Responsys or Constant Contact Anyone?

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The $2.5 billion acquisition of ExactTarget by Salesforce is just the latest blockbuster deal in the web marketing space as enterprise software companies look for value in online marketing. This deal puts the major software vendors on the prowl for marketing assets.

So who's the next acquisition candidate?

Responsys and Constant Contact

By Labor Day, Adobe or Microsoft must acquire an Email Service Provider (ESP). Adobe has built and bought various components of their Digital Marketing Cloud which started in earnest with their acquisition of Omniture. Mircosoft needs an ESP to keep Microsoft Dynamics CRM viable now that Salesforce acquired ExactTarget. Reponsys or Constant Contact are possible mergers and acquisitions (M&A) targets.

Adobe Systems (NASDAQ: ADBE) M&A focus has been in marketing technology — first Demdex, then Efficient Frontier. Microsoft (NASDAQ: MSFT) has yet to really jump into marketing technology in a major way. Snapping up Responsys or Constant Contact would be a fabulous way for Microsoft to counter the Salesforce (NYSE: CRM) ExactTarget deal and keep Microsoft Dynamics CRM on par with Salesforce's newly acquired (ExactTarget) CRM marketing prowess.

Email is Important

Email is STILL one of the most effective digital marketing investments — personalization and analytics make email marketing valuable. Microsoft and Adobe have nothing compelling to offer in this area. Email marketing and social networks are typically the places customers are receptive to recommendations.

Adobe and Microsoft must leverage the good ole' inbox to be relevant in the SaaS world. So even if you`re the type who avoids e-mail marketing subscriptions, the metrics show targeted email communications are among the most effective digital marketing options available. Email is still relevant.

Just Buy it

Microsoft and Adobe can't build good ESPs from scratch. Both Adobe and Microsoft have trouble innovating much of anything that makes users happy. ESP is chocked full of large and small companies with clear leaders that are too far ahead for Microsoft and Adobe to try to develop competitive products — acquisition is the only way to go.

Responsys (NASDAQ: MKTG) and Constant Contact (NASDAQ: CTCT) would be like ExactTarget, they could (for now) operate with a high level of autonomy and should be able to command a buyout price of five to seven times earnings.

Microsoft and Adobe will only buy recognized market leaders in their acquisitions and Responsys is comparable with ExactTarget in side by side ESP analysis. Constant Contact is not quite as "Industrial strength" as ExactTarget or Responsys, but is more user friendly and could — in the right hands, beef up it's core technology. Responsys would be a great fit for Adobe because the technologies have such excellent synergy. Microsoft needs a solid ESP since ExactTarget will "steer" customers to the Salesforce CRM.

Constant Contact has shown it is part of today's on-demand culture by partnering with GrubHub to provided integrated online ordering and mobile marketing for consumers wanting restaurant information and ordering capabilities using Constant Contact's SinglePlatform technology. Constant Contact also has goodwill with its users and the general business community. Constant Contact recently worked with Staples and SCORE to provide education for the small businesses and nonprofit communities by providing free social media marketing webinars.

Right Now!

Both Constant Contact and Responsys are attractive. The Responsys technology is solid. Constant Contact also has great technology, a fully engaged team and lots of customers.

Adobe has the inside track on Responsys, their integration is tested, their user-base is the same, and they both have cloud strategies. Microsoft has more cash and needs an ESP to stay relevant. Once Responsys is gone Constant Contact should be brought asap, or vice versa.

Adobe or Microsoft can't be without a viable ESP — will they pull the trigger?

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John Moore has no position in any stocks mentioned. The Motley Fool recommends Adobe Systems and The Motley Fool owns shares of Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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