Did Salesforce Need to Buy Datorama?

Salesforce on Monday announced a definitive agreement to acquire the marketing analytics company Datorama.

The acquisition will give Marketing Cloud a power boost by expanding data integration and intelligence, according to Salesforce.

The newly acquired tech will give marketers the ability to unlock insights across channels and data sources, providing a unified view that can help companies make smarter decisions across the entire customer journey and optimize engagement at scale, it added.

In response to that, you might be tempted to wonder, as I did, “Isn’t that what the Salesforce Analytics cloud was for?” or “What happened to Einstein?” You’d be right to ask, of course, but sooner or later it would dawn on you that the reasons companies buy other companies can vary, especially within the lifecycles of individual companies.

Reasons to Buy

Early in a company’s life, it’s not unusual to see acquisitions that essentially perform the functions of research and development — but at warp speed. After all, R&D is hard and risky, and if you see another company with something you like it can be easier to purchase the whole entity rather than spend what could be years developing what you see. Further, if the cost is some small multiple of what you envision spending, well, time is money.

Another good reason to acquire a company is simply for competitive advantage. Buying a useful technology before a competitor can will help keep your business booming while at the same time robbing the competition of some oxygen.

A third reason for making a purchase is “synergy” — that vague term that launches a thousand ships per year, half of which never return. Synergy is risky, because it depends on good analysis of a lot of subjective things like expertise, assets, customer base and good will. Done well, an acquisition like this can help drive new growth, especially if the acquired customer base needs some of what the acquiring company does well.

Emphasis on Service

From the outside, it seems that Salesforce might be buying Datorama for a combination of reasons, but probably not technology per se at this point.

Datorama has 16 offices around the world and 3,000 customers, many of which are name brands. That combination alone makes it attractive to Salesforce. Add to that Datorama’s expertise in marketing analysis and you can see a bigger fit than one simply concerned with technology.

Also, my hunch is that delivering Datorama’s expertise is highly services-oriented, which can explain why there are so many offices for a relatively small customer base. The base might be small, but the kinds of customers this company goes after expect on-the-spot assistance, especially when rolling out new programs, for instance.

My Take

Salesforce leads in virtually every CRM category and has a serious platform business that large numbers of customers increasingly have been relying on to build and maintain bespoke apps for unique business needs.

It’s natural, after all that product success, that the company continue to build out its services by offering on-site support for enterprise businesses taking the plunge into digital disruption. A judicious amount of services will drive further uptake of products.

So, it strikes me that acquiring Datorama, with its robust marketing analytics technology, makes a great deal of sense for Salesforce at this point in its evolution.

Another Salesforce initiative continues to be promoting its industry, or vertical, apps as it tries to gain market share in places where a general-purpose product, even one with a flexible platform beneath it, will have a hard time.

Time will tell, but this looks like a possible play to quickly deploy marketing analytics for specialized markets. If so, then the company is buying expertise right when it needs it.