is tightly integrated with their core CRM system. Over a longer haul, the marketing automation software pure plays will be forced to adapt in innovative ways. Some will pursue new target markets, some will go after vertical markets, some will become acquired by CRM software vendors and many will cease to exist.

The Risks & Rewards of Growing Markets and Predictable Acquisitions

While not unique to Act-On Software, the ventures who back marketing software companies such as Act-On expect a liquidation event in order to make their investments worthwhile. Therefore, due diligence is necessary to make an informed purchase decision, protect technology investments and minimize adverse disruptions to the company.

Enterprise marketing software of all types—including lead management systems, marketing automation systems, multi-channel campaign management and marketing resource management (MRM) applications—are incurring near fever pitch media buzz, increased customer acquisitions and growing market sectors. While generally considered point solutions, their ability to satisfy specific marketing demands and plug holes among broader CRM and marketing applications make them likely acquisition targets. Already IBM, Oracle, SAS and Teradata have acquired Unica, Market2Lead, Assetlink and Aprimo, respectively.

However, the acquisition of point solutions have historically bestowed very mixed results for customers of those applications. When a larger software company acquires a smaller, specialty software company, the applications are then rationalized. Competing or overlapping feature sets must give way on one side or the other, the use of mixed or different technologies results in 'technical debt' that must be resolved, product roadmaps (generally of the acquired company) give way to new strategies and alignment with other software products in the supplier's portfolio. And during this rationalization process, which may consume a quarter or a year, development plans freeze, product releases slow to a crawl, partners & alliances reevaluate their new complimentary or suddenly competitive nature, software pricing models are reexamined, and commitments made to customers often take a back seat to a new company strategy.

Enterprise software companies such as IBM, Oracle, SAS and Teradata represent the first phase of the marketing automation software acquisition spree. A second phase will follow. Acquisitions prompt remaining competitors to follow suit and assemble more full featured marketing suites in order to stay competitive. While marketing automation is one of the three pillars of CRM software applications, key CRM vendors such as Microsoft, Sage, SAP, Salesforce.com and SugarCRM have either no marketing automation or no credible marketing automation solution.

Once the next phase of marketing automation software acquisitions begins, marketing automation will literally move from one technology category to another. The point solutions that delivered value by filling voids not satisfied by the broader solutions will no longer have that unique value and those not part of the convergence will struggle to compete in a new market. The advantages of point solutions will deteriorate quickly once the next acquisition phase penetrates the SMB market. This transformation process is inevitable and customers should plan accordingly.

As marketers further leverage technology, they also become more dependent on that technology. Acquisitions bring both promise and pain for customers. Those customers not prepared for such transition will experience more of the later than the former.

Next: Act-On Software Strengths and Weaknesses >>

Act-On Software ReviewAct-On Marketing Software ReviewAct-On Email MarketingAct-On Marketing SoftwareAct-On Social MarketingAct-On Technology ReviewAct-On Software PriceAct-On CRM IntegrationAct-On Software ViabilityAct-On Strengths and WeaknessesAct-On Software Competitors

 

 

Act-On Software

 


Act-On Marketing Software Review

 


 


CRM Price Quote

Follow Us
social
social
social
social

crm search

Home   |  CRM  |  Sales  |  Marketing  |  Service  |  Call Centers  |  Channels  |  Resources  |  Blog