'Marketing clouds are building things that can go directly to brands': Salesforce's ad acquisitions could be more bad news for agencies

Salesforce

Salesforce CEO Marc Benioff

• Salesforce's recent acquisition of Datorama signals that the marketing cloud firm wants to take on agencies and consultancies, according to Bill Wise, CEO of Mediaocean, a software marketing platform.
• The deal gives Salesforce direct insight into paid advertising, an area where it has historically lacked expertise.
• Agencies, consultancies and marketing clouds are all vying for more analytical and strategy work.

Massive consultancies like Accenture Interactive and Deloitte Digital have been aggressively moving into ad agencies' turf.

But agencies should also watch out for the likes of Salesforce, Oracle and Adobe.

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That's one school of thought when it comes to why Salesforce acquired data aggregation tool Datorama last week for a reported $800 million, according to Bill Wise, CEO of Mediaocean, a software marketing platform.

Advertising agencies are under increasing pressure to keep up with clients' growing digital needs. Holding companies like Interpublic Group and Omnicom are rapidly building out data expertise to keep up with consultancies that promise to tie technology, data, creativity and strategy together for giant marketers.

According to Wise, Salesforce's acquisition of Datorama opens up a new revenue stream that pits the company against those agency and consultancy giants.

Salesforce is eyeing a bigger push into paid advertising

Datorama is aggregation tool that helps brands like Unilever and PepsiCo. piece together and make sense of data from social media, search and display advertising campaigns.

"When you look at ad-tech and all the data, there are hundreds of companies in the space that provide unique value," Wise said. "If there's a company that can suck all the data into a cohesive business, that's a kick ass business-if they can execute on it, it's a billion dollar business."

According to Datorama, the acquisition "will enhance enhance Salesforce's Marketing Cloud with expanded data integration, intelligence and analytics, enabling marketers to unlock insights across Salesforce data and the myriad of technologies used in today's marketing and consumer engagement ecosystem."

Salesforce pointed Business Insider to Datorama's blog post for more information about its acquisition.

If that sounds a lot like what Salesforce already does, you're right. Both companies crunch reams of data and sell software organizing the data into dashboards. Salesforce is plugged into all sorts of marketers' 'customer retention management' (CRM) data sets like email lists, phone numbers and social platforms - but has traditionally lacked roots into paid media. It's not been a tool for buying and selling ads.

That could change, says Wise.

"Datorama becomes the thread to pull it all together," he said. "That would put [Salesforce] up against companies like Oracle and IBM."

Giving ad agencies a run for their money

The ad agency business continues to grapple with a mounting list of threats and challenges. Brands are increasingly asking for their agencies to offer more services for less money and are increasingly taking more of their marketing work in-house.

Meanwhile agencies are scrambling to assemble data-driven practices and offer streamlined services for clients.

So why would a marketing cloud company like Salesforce, Oracle or Adobe want to get into the day-to-day business of managing ad budgets?

"They're already dealing with the largest Fortune 500 companies and they're adding more and more capabilities," Wise said.

"People have talked a lot about the consultancies going after the ad agencies - what people aren't talking about is the marketing clouds are building things that can go directly to brands and compete."

But don't expect for Salesforce or IBM to start making or selling TV commercials.

"They don't want to compete in creative and all the labor associated with media buying," he said. "They want to build automated systems."

Plus, the duopoly of Facebook and Google continue to suck up digital ad budgets, meaning that marketing clouds are looking for new sources of revenue, according to Wise.

"The traditional software companies have always stayed away from it and now because of Google and Facebook, people are looking at advertising as a meaningful form of revenue," he said.