What does the acquisition mean?
Another week, another acquisition in the CDP space. This time it’s AgilOne, which was acquired by Acquia, a company providing enterprise services and support around Drupal, an open-source CMS. Acquia itself was a recent acquisition by private equity (PE) firm, Vista Equity, back in September. Acquia has always had a strong focus on content as the wrapper company that contributes and supports the open-source Drupal project (the Drupal founder is Acquia’s CTO and Founder). In the last few years, to get away from pure content management, Acquia has been increasingly positioning itself around personalization, and then the data required to drive that personalization. In fact, Acquia already has a product called Lift that is intended to connect the world of content and data, but could not escape the unenviable ‘Niche Player’ section of Gartner’s 2019 Magic Quadrant for Personalization Engines.
So where does AgilOne fit into this? AgilOne is going to be the next attempt for Acquia to get closer to customer data, likely by hacking up AgilOne to fit within their Lift product (which may result in AgilOne ceasing to exist as a standalone offering). This move of acquiring several companies, disassembling them, and trying to create a much bigger offering in a Frankenstein fashion is right out of the PE playbook. In fact, this is the same playbook that Vista ran previously with Kibo, their omni-channel commerce platform, which was based on three acquisitions that were disassembled, rebuilt, and rebranded. For Acquia, this is a risky move for two reasons:
- Acquia is largely a services company, and besides their contributions to Drupal, they’ve shown little ability to develop on the product front (see Lift), or really anything outside of the world of content.
- AgilOne is dated technology, and probably would have been gone long ago if the CDP category hadn’t provided a second wind. Still, they failed to capitalize on that, and have been struggling to differentiate in a crowded market.
This is not a recipe for vendor success in the competitive Martech landscape. Surely Vista would know this, which means the cost of this experiment through an AgilOne acquisition had to be low enough to warrant the corresponding risk/reward. Maybe that risk is fine for PE, but if you’re a CDP buyer in the market right now, I don’t think you should be taking the same level of risk when you select your vendor.
What does this mean for the broader CDP market?
Martech vendors are consolidating around a common principle– that unified data is critical for delivering personalized customer experiences. Vendors that do not provide a single customer view as part of their offering are taking steps to shore up that gap. Look no further than marketing clouds building CDPs (e.g. Adobe, Salesforce, and Oracle), web content management vendors buying CDPs (e.g. Acquia purchasing AgilOne), and personalization engine vendors merging with CDPs (e.g. RichRelevance was acquired by Manthan). Those vendors without unified data are quickly tipping their hand.
The second trend is that the market for CDPs is currently smaller than the number of vendors providing them. One should not infer that the market is small, but rather that the number of vendors selling CDPs is astronomically large. The result is vendors are going out of business (e.g. IgnitionOne) and vendors are streamlining their operations in response to demand that’s fulfilled by more and more CDP vendors each day (note- there are tons of rumored CDP layoffs that we will cover in a subsequent post).
The final trend is that CDP vendors are realizing their incomplete solutions won’t survive. Customers are demanding complete solutions that deliver upon three needs: the single view of their customers, predictive intelligence, and journey orchestration across all channels (marketing, sales, and service). Vendors that do not meet this criteria are looking for exit outlets to increase their chance of survival (e.g. Custora found Amperity; Manthan bought RichRelevance).
What happens next?
Consolidation is expected — and actually healthy — in the two to three years after new markets are created (see DMPs ten years ago). Here is what you can expect in the next 12-18 months as the CDP space stabilizes from 80+ vendors to less than 10:
- More vendors to shutter who attempted a pivot from the ad-tech world to the CDP world (e.g. IgnitionOne)
- Second-rate CDPs being acquired and folded into PE firms or services-heavy businesses (e.g. consulting or agencies)
- Adobe or Oracle acquiring an integration “CDP” like mParticle, Segment, or Tealium to get to feature parity with Salesforce and its Mulesoft integration platform
- Major marketing clouds (Adobe, Salesforce, and Oracle) trying to deliver on their own CDP roadmap, but upon their stumble (and at least one of them certainly will) they will look to acquire one of the remaining independent CDPs
- The market settling on two classes of CDPs— Enterprise and Mid-Market — that offer differing solutions to meet the unique needs of their buyers
- The Enterprise CDP class will consist of four vendors: two marketing cloud offerings (which require buyers to use them for both CDP + execution) and two independent CDPs (which provide buyers a vendor-agnostic, best-of-breed hub alongside their existing best-of-breed execution spokes)
Again, all of the above change is good for the market, and most of all, for the CDP buyer. So stay tuned and try to enjoy the ride!
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