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Interactive Marketers Vie For Customers In An Increasingly Crowded Field

Posted on Wednesday, Nov 30th 2011

A Forrester Research report on marketing spending in the United States projects that interactive marketing spending in the country will increase to $77 billion in 2016 from an estimated $34 billion in the current year. In 2011, interactive marketing spend accounts for 18% of overall marketing spending in the country. That share is projected to rise to 35% by 2016. Within interactive marketing, spending on campaigns on email, mobile, and social media will grow 27% annually to $15.7 billion by 2016. Another report by IDC estimates that spending on marketing automation will grow to $4.8 billion in 2015 from $3.2 billion reported last year. Spending on analytics is expected to grow to $3.4 billion in 2015 from $2.2 billion reported last year.

Eloqua’s Financials
Eloqua is one organization that is helping customers improve the performance of their online marketing tools. Eloqua focuses on revenue performance management through deployment of SaaS-based tools that help their customers with automated marketing, demand management, and lead generation services.

Virginia-based Eloqua was founded in 1999 by Mark Organ, Steven Woods, and Abe Wagner in Toronto. As of June of this year, they had more than 1,000 clients worldwide, including Adobe Systems, American Express, and Dell, to name a few. They earn revenues through a subscription-based model and other professional services. Their subscription model is priced on a tiered structure in which fees increase with the size of the customer’s database of potential buyers. Professional service fees are earned for services provided to get customers onboard. These services include implementation, integration, and education of their sales automation and other marketing systems.

The company has raised $36 million in venture funding through investments from Bay Partners, Bessemer Venture Partners, and JMI Equity. For the six months ended June of this year, they reported revenue growth of 38% to $31.7 million. They suffered a loss of $3.5 million during the period compared with a loss of $1.5 million in the year-ago period.

Eloqua’s Expansion Plans
Eloqua is continuing to invest in the development of new solutions that will enhance the functionality of their platform. Last year, they launched their latest release, Eloqua10. Eloqua10 was designed through improvement of workflows to help make marketing tasks shorter and faster to execute. The platform uses predictive analysis to help marketers determine, in real time, the impact of their campaigns. Earlier this year, they released an App Cloud as a hub for B2B marketing applications that connect with Eloqua’s platform and includes free connections to more than 20 leading social, data, and conferencing applications.

Besides product expansion, Eloqua is also looking at international expansion. They are focusing on markets in Europe, South America, and Asia-Pacific.

In August of this year, Eloqua filed their S1 for an IPO launch, which is proposed to raise $100 million. They are targeting annual revenues of $100 million by the year 2013 and expect to be worth $400 million-$500 million by that time. While Eloqua may still be working on further details for their IPO, Responsys, another marketing automation company, went public in April of this year.

Responsys’s Offerings and Financials
Responsys (NASDAQ:MKTG) is among the leading providers of e-mail and cross channel marketing solutions. San Bruno, California–based Responsys was founded in 1998. Their proprietary Responsys Interact helps provide marketers with a platform that can plan, implement, optimize, manage, and analyze performance of marketing campaigns across multiple channels such as e-mails, mobile, social, and Web-based platforms.

Their recently released Responsys Interact for Display helps marketers focuses on marketing campaigns and analysis of display ads. The solution will let marketers leverage the profile-based, behavioral, transactional, and communication-oriented knowledge of their customers and prospects to drive display ads as a part of their coordinated, cross-channel marketing programs.

Responsys raised $51.9 million in venture funding from investors, including Redpoint Ventures, Accel Partners, Foundation Capital, Sigma Partners, Lighthouse Capital Partners, and R. B. Webber & Co. In April of this year, they filed for an IPO to raise $61 million from the market with stock priced at $9.25 a share.

For the recently ended quarter, Responsys saw revenues grow 51% over the year to $33.9 million driven by impressive growth in both subscription and professional services. Subscription revenues grew 44% over the year to $23.8 million and professional services grew 72% over the year to $10.1 million. EPS for the quarter was $0.03 compared to a break even quarter last year.

Responsys expects to earn $34 million-$35 million in revenues  for the current quarter with EPS of $0.03-$0.04.

Responsys’s International Expansion
Responsys is focusing on international growth. They have operations in Thailand, Singapore, China, Australia, and New Zealand and are now looking at expansion in Europe. To that end, they recently set up operations in Germany. Market reports suggest that within the EU, Germany has the largest online population and thus plays a major role in online advertising, e-commerce, social networking, and other digital activities for the continent. Responsys aims to address this influential online community as part of their growth.

Responsys’s stock is trading at $8.46 after having touched a high of $18.19 in July of this year. They are trading at a market capitalization of $401.37 million.

Chart forResponsys, Inc. (MKTG)

Besides Eloqua, which plans to list, and Responsys, which went public, there are other smaller players that are growing fast. iContact, led by CEO Ryan Allis, is operating at annual revenues of $40 million, and Marketo, led by CEO Phil Fernandez, claims to have recurring revenues of more than $30 million. Recently, I also wrote about  Act-on Software, which is actively pursuing smaller businesses. Act-on is founded by Responsys’s co-founder and ex-CTO, Raghu Raghavan, who also spoke with us earlier this month.

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