Google's parent company Alphabet is in talks to acquire marketing and CRM software provider HubSpot, according to a report from Reuters today.
And if it's documented, it would blow away Google's biggest acquisition ever, at $12.5 billion, when it acquired Motorola Mobility for its Android business in 2011. HubSpot, which went public in 2014, has a market capitalization of nearly $35 billion.
This acquisition will also shake up the worlds of ad tech and martech, uniting key players in each software dynamic and paving the way for a new era of digital marketing and customer engagement. Google will take on Microsoft and Salesforce in the $71 billion customer relationship management market. It also means the last of the four long-standing marketing automation companies will be busted: Pardot (Salesforce), Marketo (Adobe), and Eloqua (Oracle).
“This is a convergence of adtech, martech, and CRM,” Zach Pines, vice president of partnerships at Formstack, told CMSWire. Pines may have expected this to eventually happen when he predicted the acquisition of Google and he Marketo in 2014, but this is exactly the case in this situation. Marketo is a privately-turned-public marketing automation provider that competed with Cambridge, Massachusetts-based HubSpot and was eventually acquired by Adobe in 2018.
“The title was 'Why Google is buying Marketo,' so it was a little off, but not bad for nine years ago,” Pines said. “…Google moving further into the marketing automation and CRM space is huge news.” Google will become more competitive with Salesforce through such acquisitions, Pines said, adding, “Google is in charge of the entire advertising business, and in the long run, it's the type of service that HubSpot provides with its own products.'' “It will be very complementary to our companies,” he added.
When CMSWire reached out to HubSpot regarding the potential acquisition, a HubSpot spokesperson said: “As a standard practice, HubSpot does not comment on rumors or speculation. We remain focused on building a great business and serving our customers.”
HubSpot is an attractive acquisition target for Google and could strengthen the company's enterprise application portfolio. According to Predrug (PJ) Jakovljevic, principal industry analyst at the Center for Technology Assessment, it is easy to integrate with Google's suite of office applications and has powerful marketing capabilities complemented by Google's analytics and search capabilities. This makes it a logical choice because it has the foundation.
“It makes sense to me that Google would enter the enterprise apps space with something that's not very complex and can easily integrate with Google Office apps,” Jakovljevic said. “HubSpot seems like a good fit for that. It's a good way to compete with Microsoft, Salesforce, Adobe, Zoho, etc.”
HubSpot pioneered the inbound marketing concept, drawing thousands to its annual show named after its marketing strategy. HubSpot remains the strongest in marketing, Jakovljevic added, and Google Analytics and search can also play a role.
“Imagine using Hangouts for meetings and calls with Google GenAI,” says Jakovljevic. “HubSpot isn't strong in commerce, so I don't know if Google can help there. Don't forget to move HubSpot to Google Cloud. Also, Google will only get stronger in the data business. I might wonder if Amazon will support me, and I'm planning on acquiring Salesforce in the future.”
Pines speculated that the acquisition of Google and HubSpot could start a competition between Google and Adobe.
“I think Adobe is playing in this space, but in a different way, because not only can they use Marketo to support their martech teams, but they can use their tools to support their ad tech teams.” Pines said. “The difference is that Google is also a media company, because Google is doing the purchasing and the media. So it's going to be competitive and high-level with Adobe, but in a different way. We’re going to work on that.”
Related article: HubSpot and TikTok announce CRM integration to enhance lead generation
Google and HubSpot have a history
Joshua Feinberg, CEO of the Data Center Sales & Marketing Institute (DCSMI), said Google Ventures was an early investor in HubSpot in 2011, so “it's very interesting to see Alphabet's interest.” said. Feinberg added that HubSpot and Google already have several popular integrations, including ads, Search Console, Calendar, and Gmail.
Feinberg noted HubSpot's growing interest in podcasting and video, and said incorporating YouTube capabilities could significantly expand the platform's usefulness across the marketing and sales journey. He suggested that there was. “HubSpot has shown tremendous interest in podcasting and video in recent years, both in their content engine/network and in the tools within the platform,” Feinberg said. “Bringing the power of YouTube (think YouTube Studio, Shorts, Live, and Communities) into HubSpot's social tools is exciting and has a lot of potential. Many of HubSpot's customers are We have yet to fully explore the potential of video across the journey/flywheel of marketing, sales, content, commerce, and service hubs.”
One potential friction Feinberg sees is that HubSpot's AI approach relies on OpenAI, which has previously partnered with Microsoft. Will things change if Alphabet owns HubSpot along with Gemini? HubSpot co-founder Dharmesh Shah is an investor in OpenAI.
Feinberg also pointed out that we are entering a post-cookie environment where attribution is very unclear. How does that work in the marriage of Google and HubSpot?
Related article: HubSpot debuts AI tool powered by OpenAI's ChatGPT
What is the impact for HubSpot customers?
Ace Bhattacharja The CEO and founder of Medicalrecords.com and a HubSpot customer reports that he has mixed feelings about this potential acquisition between Google and HubSpot. As a Boston tech startup practitioner, he said, “This is a great accomplishment for a great local company, but it's another example of a Boston company being acquired by Silicon Valley.” He also said he finds it interesting that Google is making this choice despite Federal Trade Commission Chair Lina Khan's “anti-Big Tech bias.”
Laurie McCabe, co-founder and partner at SMB Group, also addressed the potential for blowback from antitrust regulators over the Google-HubSpot marriage. Google has typically developed apps organically rather than through acquisitions, so it would be interesting if that happened, McCabe said.
“Google could be looking to acquire a major marketing and CRM app for small businesses, tie it to its own search ads, or exponentially expand HubSpot's growth,” McCabe said. . “HubSpot has over 200,000 customers, but that's just a drop in the bucket compared to Google Workspace for Business, which I believe has billions of customers. Google is offering this as a premium service. It may be incorporated into Workspace.”
Bhattacharjya talked about the basics of the technology and said Alphabet has an opportunity to roll it out as part of a more convenient Google Workspace, which could add a lot of value to SMB customers. “Reducing acquisition costs for HubSpot and acquiring more Google Enterprise customers (not all of whom are 'enterprises') will be extremely valuable for both parties. The HubSpot app ecosystem is already connected to many other small B2B companies. There's also the possibility of being shot in the arm. ”
Feinberg said HubSpot was the last independent entity of the four major martech platforms of the early 2010s, citing Eloqua, Pardot and Marketo as others. “Both HubSpot founders were adamant about building a company that would be a pillar of Boston, employing thousands of people for generations,” Feinberg said. “Will HubSpot’s U.S. headquarters remain in Cambridge? Will HubSpot’s legendary cultural code remain intact? The future remains uncertain, but if Alphabet acquires HubSpot, the result will be We can expect something similar to the LinkedIn acquisition, a scenario in which LinkedIn is given significant autonomy to maintain its unique identity.”
Antitrust hurdles stand in the way of Google's potential acquisition of HubSpot
Google's parent company Alphabet is eyeing a landmark acquisition of HubSpot, a deal that not only promises to reshape the landscape of adtech, martech and CRM, but also brings in industry players like Microsoft and Salesforce. We are also preparing to directly challenge the major players. With HubSpot's pioneering stance in inbound marketing and the potential for strong integration with Google's suite, this acquisition has the potential to significantly enhance Google's enterprise applications and data analytics services.
But in the midst of this potentially transformative partnership, the shadow of antitrust scrutiny looms large. And not everyone strongly believes this mega-deal will continue to happen.
“I think the chances of something like this happening are very low,” said R “Ray” Wang, principal analyst and founder of Constellation Research, Inc. It seems like a logical transition.”
