Marketo’s latest VC investment shows marketing automation (or RPM) is growing up fast

I had very interesting 40 minutes yesterday with Marketo CEO Phil Fernandez yesterday, which he managed to cram into his whistle-stop tour of his company’s rapidly growing European operations. After my last experience of Silicon Valley-comes-to-London, the bombast that was the Cloudforce event in September, Fernadez’s candour and self-effacing honesty was refreshing. It was nice to put a human face to the Bay Area tech industry.

Our meeting took place on the same day as Marketo announced a further $50 million in VC investment – it’s the fourth and biggest to date for the San Mateo company, and one which Fernandez intends to be its last, with the target of an IPO next year, should everything go according to plan.

Even in the rapidly evolving world of marketing automation (or what the vendors would increasingly like us to call ‘revenue performance management’ – or RPM), Marketo’s growth appears impressive: at least from the information that is available – it keeps key financials confidential. The company claims to have added 150 new clients in Q3 alone and grown revenues by 120 per cent year on year. Should current trends continue, the company expects to overtake market leader Eloqua some time in 2012, and to exceed $100 million in annual recurring revenues in 2013.

Whether this happens remains to be seen, but they’ve certainly come a long way from being seen as the annoying demand gen upstart, nipping at the heals of Eloqua and Vtrenz/Silverpop, as they were presented to me a couple of years ago (admitedly by some of its detractors).

Fernandez’s quiet, considered confidence in his company’s prospects is perhaps a reflection of the whole sector. Although uptake may not have matched the expectations of the technology's most enthusiastic backers, the leading vendors have continued to increase in size, and almost surreptitiously RPM or marketing automation has evolved from a bleeding edge solution to something which many B2B companies feel is inevitable, or better still something that they can’t do without.

The image and perception of RPM is maturing fast, and Fernandez believes that it is on track to be recognised as a valid standalone technology category in its own right – like CRM, for example. And the change in preferred name from marketing automation to RPM is significant in this, he claims, and both cause and consequence of changing perceptions: whilst marketing automation is a means to an end, RPM is an end in itself, and gives the vendors the intellectual clout to speak to CEOs, rather than purely to marketing decision makers.

Looking ahead, Fernandez says that the technology – whatever you want to call it – will continue to evolve, with the incorporation of some of the budgeting and management functionality that has often been referred to as MRM into leading solutions. This can be seen as retrospective validation of the decision of former MRM vendors, such as Aprimo, to align themselves with the automation/RPM space, and is more evidence of the increasingly strategic vision of the future for this technology that the vendors are presenting.

Whilst this more strategic functionality may be increasingly in demand amongst US users, I suspect the discussion in Europe is some way behind, as are general levels of uptake in RPM. Another reason why the timing of Fernandez’s visit is interesting is that it follows the decision of rival vendor Pardot to take over the franchise of its UK-based operation, after only a year of operation, and ahead of expectations. Developments such as these suggest that interest and awareness in marketing automation or RPM may be finally be reaching the tipping point on this side of the pond. At the very least, momentum is continuing to build.