The Active Network's acquisition of StarCite, one of the
longest-standing and most prominent corporate meetings technology firms and
itself an amalgamation of several former competitors, may not drastically
change the segment's competitive landscape, but it does add a financially stronger
entrant that plans to augment StarCite's meetings and procurement tools with
its own marketing technology.
Active is a San Diego-based, publicly traded developer of
online registration and other capabilities for community activities and the
outdoors and sports markets. It lost about $1.4 million in the third quarter of
2011 on about $89.6 million in revenue. StarCite, for comparison's sake, earned
about $44.7 million in revenue for all of 2010. Active officials during a
January conference call for investors projected StarCite's 2012 revenue at
about $47 million, excluding the impact of the acquisition. Active closed the
StarCite acquisition in late December, valuing the deal at $57.7 million.
Active plans to integrate StarCite's meetings management
technology with its own registration and marketing tools to create a broader
offering for their respective client bases and the industry. "The intent
at this point is not necessarily to get rid of any of the products, but to
integrate the back end and still give clients a choice of technology solutions
that meets the needs of the event," said JR Sherman, Active senior vice
president and general manager of the newly created Active Network Business
Solutions division. "We're looking to cross-pollinate some best practices
of the marketing tools with the SMMP side." Sherman offered no timetable
for completing such integration.
Whenever the integration is complete, the result will be a
potent offering for the meetings industry, said meetings technology consultant
Corbin Ball, president of Corbin Ball Associates. "This is a merger of
very significant technology companies," he said, noting that, just as
StarCite in the past decade acquired or merged with former competitors like
OnVantage (itself a combination of SeeUthere Technologies and PlanSoft) and
B-there, Active has consolidated its space by acquiring such meetings
registration tools as RegOnline and WingateWeb.
"StarCite brings to the table the procurement component
of it, the strategic meetings management component—their registration component
is kind of outdated now—but they have a stable of Fortune 500 clients and a very sophisticated expense management and
tracking system and an automated RFP process, which Active Network did not
have," Ball continued. "With WingateWeb, Active has high-end
registration and exhibition management. Active and StarCite don't really
overlap that much, so the result is a pretty significant offering."
The deal itself was not particularly surprising to industry
watchers. StarCite's revenue had slipped since reaching a high of $50.6 million
in 2008, according to a March 2011 filing by publicly held Internet Capital
Group, which owned 36 percent of the meetings technology company. (Several
investment firms, including TPG Growth, Norwest Venture Partners and TL
Ventures, had owned the remainder.) StarCite last spring retained San Francisco
investment firm ArchPoint Partners to explore future strategic alternatives.
Sherman, who said Active since mid-2010 had discussed a deal
with StarCite but delayed any action until after Active's May 2011 initial
public offering, described the decision to acquire StarCite as an opportunity
to broaden Active's tools and offer a more complete technology package.
"We knew in this other side of the space, known as
SMMP, there were many events in client organizations that we didn't touch, yet
we never ran into these players, and we found that intriguing," Sherman
said. "In order to really connect all of the touchpoints that a prospect
or customer has and look at the employee side of the organization, we needed to
be able to tie in this piece of the business. Between procurement-driven
internal events, or large volumes of smaller events, versus the marketing
events we had provided technology for, there's always been a bit of a gap."
Added Active vice president of strategy Anthony Miller, "The
industry is evolving from being just about logistics and delivery of events to
becoming a very intelligent part of the communications mix."
Maintaining
Competition
The lack of significant overlap between Active's and
StarCite's tools means that little will change in terms of competitive
structure of the SMM technology sector. Active will take StarCite's place as
one of the two largest competitors alongside Cvent, which last year made
headlines by securing $136 million in venture funding and embarking on a
subsequent hiring spree.
Cvent in the past few years has made inroads into StarCite's
base of corporate SMM clients. It has never acquired another company, but Cvent
CEO Reggie Aggarwal in August told The
Beat that the company was in discussions for its first, targeting "anything
in the meetings technology space, and that includes SMM, supplier marketplaces."
Ball said he expected "strong, aggressive movement" from Cvent.
"Cvent is a formidable opponent, with the huge funding
they've had," Ball said. "I expect to see acquisitions. They have
nearly 1,000 staff right now, which is just unfathomably large for what they
need."
Other SMM technology vendors include Lenos Software, Arcaneo
Inc., SignUp4—which last year acquired meeting-space booking tool and event
management tech supplier Worktopia—and Certain Software.
Ball was skeptical that new players, be they existing
technology companies or pure new entrants, could enter the SMM technology
space. "That would be hard," he said. "Never say never, and it
is a big potential business, but there are lots of hurdles."
Certain CEO Peter Micciche in a blog post called Active's
purchase of StarCite "good for the events industry at large; for their
respective customers, it's a case-by-case situation," but noted that "the
slow SMMP adoption rate for enterprise-wide meetings management makes it
difficult for vendors to maintain their independence."
Meetings Tech's
Evolving Future
Micciche in a subsequent interview with Travel Procurement pointed to a near-term future in which the
deployment of mobile technologies and social media tools and remote
conferencing's heightened role in meetings prompt corporate meeting sponsors to
use new methods of determining the value and impact of a meeting on attendees.
The ascendancy of new technologies in meetings management will have a
significant impact on technology vendors, he said.
"To integrate new technologies like mobile, you have to
take a platform approach," Micciche said. "There will be a handful of
vendors who offer robust, scalable platforms for event management, and other
vendors then will plug into those platforms to provide the level of extension
and integration that you need. So the price of entry goes way, way up for a new
entrant, and you either come in with a lot of money and a very large idea or
you plug into existing platforms."
The prospect of such integration should lead meetings
technology suppliers to embrace cloud computing for a more seamless
infrastructure to connect disparate systems, Micciche said. That move, though,
also could alter the industry's competitive lineup, due to the required
investments in data security and technology upgrades.
"An aggressive shift to the cloud means a completely
different approach to underlying technologies," Micciche said. "Smaller
vendors without the financial wherewithal cannot keep up. The security stakes
are way up. You have to be a significant vendor to play at that level. That one
step means that a lot of smaller vendors will be consumed by larger vendors.
There will be a lot of mergers and acquisitions in the industry."
Active's Sherman said the company would explore and invest
in the application of new technologies to strategic meetings management. "We
have many clients, especially on the enterprise side, who are willing to invest
in deploying these communities and mobile technologies to engage deeper with
their clients and prospects," he said. "It's really about taking the
technology we've built for those early adopters and making it accessible to the
small and medium business. It's about gaining those best practices, building
that technology and making it scalable to the SMMP market."
This report
originally appeared in the February 2012 issue of Travel Procurement.