Marketing Automation and the Marketo IPO

Marketo IPOWe’ve got some thoughts to share on marketing automation and the marketo IPO. We’ve watched our competitor, Marketo, over the years and we must say their growth has been impressive. Marketo has helped put marketing automation on the B2B services map. The company recently announced plans to file a $75 million initial public offering (IPO) to “expand and build out its marketing software platform”. This action follows earlier private capital funding rounds of a reported $108 million.

Reviews on the Marketo IPO from Wall Street to Market Street have been mixed. What we do know is that moves like this indicate an ever-growing acceptance by companies of all sizes of the marketing automation industry. We at Lead Liaison are pleased to be a part of the rising tide.

We see marketing automation as the solution for poor lead management, inadequate pipeline management, a lack of sales and marketing alignment or integration, and several other business challenges. Our innovative Lead Management Automation™ platform provides solutions to many of the present-day challenges to being competitive in your markets. Lead Liaison, Marketo, and other marketing automation companies provide systematic marketing delivery and lead management platforms that allow B2B enterprises to methodically engage with their audiences. The Marketo IPO raises awareness of the benefits that MA provides.

The IPO comes at an interesting time for Marketo, however. The IPO raises a question for investors:  Is this the right time to be raising funds? Although, according to sources, the company states it has earned revenues of $14 million in 2010, $32 million in ’11, and nearly $59 million last year, it has had expanding net losses of almost $12 million in 2010, $22.6 million in 2011, and over $34 million in 2012 towards an accumulated deficit of a whopping $82.2 million. That’s higher than the value of the IPO.

Marketo says it intends to “invest significant funds” to expand its marketing and sales operations, develop and enhance its product line, and upgrade its data center infrastructure and services capabilities. Although, Lead Liaison executives understand the capital investments required to increase technological capacity and development, many times much of an IPO’s proceeds go towards marketing and sales costs.

The IPO also raises a question for Marketo as a company. How will the recent funding activity affect the company’s customers. Often when companies go public there is a drop-off in some areas of customer satisfaction. Our privately-owned stature allows us to focus on developing products in response to our customers not to appease our stockholders.

We respect Marketo’s decision to leverage its top line growth by going public. And we are thankful for the exposure the Marketo IPO announcement brings to the marketing automation space. But is it the right time, as the industry continues to cement its place in business services, to become focused on internal needs and not the needs of the marketplace?

Although we congratulate Marketo on its spectacular growth, financing accomplishments, and its impact on our industry, we wonder about the direction Marketo will turn when its obligations could change from serving its customers’ needs to fulfilling its stockholders expectations.