March 19, 2013


Let's look at the 10-K statement of ExactTarget, a brand many of you utilize for digital marketing execution.

As you already know, this is one of many vendors that strongly encourage you to utilize digital, cross-channel (omnichannel) tactics to grow your business.  This is interesting, of course, because ExactTarget tells us on page four that the market for digital solutions is large and underserved, causing ExactTarget to attempt to attract new clients by growing their sales force.

This is a consistent theme, folks, when reading vendor statements (recall, we talked about this when reviewing Forrester Research).  Vendors tell us we must grow our digital footprint ... then the same vendors communicate to Wall St. that they will grow via an analog sales force.  Pay attention to what vendors tell you to do to grow, and pay attention to what vendors actually do to grow themselves.  There is a disconnect, and we should question the disconnect.

In fact, here's a direct quote from the 10-K:
  • We believe our team is the largest sales organization devoted to selling digital marketing SaaS solutions, with more than 400 sales professionals located on four continents. Our field sales team sells into the enterprise market, while our inside sales team sells to small and medium-sized organizations primarily via telesales.
Again, vendors are telling us to grow, digitally.  And then, vendors do the opposite.  Do vendors tell us to sell via telesales?  Telesales!!

This is not meant to criticize ExactTarget.  They're growing by 40%, each of the past three years.  It's obvious analog sales techniques work!

Here's another tidbit.
  • 290 research and development employees.
  • 400+ sales professionals.
ExactTarget employs more sales professionals than folks who create digital marketing solutions.  Ponder that one for a moment, when vendors tell you that you must be digital or you'll be dead.

From page 16.
    • If cross-channel, digital marketing SaaS solutions are not widely adopted, or the market for such SaaS solutions does not develop as we expect, our business, growth prospects and financial condition would be adversely affected.
    They're telling you, flat out, that if you don't embrace what they're selling, their financial condition would be adversely affected.  Keep this in mind when you read about vendors telling you that you must become digital or die --- what they're saying is if you don't embrace digital, they may die!

    You might appreciate the five year sales and profit trajectory.
    • 2012 Sales = $292.3 million ... EBT = ($21.0) million.
    • 2011 Sales = $207.4 million ... EBT = ($24.6) million.
    • 2010 Sales = $134.3 million ... EBT = ($18.2) million.
    • 2009 Sales = $95.4 million ... EBT = ($2.8) million.
    • 2008 Sales = $72.3 million ... EBT = $6.5 million.
    To be fair, they have plenty of cash.  And they spend considerable time showing that Adjusted EBITDA is positive.

    We keep reading how we must be digital, or we're in trouble.  Carefully parse what the vendor community tells you about how they grow.  ExactTarget is growing via an analog sales force.  ExactTarget employs more sales employees than research/development staffers.  Their growth strategies, in many ways, contradict the growth strategies they sell to us.

    P.S.:  The phrase "omnichannel" does not appear in their 10-K filing.

    P.P.S:  This doesn't mean that you shouldn't go all-in with digital strategies.  This means, quite honestly, that you should do what is best for your business and your customers.  If that's digital, great.  If that's analog, great.  ExactTarget is doing what is best for them, using different marketing tactics than the ones they sell.  There's nothing wrong with that.