Cloud communications platform vendor Twilio is set to acquire Customer Data Platform (CDP) vendor Segment in an all-stock deal for $3.2 billion. But you knew that already, since the news was all over the place.
They have listed three rationales:
Provides a single view of a customer across channels for more effective engagement
Forms foundational data element fueling Twilio’s Engagement Cloud
Enables businesses to delight their customers with personalized, timely, and impactful communication
(Source: Twilio Investor presentation)
First a Little Background
Twilio provides services and APIs for adding telephony and messaging capabilities to your applications. Customer Service is a major area they target. They acquired SendGrid last year. With SendGrid, they acquired an email marketing platform. They further added Twilio SendGrid Ads which provides additional capabilities to create ads for Facebook, Instagram and Google.
Segment provides a Customer Data Platform (CDP). If you want to know what a CDP does, here’s a short explainer.
How Do They Come Together?
Think of data lifecycle as consisting of these three stages:
- Data ingestion: This refers to capabilities for data ingestion from online and offline sources.
- Data and Profile Management: Data Management, Identity Resolution and creating a unified profile of each user
- Data Activation: Or Engagement. Basically, putting all this data and segments to work. So sending email or messages to segment of users.
Twilio was mostly playing in the last stage (Data Activation) with its APIs and services for messaging. SendGrid acquisition strengthened that story with a full-service email activation platform. Plus they got a full-fledged application, as opposed to APIs and services using which you build your own application.
But it seems Twilio is more ambitious and wants to have a broader footprint in a customer lifecycle. Which is where this acquisition of Segment will help, since Segment can address the first two stages (Data ingestion, Data/Profile Management).
The graphic below shows this better. This is a screenshot from Twilio/Segment investor presentation and I have marked out different stages.
Twilio is a very developer-centric company with focus on APIs and services, mostly targeted at messaging – SMS, Text, Videos, Telephony, WhatsApp Messaging and so on. Developers use APIs to incorporate these capabilities in their applications.
Segment, the company, targets engineering leaders and the product focuses on integration scenarios with special attention to modernising legacy stacks, data migration and standardisation.
So in some ways, there are some similarities in terms of their focus on developers, APIs and integration-centric platform nature.
What Does it Mean for Customers?
In the conference call, Twilio CEO Jeff Lawson confirmed Segment will operate as a division of Twilio with existing management team running it.
I am assuming that means Segment will continue to be available as a stand-alone CDP.
If you are an existing customer of both Twilio and Segment, this acquisition is good news for you. You’ll probably get better integrated products, plus “one neck to grab” in case of problems.
However, if you are a potential customer of Segment, don’t let anyone fool you that this will be a Suite or a single unified marketing cloud or whatever. Twilio has been referring to “Twilio Engagement Cloud” but remember this Engagement Cloud is really a collection of multiple tools, some of which have come via acquisitions. My suggestion would be to keep evaluating Segment on its own merit, for now at least.