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IBM To Buy Marketing Management Firm Unica

Campaign analysis and automation firm will stoke competition with SAS, Teradata and Adobe.

IBM announced Friday a definitive agreement to buy Unica Corporation, a Waltham, Mass.-based provider of software and on-demand services for analyzing and delivering targeted marketing campaigns.

Pending Unica shareholder approval, the $480 million cash-for-stock deal will bring IBM expertise and technology for predicting customer preferences and developing personalized marketing campaigns into the IBM portfolio. The assets are seen as complementing IBM's earlier acquisitions of ILog for business-rule and optimization technology, SPSS for analytics, Sterling Commerce for order management and Coremetrics for Web analytics.

"Companies are increasingly investing in technology to automate and manage the process of marketing planning and execution," said Craig Hayman, general manager of IBM Industry Solutions. "[Combining Unica] with Coremetrics, Sterling Commerce, SPSS and ILog, you can see how we're now able to connect outbound marketing campaigns all the way through to order management and distribution centers."

Unica has more than 1,500 customers, including Best Buy, eBay, ING, Monster, Starwood and US Cellular. The company's customer list is studded with large firms, but CEO Yuchun Lee says Unica Enterprise software and the Unica On-Demand service are also used by small and midsize firms to make better use of available marketing funds.

"Organizations around the world now spend around $2 trillion on marketing each year, and most of that money is wasted," said Lee, who will join IBM and continue to lead Unica. "With the customer's previous purchase transactions and their behavior, we can understand what they're really looking for."

Best Buy uses Unica's software to analyze and target messages across channels. If the company sees that an affinity-club customer has researched home theater equipment at, it can tailor e-mail or direct mail campaigns to highlight these systems. And if a customer purchased a smart phone at a store or online, the next campaign might highlight Bluetooth headsets. Beyond obvious product and behavior associations, Unica can also refine messaging for customer personas and segments such as affluent suburban moms or affluent urban males.

Unica's primary competition is a hodgepodge of manual methodologies, Lee said, but he noted "niche" competitors including SAS and Teradata in campaign management and Adobe (Omniture) in Web analytics.

The Unica deal is an acknowledgement that IBM needed to "fill a gap" in its portfolio, said SAS Director of Worldwide Marketing, Jonathan Hornby, in a statement. "IBM is late entering an already mature market and won't be ready to execute against it any time soon," he said.

Hayman said IBM already had partnerships with Unica and is poised to help it penetrate fast-growing markets outside of North America and Europe, where the firm currently does most of its business. Once the deal is completed, Unica's 500 employees will be integrated into IBM's Software Solutions Group and will remain in the Boston area. Hayman said IBM is now the third-largest technology employer in Massachusetts.

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