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Ken Magill

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Oh, Sure; It's all Hugs and Kisses Now

7/12/11

By Ken Magill

At first it’s always champagne corks popping and party streamers flying. And then the painful process of integration begins.

Atlanta-based email marketing concern WhatCounts has acquired Baltimore-based marketing services agency Blue Sky Factory, the two companies announced yesterday.

“This acquisition strengthens our thought leadership, delivers proven Email+Social integration, and adds talent from the Blue Sky Factory team,” said WhatCounts president and founder Allen Nance in the release announcing the acquisition.

Added Greg Cangialosi, chief executive officer of Blue Sky Factory: “As our team spent time with WhatCounts it become clear that joining forces would make us both stronger and better positioned to drive innovation in the email channel, and set ourselves up for success in the future.”

Yeah, yeah, they’re smooching it up now, but in the end there is one inescapable hurdle—well, two, actually—culture and technology.

They’ve both got their own and they must integrate them.

Sooner or later, the WhatCounts culture will subsume the Blue Sky Factory culture. Those who don’t like it will have to leave.

Then there’s the email-delivery-platform issue. Both companies have one. It’s hard to imagine they’ll keep both.

The email-marketing poster child for platform- and cultural-integration troubles is Epsilon. Oh, it all worked out in the end, but the process sure wasn’t pretty.

Epsilon acquired email service provider Bigfoot in 2005 for $120 million and DoubleClick’s email unit in 2006 for $90 million. By all accounts the ensuing integration—culturally and technologically—was a nightmare, culminating in an exodus of disgruntled DoubleClick employees and the ouster of Epsilon CEO Al DiGuido.

In an interview with The Magill Report, WhatCounts’ Nance said he harbors no illusions about the difficulty of merging two email marketing companies.

“Let me answer the culture question first,” he said. “We spent three months of due diligence making sure the companies were a cultural fit.

“If we were a full-service provider and they were a self-service provider who didn’t like answering the phone, that wouldn’t have been a good fit,” Nance added. “We’re both basically mid-market, tier-one ESPs focused on having a couple hundred customers, not a hundred thousand customers. So philosophically, there’s a fit.”

However, he added that he understands there still may be some pain in the process.

“I’m not going to bullshit you and say there won’t be any territory wars and things like that,” he said. “That just happens. It’s natural. But what I am telling you is our business models and philosophies are the same.”

As for email platforms, Nance said WhatCounts’ and Blue Sky Factory’s are about as compatible as two platforms at different companies could be expected to be.

“We have a PowerMTA [email sending technology from Port 25] infrastructure. They have a PowerMTA infrastructure,” he said. “So it’s not like we have to teach anyone what PowerMTA is.”

He said both companies use Siebel marketing software as opposed to Oracle, making integration on that front less problematic, as well.

“Then basically, what you have is the front-end application that sits on top of all that,” he said. “Our plan is to run the two interfaces in parallel and then probably in the second quarter of next year, or about 12 months from now, we’re going to merge the two interfaces into a brand-new WhatCounts release.”

Nance added: “I don’t think [integrating is] a trivial thing. I think it’s hard as hell and we’re going to need a lot of luck and a lot of smart people to make this happen. But what I’m saying is we have a chance at success and it’s because we’ve done our homework.”

And of course, Epsilon is now email marketing’s 800-pound gorilla. So the pain of integration can certainly pay off.

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Terms: Feel free to be as big a jerk as you want, but don't attack anyone other than me personally. And don't criticize people or companies other than me anonymously. Got something crappy to say? Say it under your real name. Anonymous potshots and personal attacks aimed at me, however, are fine.

Posted by:
Date: 2011-07-14 06:42:47
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LOL. 800 pound gorilla sounds funny. LOL! Back to the article, its really surprising to hear Blue Sky Factory's been taken over. Their website and platform look really good. Hope it doesn't undergo a sea change.

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