Email M&A is seeing a surge
Is it 2013 all over again? And what are the implications for email marketers?
Just a few years ago, I was at an email conference in Las Vegas, talking about the eras of email and how the then-recent space of acquisitions and mergers changed the trajectory of email innovation.
Remember going to conferences? Sharing your knowledge, seeing your friends, going out after sessions and building a community? Can you tell I’m jonesing to get back to a show?
But now we’re starting to see movement, with another surge in email company mergers and acquisitions.
The next era of acquisition
In my keynote at that conference, I explained how one of the major eras in the email industry was marked by the acquisition of big players in the space, and consolidations at the provider level. These moves had ramifications we still feel today. Essentially, they stifled the innovation that helped the email industry grow exponentially in its first decade.
Fast forward a few years and consider the growth of data privacy regulations like CASL, GDPR and state regulations in California, Virginia and other states. That made me think this next era would be all about privacy, but we’re talking once again about acquisitions.
Now we’re in another “wow” moment, where almost every day brings a new venture. Over the course of just a few weeks:
- Intuit buys Mailchimp for $10 billion;
- FreshAddress and TowerData merge;
- The CM Group (Campaign Monitor, Liveclicker, Sailthru, etc.) merges with Cheetah Digital;
- Pathwire acquires Email on Acid;
- Sinch acquires Pathwire;
- MessageBird Acquires US-based SparkPost for $600 million.
Is it 2013 all over again?
2013 was the year Oracle bought Responsys and ExactTarget was sold to Salesforce. The two ESPs had led email innovation for a decade or more but receded to become tools in the greater toolbox of the “marketing suite” format.
That was then. What I know now, after talking with contacts in the companies that took part in these most recent acquisitions or mergers, is that they are less about creating behemoth leaders in the email space and more about great companies coming together with a desire to make both partners better.
Most of the deals in my bulleted list above provide mutual benefit to the acquirers and acquired, or to each partner in the merger. In talking with company reps, what I heard most often is “We have great stuff. They have great stuff. We’re putting our great stuff together to make it better.”
Unlike in the previous M&A era, most of these appear to be good things for the email industry, aiming to build it up and keep it on a continued path to growth.
3 implications for email marketers
As good as it looks so far, we need to dive in and look at how these moves benefit marketers and whether they change the approach to the vendor relationship. I see three threads:
1. History has not been kind to acquisitions in the email space
If you look at earlier acquisitions in the previous 20 years, very few companies maintained their edge in leadership and innovation. That’s because the deals didn’t represent a mutual benefit. Generally, the acquiring company took the acquisition for a few pieces, and the rest of the company died on the vine.
One of the few acquisitions that succeeded back then was Experian’s acquisition of CheetahMail. It was an add-on to get sell-through to companies to get their data.
2. The CM Group’s growth is an example of successful acquisitions through a methodical accumulation of semi-complementary companies
Companies like Emma, Liveclicker, Sailthru and Selligent thrived post-acquisition because the acquiring company didn’t stifle innovation, didn’t slash marketing budgets or stop individual brands from continuing their thought leadership. The companies were allowed to continue the trajectories they had before the acquisition.
Did it all go according to plan? No, but CM Group proved it has a better recipe for combining individual companies into a whole ecosystem of mutual support and growth and helping them to optimize success.
Considering the acquisition of Cheetah Digital by CM Group, I see the same approach. Cheetah Digital brings extension through CDPs, new technology and building a platform from scratch.
Recently, I was on a client call during an RFP when we heard the news about the Cheetah Digital acquisition. Our client was considering a CM Group company, but I assured them that this event should not be a cause for concern because the group has shown it can do acquisitions better than the historical record.
However, there is concern about the future if CM Group is sold. That could introduce some instability, but we will have to wait and see.
Having said all that, I don’t have a vested interest in any of the companies I’ve mentioned here. Instead, I look at CM Group with optimism for its future.
3. The theme in all of these recent acquisitions is “building a better approach.”
TowerData and FreshAddress are reputable companies that have good people at the helm and run great businesses.
This merger makes sense, with two great companies that complement each other. The unified company will be a powerhouse. There are a lot of strong companies in the data and list quality space, and the new company will take both TowerData and FreshAddress to a higher level.
Guidance for email marketers
My general advice is to stay away from newly acquired companies. You can’t accurately gauge any instability that results from consolidation, and that could put you at a disadvantage for your company.
With this latest round of mergers and acquisitions, I don’t see the potential for instability in most of these deals. There’s not this instant queasy feeling that the combined companies will fall down on their commitments.
Yes, some of them might. The ones that don’t are the ones that realize the value of thought leadership, keeping strong teams together, innovation, and retaining customers by taking good care of them.
That’s what separates this era of M&A from the earlier one. For email marketers, this means email can continue to thrive. We saw the importance of email in COVID-19 and as one way to get into customers’ inboxes and express a company’s unfiltered point of view.
This holiday season, I expect we’ll still see marketers relying on email as much as they did in the past. What these mergers signify is that having good companies come together benefits our customers, who can get things done quickly without worrying about the craziness that can come after an acquisition.
My real-time experience during an acquisition
Here’s what I experienced a couple of weeks ago: I ran a small newsletter list through the free list validation tool FreshAddress offers. It’s not a substitute for a full validation, but it gives you a sense check for how many problem addresses your list might have.
I didn’t expect to find many issues because the list is relatively small and is 100% opt-in, with a clear permission path. I’m not usually a fan of list validation where you have permission and no apparent problems in sending emails. But my free check came back with a list of challenges. After running the list through FreshAddress’ paid service, we ended up removing 2% of the addresses.
This was just after the TowerData/FreshAddress merger was announced. But I didn’t let it cloud my decision where it might have in the past. I had faith in the technology. I was able to clean my client’s list. I didn’t disregard the company just because of the merger. Instead, I looked at the rationale for the event.
Smart marketers will look at the company’s offerings, synergies and whether they make sense for business.
At this point most of us still have plenty to do before the holiday rush. I mean, we have a couple of days before things get crazy, right? So use them wisely. Consider your options and which companies can help you.
If we have learned anything over the last year it’s that third-party services and agencies are there to accelerate your innovation. With these latest developments in the industry, I see great companies helping marketers market better.
This time, I’m looking forward to the next round of acquisitions to see if they continue the progress in bringing great companies together to build each other up for everyone’s benefit.