Kahuna Raises $45 Million And Explains Why Marketers Need A Different Email System

MarchickKahuna, a mobile marketing automation startup going against Adobe, Oracle and Salesforce.com, revealed Wednesday it had raised $45 million in Series B funding.

The round, led by Tenaya Capital, Sequoia and SoftTech, will be used for product development and to expand Kahuna’s team of 80. Kahuna’s clients like Dollar Shave Club, Overstock.com, The Weather Channel and Hearst use it to automate messaging.

Kahuna co-founder Adam Marchick, a former engineer at Oracle and investor at Bain Capital Ventures, said the market is not fully cornered for marketing automation, despite large acquisitions in this area by Salesforce (ExactTarget) and Adobe (Neolane).

The reason, he said, is current legacy systems run on cobbled-together solutions, which don’t factor in real-time data.

“We’re looking at this concept of engagement state marketing where if someone is super engaged and using a mobile app on a daily basis, that means maybe we shouldn’t message them,” Marchick said.

He said old forms of marketing automation – send a message first, then determine if it worked – are falling away.

Batch and blasting in email marketing is still a big issue – in part because vendor pricing structures for so long encouraged it. 

Adobe used to associate CPM fees based on emails sent, until it switched to a fee on a per customer profile basis. And, LinkedIn recently reduced its volume of emails sent by 40% due to member pushback.

Marketers who measured efficacy based on open rates were also part of the problem.

“When I open email, it’s to get rid of it because of my Google Priority inbox,” Marchick said. “That’s an indicator I don’t like that email, whereas a marketer using a legacy system might call that a victory.”

Kahuna is different from other marketing automation providers because it hooks first into real-time data sources like publisher sites and apps, Marchick claimed. By contrast, major marketing automation providers integrate with big CRM databases.

“We built a technology where [if Overstock.com] understands you like shopping on their site at 9 a.m. or 2 p.m., a marketer can supply us with their messaging and our algorithm figures out which resonates most with you,” he said.

Because Kahuna was not built solely for email, a marketer may instead opt to send a push notification, in-app message or populate a Facebook ad.

Marchick claimed Kahuna goes one step beyond “predictive marketing.” Instead of identifying to the marketer 50,000 people at risk of churning, he said the platform will suggest a plausible outcome and next steps they can take in their message sequencing based on machine learning.

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