eMarketer’s latest report on global marketing spend projects worldwide spending on advertisements to increase 6% this year to $545.4 billion compared with the 3% growth reported a year ago. Within the market, growth will be driven by digital ad spend which is projected to grow 17% this year to $140.15 billion with mobile ad spend growing 85% this year to $32.71 billion. This will also be the first year when ad spend on digital media will account for more than 25% of all media ad spend for the year.
Digital marketing solutions provider Marketo (Nasdaq:MKTO) saw strong revenue growth for the quarter ended June this year. Second quarter revenues grew 60% over the year to $36 million. Deferred revenues grew 74% to $53.2 million. They ended the quarter with a net loss of $0.33 per share.
By segment, subscription and support services grew 57% to $31.24 million and professional and other service revenues grew 83% to $4.8 million.
For the current quarter, Marketo projected revenues of $36.5 million-$37.5 million with a net loss of $0.42-$0.44 per share. They expect to end the year with revenues of $143 million-$145 million and a net loss of $1.54-$1.58 per share.
Marketo’s Product Expansion
As part of their product expansion focus, Marketo recently entered into a tie-up with SalesPredict, a SaaS-based solution that leverages predictive analytics. As part of the agreement, SalesPredict will integrate their smart predictive lead scoring algorithms into the data from Marketo’s LaunchPoint Ecosystem to help marketers focus more on a targeted audience that is more likely to convert to sales. The application will be sold as part of the complete suite of SalesPredict’s offering.
Marketo’s International Expansion
Meanwhile, Marketo has also grown their international presence and announced the opening of their Australian data center. The new data center will help Marketo expand their geographical footprint in the Australian and New Zealand markets while mitigating offshore data storage risk and enabling their customers to comply with data sovereignty mandates and with Australia privacy laws.
It is not just international footprint that is growing for Marketo. In July this year, they also opened an East Coast hub in Atlanta, Georgia. The new office is expected to house 200 employees within two years.
Marketo’s stock is trading at $31.74 with a market capitalization of $1.29 billion. It touched a 52-week high of $45.00 earlier this year.
Another product expansion that I feel Marketo should look into is that of webcasting technology. I have mentioned earlier how it would be beneficial for them to diversify into this field by acquiring San Francisco-based ON24. According to a Frost & Sullivan report released in July 2014, ON24 remained the market leader in global webcasting and virtual events market with a 27.8% market share of total revenue.
Founded in 2008, ON24’s patented cloud-based platforms are the leading offerings for webinar-based marketing solutions and virtual environments. Their solutions help provide marketers with an interactive and immersive user interface to manage webinar analytics for events, campaigns, and benchmarking. The platform is known for their webcasting and virtual communication solutions that are useful in marketing campaigns along with virtual training, talent development, and town hall meetings. Additionally, their platform is also easily integrated with leading CRM and marketing platforms so that marketers are able to optimize demand generation, lead qualification, and accelerate conversion within their pipelines.
ON24 is privately held and does not disclose their financials. However, in a recently published report, they mentioned that they have seen rapid growth and their network is now reaching over 8.3 million business users who watch an average of 732 hours of ON24 webinars each hour. According to their statistics, they record a new registration on an ON24 webinar every 1.8 seconds. They expect to deliver more than 33,000 live webinars this year and have already seen that translate to a growth of 95% in revenues in the first half of the current year.
Market reports suggest that the company had generated revenues of $50 million in 2010 and was looking to grow that to $75 million in 2013. They have been profitable since 2006. They remain venture funded with $46 million in funding from Canaan Partners and Rho Management.
Marketo and ON24 have a lot of overlapping customers.