Ask someone to name top contenders in marketing automation, and marketers will invariably point to three software giants—Adobe (ADBE), Oracle (ORCL), and Salesforce (CRM)—plus one scrappy upstart, Marketo (MKTO).
Soon one of the names on that list may change. Marketo has apparently hired investment bank Morgan Stanley to explore various “strategic alternatives,” including a potential sale of the company, reports Bloomberg.
While there’s no official comment from the company, Marketo’s shares spiked 25% on the rumor, gaining $5.30 to close Tuesday at $26.77.
Get Data Sheet, Fortune’s daily technology newsletter.
It certainly would make sense for Marketo to explore its options. Credit Suisse analyst Phillip Winslow is even naming names of the software companies that would benefit most, with Microsoft (MSFT) and SAP (SAP) at the top of his list. Neither has made substantial investments in marketing software to date.
Marketo’s traditional focus on small and mid-market accounts kept it largely off the radar of its biggest rivals for years. But the company’s move upmarket over the past 12 months—a strategy supported by a huge sales reorganization last summer and evidenced by its new alliance with Accenture disclosed in March—changed the game.
In fact, the company’s call with financial analysts in February was replete with references to stiff price competition from unnamed competitors, a phenomenon that was pressuring margins and delaying contracts.
What Microsoft Can Gain From Buying Salesforce
Marketo’s latest revenue guidance for the year is $269 million to $275 million. The top end of that range, issued during the company’s latest financial update last week, is slightly lower than previously projected.
Last year, Marketo created a list of about 100 strategic accounts where it hoped to expand its footprint, building on its reputation as a reputable provider of department-level services. At last tally, the company’s total customer count was around 4,500 including big names like Best Buy, Citibank, Coca-Cola, Ford, Microsoft, and Pfizer.
At the same time, however, its competitors have turned up the heat, preaching the breadth of their offerings.
Oracle, for example, spent at least $3 billion assembling an array of marketing applications and data services to complement them. In late April, it announced updates to the Oracle Marketing Cloud that blur the lines between its different services—it’s now more difficult to tell where one app stops and another begins.
Salesforce is using a similar tactic, by talking up the ties between its own Marketing Cloud and its applications for managing sales relationships and customer service. Sales intelligence from the core sales app, for example, can be pulled into the marketing system. The company’s evolving strategy is also visible in changes Salesforce announced this week to the user interface for Salesforce Marketing Cloud—the service uses the same “Lightning” framework as it does for its other applications.
Meanwhile, Adobe’s strategy is to play up its strength in content creation and marketing analytics, as it did last week with the acquisition of Livefyre.
Right now, digital marketers are often forced to use dozens of services to get their jobs done, so the allure of all-in-one approaches is very appealing. And so too are the price breaks that often go along with buying more than one application from larger software vendors. As its big rivals preach the virtues of consolidation, Marketo may find it increasingly difficult to go it alone.
