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Salesforce Has These Cloud Service Competitors to Fend Off

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Salesforce was ranked a market leader in the CRM marketing solutions space in 2016

Earlier in the series, we discussed Salesforce’s (CRM) fiscal 2Q17 results as well as its Marketing Cloud performance. We also discussed Salesforce’s aspirations from this offering and how the Demandware acquisition will provide an opportune push to Salesforce Marketing Cloud. Salesforce’s Demandware acquisition wasn’t just the company’s largest-ever acquisition, it was also the largest-ever acquisition in the marketing cloud space.

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The below chart shows the CRM (customer relationship management) market leaders in the marketing solutions space in 2016. Among Adobe, Oracle, Salesforce, IBM (IBM), and Teradata (TDC), Salesforce stood as the winner for the second straight year, while Marketo was listed as a company to watch out for under Vista Equity Partners ownership, according to DestinationCRM.

In June 2016, Vista Equity Partners, a PE (private equity) firm, announced the acquisition of Marketo for $1.8 billion. Tfmainsights stated that of the top 10,000 websites, Marketo leads the marketing automation space with a ~26.7% market share. Overall, Adobe (ADBE) is a leader in the Marketing Cloud space. Its Marketing Cloud is expected to command a $27 billion market by 2018.

Demandware and Marketo acquisitions indicate growing consolidation in the Marketing Cloud space

According to DestinationCRM, citing Bessemer Venture Partners’ 2015 State of the Cloud Report, by 2018, 62% of all CRM software is expected to be cloud-based. In late 2015, Paul Hamerman, vice president and principal analyst for business applications at Forrester Research, said, “Oracle’s focus has shifted away from traditional on-premises competitors, like SAP and Infor, and now seems primarily intent on competing with pure-play cloud providers like Workday and Salesforce.”

Regardless of which company leads the marketing cloud space, rising competition, as well as an increased preference towards the cloud, has contributed to the surge in M&A activity in this space.

Looking at Salesforce’s increased interest in the marketing cloud space, Oracle’s increased focus in this space was very much expected. After Salesforce’s Demandware buyout announcement, Oracle (ORCL) also announced two acquisitions in this space.

Oracle announced the acquisition of AddThis in 2016 to strengthen its position in this space. Its NetSuite acquisition for $9.3 billion is expected to further boost the company’s position in the data cloud and marketing cloud spaces.

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