Salesforce has shifted back into gear on ad tech M&A after a three-year quiet period.
The company will snap up data management platform Krux in a move that could bring its marketing stack into closer parity with its archrival Oracle.
The acquisition's price tag is $700 million, a number that will put smiles on the faces of many ad tech founders who have struggled with investor sourness and atrophied valuations in recent years. The deal's structure is an even split of cash and stack.
Buying Krux will let Salesforce customers do advanced segmentation and audience management from within the Salesforce Marketing Cloud (SMC), a platform that also includes marketing automation (acquired via ExactTarget in 2013), social campaign management (Buddy Media in 2012) and social listening (Radian6 in 2011) capabilities.
Salesforce has an acute need for DMP capability. The company has until now focused on partner integrations to support its SMC customers' data management needs. In June 2015, the company partnered via its Active Audiences API with five data partners, of which Krux was one. But its ability to ingest data streams from those partners could not fully support all complex instances for marketer data management. And ironically, much of the CRM data housed by Salesforce has been activated on its competitors' DMPs, namely Oracle and Adobe.
Gartner Research VP Martin Kihn noted, "Recently Salesforce has seemed to be less interested in ad tech and seemed to be doubling down on the CRM side of the business with campaign management, email campaigns and highly targeted advertising mostly through Facebook Custom Audiences."
"That was fine, but they are missing out on the entire ad tech universe," Kihn said. "Krux gives them entrée into the whole non-Facebook side of advertising."
Oracle, in particular, has focused strongly on an owned strategy for its data and data platform businesses, having acquired four companies in less than two years (BlueKai, Datalogix, Crosswise and AddThis).
According to one senior agency source, it's been evident for some time that Salesforce needs a centralized data management capability.
"Data is messy and it's got to go somewhere," this person said. "There's a collation and interpretive level that they've never had. Yes there are APIs, you can point your data to it. But if you point multiple data sets to it then it starts to break down."
Historically known for its focus on publishers, Krux has over the past year been in a push to find uptake with advertisers. The 2015 hire of Jon Suarez-Davis, Kellogg Co.’s VP of global media and digital strategy, as its chief marketing and strategy officer was part of that initiative.
The company claims approximately 200 customers overall, and its brand customers have included ABInBev, ConAgra Foods and JetBlue.
Krux is one of a shrinking handful of standalone data management companies, a group that also includes Lotame and Neustar's soon-to-be-spun-off ad tech holdings. Many others, such as BlueKai, Datalogix and LiveRamp, were scooped up in a wave of acquisitions in 2014.
Recently, Krux took a significant step toward paid media buying by adding support for header bidding. A group of DSPs and 28 marketer buyers are using the offering to acquire media from the approximately 32 publishers that carry Krux's header-bidding tags, according to the company.