What Happened:
Teradata signed a definitive agreement to acquire Aprimo for approximately $525 million including the assumption of approximately $25 million of cash at closing.
Analysis:
Aprimo has been toying with an IPO for years, but market conditions held this at bay. With $60M in recurring revenue and $80M in sales, it looks as if Aprimo pulled a premium amounting to a little over six times revenue. Wow! Merry Chrismas Bill Godfrey!
This marks the final chapter in the consolidation of the large enterprise marketing automation solution providers. Unica, Aprimo’s closest competitor, was snatched up by IBM back in August 2010 after IBM made a number of other significant investments in marketing automation including Coremetrics (enterprise web analytics) and Sterling Commerce ( cross-channel commerce and integration of customer, partner and supplier networks).
Teradata had to feel pressure from IBM’s combined $3.5B plus in marketing automation and data warehouse acquisitions in 2010. Don’t forget, in September 2010, IBM acquired data warehousing vendor Netezza for $1.7 billion, which is expected to help IBM compete with Oracle and Teradata on price and performance. Aprimo was certainly a natural acquisition to block encroaching competition on Teradata marketshare. Frankly, customer data and digital marketing data will continue to grow at exponential rates, so it makes sense for the Teradata’s and IBM’s of the world to pull in applications and tools that contribute to the explosive growth of customer / marketing data and provide hardware and software solutions to store and transform these overwhelming amounts of data into actionable insights.
Aprimo claims that 36% of Fortune 100 organizations leverage Aprimo. But is that really that impressive? Every Fortune 100 company conducts marketing, and most are fraught with inefficient manual processes. Unica certainly doesn’t own the other 64%. How come 100% of Fortune 100 companies don’t own Aprimo or Unica? The point is, in many respects marketing automation is still an emerging discipline – one that is increasingly being validated by early adopters, and by no means mature. The complexity and change management involved in Aprimo implementations is nothing short of a transformational effort. Until now, the fire and passion for building an $80M business around marketing automation was fueled by Aprimo’s growing need to validate the benefits and ROI from their products and services. Hopefully, IBM and Teradata didn’t pluck these technologies from the tree before they could mature.
Experience tells us that Aprimo and Unica face the very real fate of withering on vine inside of these larger organization- even as independent business units. For Teradata at least, if it doesn’t sell disk, it typically doesn’t sell. It would be sad to see the pilot light stifled during such a critical time in the evolution of marketing automation. It seems like both Teradata and Aprimo recognize the bigger picture and the overwhelming need to address enterprise marketing and customer data challenges from one scalable platform. But only time will tell if the today’s investment was truly an offensive move to continue the evolution of marketing automation or a defensive move to reduce the “big blue” object in Teradata’s rear-view mirror.
