New Marketo CEO Steve Lucas: Massive consolidation is coming to marketing tech

As the ad tech boom of the past decade has wound down to a roll-up battle among tech giants ranging from Google Inc. to Salesforce.com Inc. to Oracle Corp., marketing technology has emerged as the next battleground.

That’s one of several reasons Steve Lucas (left), who joined Marketo Inc. as chief executive in October, thinks martech will see rampant consolidation in the next year or two. Lucas outlined his vision for Marketo and martech in interviews with SiliconANGLE Media co-CEO John Furrier, both for an appearance in theCUBE’s Palo Alto, California, studio and in a segment on the Silicon Valley Friday Show.

Before Marketo, Lucas was a senior executive at business software giant SAP SE, most recently president of its Enterprise Platform & Analytics unit. He led SAP’s HANA analytics processing platform from zero to more than $1 billion in annual revenues. Lucas replaced former Marketo CEO and founder Phil Fernandez. The change followed the $1.8 billion acquisition of Marketo by Vista Equity Partners a few months earlier, taking the company private after speculation that it was being shopped to SAP and Microsoft Corp.

Consolidation in martech — a hazy term but generally defined as the set of technologies used to market to known customers or prospects versus ad tech’s attempts to reach likely new customers — actually started several years ago. Companies such as Oracle, Salesforce and IBM Corp. snapped up startups to complement their other ad and marketing cloud services.

Lucas thinks one new macro-event that could help kick the martech roll-up into high gear: a new U.S. president Jan. 21. Donald Trump has vowed to change tax laws to make tens of billions of dollars held overseas by U.S. tech companies more attractive to bring back home. “When you see this repatriation of cash coming in under the Trump presidency, you’re going to see significant growth in M&A,” Lucas said.

But that’s not the main reason he predicts rampant consolidation, which could come across information technology. Mainly, marketers are looking to reach consumers in a more personalized way, but do it at massive scale in real time. Of course, since Marketo’s key selling point is that it can offer a single view of customers at a scale of millions of consumers, and Lucas is looking to make Marketo one of the key consolidators, his comments can be seen as self-serving.

Nonetheless, he also may be right. It’s clear that marketers are looking for more intimate engagements with consumers. “Marketers need to engage with millions of people in a personalized manner at scale,” Lucas said. “It’s go digital or die.”

Crushing the marketer

That’s how Facebook Inc. has managed to create a blockbuster advertising business even at a time when Google Inc. has become increasingly dominant in digital advertising. Like few other companies at scale, it doesn’t need to use cookies or other digital tracking methods to guess consumer preferences and behavior: It already knows because people use their real identities and give Facebook precise and accurate data about themselves.

But Facebook and Google can’t be the end-all and be-all of digital advertising, if only because those aren’t the only places people are spending time online. Indeed, the rise of many new communications platforms, from Pinterest to Snapchat, not to mention apps such as Uber and Airbnb that have amassed millions of regular users, and new devices such as smart watches, means marketers must contend with more and more platforms and customer sets seemingly every month.

“What’s crushing the marketer right now is that every time there’s a new consumer touchpoint, there’s a new [marketing] point solution for it,” Lucas said. “It’s overwhelming the marketer,” who must deal with 30 or 40 different apps and devices. In fact, there are some 4,000 companies in martech, by one count.

The problem with that, he said, is that “you lose any context on who the customer is.” It’s a problem marketing clouds ranging from Oracle’s to Salesforce’s to Adobe Inc.’s are trying to address — in fact, it’s a prime driver for their own acquisitions. Marketo is trying to offer a range of services that, at least according to Lucas, may be able to provide that unified view more simply than can the marketing clouds with their disparate acquisitions that take time to integrate.

In particular, Marketo aims to up its game with a revamp of its architecture called Project Orion that’s intended to provide even higher scalability, including reaching Internet of Things devices such as refrigerators and cars, using big data and artificial intelligence. “Orion takes the ability to have millions of touch points for the consumer a year — social, mobile, digital — to quadrillions of touch points,” said Lucas, who is writing a book on the emergence of what he calls the “engagement economy.”

Photo by theCUBE