Tuesday, October 11, 2011

Spark by Marketo

Marketo announced a new sub-brand called Spark targeted at the SMB market. It's a testament to how successfully Marketo has transitioned from SMB to the enterprise space that it has to go back and offer a new brand for what used to be its primary market. The demand for marketing automation at large enterprises is driving rapid growth for all marketing automation companies, and Marketo is no exception. So much so that smaller prospects are starting to perceive the company and its target market as having outgrown them. Not so.
SMB is intrinsic to Marketo's heritage and the company has no intention of walking away. The Spark offering is more than just a "lite" version of its flagship product. The idea behind Spark is that it is a bundle of software and services to help small companies quickly adopt and become expert in the use of modern marketing automation technology. Marketo is dedicating expert staff to offer training, support, and mentoring for its Spark customers. The importance of this cannot be overstated as marketing automation requires a higher level of sophistication, analytical ability, and business process expertise than most small companies have in their marketing departments.
The challenge for Marketo will be managing Spark as a sustainable business model. Typically the enterprise segment is much more profitable for software companies (SaaS or not). Large companies have more money, bigger projects, and greater potential for expansion into other business units. However, Marketo knows the SMB business well and has a subscription model revenue stream that's ramping up to the point where it can afford to support the launch of a down market offering until it starts to pay for itself. It is the rare company that can serve both segments well, but Marketo has clearly separated the two teams internally which IDC believes is absolutely critical for success.

3 comments:

  1. It would appear to me that Marketo has started to struggle in the Enterprise space and is looking for other revenue sources. While the initial price point is attractive once a company hits the 30,000 email wall their price jumps to $2,000 a month. Even for a growing business this is a substantial jump in price and you are not getting any additional functionality. It will be interesting to see how this plays out but I would skeptical until we hear all the facts.

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  2. Not sure how you reach the conclusion that Marketo is struggling in enterprise and is looking for other sources of revenue. They built the business on the SMB space and only recently entered enterprise in a serious way. In terms of pricing all the marketing automation vendors have tiered pricing based on various usage models with break points that work better for some business models than others.

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  3. I'm pretty sure Marketo didn't start out with small businesses in mind. Otherwise, they wouldn't have just rolled out this product. After having used Spark, I am not impressed. It's not ideal for a small business. It's time consuming and much more involved than someone at a small business would have time for. It's also much more complicated than it needs to be and not at all user friendly. When I want to send a mass e-mail, I don't want to complete 50 steps before I'm able to send it. Just ridiculous. I'd imagine it's much like the regular Marketo solution which might work for medium to large business but not small.

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