Exactly a year to the day after Oracle announced its $871 million buy of marketing automation company Eloqua, Larry Ellison and company announced plans to acquire marketing cloud player Responsys for $1.5 billion.
Oracle has agreed to pay $27 per share in cash for Responsys, and the deal is expected to close in the first half of 2014. It brings more than 450 customers to the Oracle mix with $51 million in revenue during the third quarter.
Oracle's dive into the marketing arena in 2012 has ticked off a year of acquisitions, most notably resulting in a competition with its major competitor, Salesforce.
"It's almost like an 'every time you get one, I have to get my own,'" Rebecca Lieb, an analyst at Altimeter Group told CMSWire.
The deal is noteworthy because CRM oriented companies are now moving aggressively into the marketing space, two worlds that had been decoupled for a long time, she said. "A big part of this is the trend toward big data, and the ability to derive insights on trends across the buyer lifecycle. We haven't seen the end of these acquisitions."
Oracle recently acquired a company called Compendium, a content marketing tool that is being rolled into the Eloqua Marketing Cloud. Responsys is destined for the same fate. Oracle sees Responsys as a clear B2C marketing tool, where Eloqua is focused on B2B customers. As Lieb mentioned, the back and forth buying cycle between Oracle and Salesforce plays out in this scenario.
Salesforce bought ExactTarget in mid 2012 in response to the Eloqua buy. That move came less than a year after ExactTarget itself had bought up B2B marketing automation vendor Pardot. Now both Oracle and Salesforce have marketing systems that are expressly designed for either B2B or B2C customers. Oracle President Mark Hurd said as much in a statement by pointing out B2B and B2C have unique needs.
Responsys Interact monitors and distributes campaigns, much like Eloqua. It seems likely the two will remain separate for now, similar to how Salesforce markets Pardot and ExactTarget.
Part of a Mix of Marketing Tools
Analysts at Gartner had placed Responsys in the Visionary quadrant in this summer's Multichannel Campaign Management Magic Quadrant (MCCM). It found Responsys strong in the retail, financial services and travel and hospitality sectors, a seeming reinforcement of the Oracle take on how the company was positioned (B2C). Additionally, Gartner found Responsys to have strong revenue growth, but to be a bit too dependent on email.
This has been a common criticism of marketing automation tools in general, but it is more relevant in the B2C space where marketers are really starting to aim at places like social media.
"Marketers value product performance over long term tech strategy, and will quickly shift allegiances as new or different products come online," Robert Brosnan, principal analyst at Forrester said in an email to CMSWire.
"Consumer tech is changing rapidly, and 2013's acquisitions are no hedge. Expect Oracle and others to stay acquisitive to keep up with marketer's needs."
The next step for Oracle might even be into the advertising world, Lieb said. Maybe not into display ads but perhaps into something like social media, she added. Whatever Oracle does, keep an eye out next year on December 20 because it might have another acquisition to announce.
What It Means
Analysts at Technology Business Research, an independent technology market research and consulting firm, said the deal proves Oracle "remains unafraid to use its cash-rich position to galvanize its cloud market position and provide the cloud capabilities that install base customers demand. Products that are built on cloud environments are intrinsically easier for vendors to integrate across their products line post acquisition."
TBR noted that it supports two trends: how vendors are expanding their cloud suites to increase share-of-wallet in the rapidly growing cloud market and how IT purchasing power shifting to the CMO. A recent TBR study showed the public cloud market grew at 30 percent year-over-year in the third quarter this year.
Responsys founder and now Act-On CEO Raghu Raghavan said in an email that the deal is The deal is bad news for both Salesforce and Marketo, "As for Marketo, the enterprise segment just got that much tougher," he wrote. "There have been rumors of Salesforce gunning for them, with a bounty program for Marketo customer takeaways. And now here comes Oracle with a complete story for the big company CMO."
Raghavan even took sides in the Oracle versus Salesforce competition.
"On the B2C side, Oracle/Responsys is (and always has been) clearly superior to Salesforce/Exact Target, and on the B2B side, Oracle/Eloqua easily trumps Salesforce/Pardot," he said.
But Brosnan, disagreed. "My take is that Oracle's deal helps it answer questions about its ability to stay relevant against Salesforce. I expect most marketers to shrug," he said.
Marketers have big challenges that are separate from other corporate functions, Brosnan said
"Because of the breadth of those challenges, an enterprise wide suite — covering sales, service, and marketing — doesn't provide much relevance for the big spenders: enterprise B2C marketers."
It's far too early to see whether marketing will drive long-term valuation and revenue for the following reasons, Brosnan said.
- Front office corporate functions, especially marketing, control more and more tech spend,
- Media digitizes and drives the growth in data and analytics, and
- Enterprise tech continues to move towards software-as-a-service
Nevertheless, Oracle will aggressively invest in its Marketing Cloud going forward, according to a statement, but the buying of other companies is just the beginning. Oracle bought Fatwire, a content management system in 2011, for example, and the company is still integrating it into its customer experience management suite. It's been rebranded as WebCenter Sites, but Oracle's standard response to acquisitions is that it takes at least a year for integration.
"Buying them is one thing, but integrating them is another," Lieb said. "We've seen that time and time again."
Title image by drserg (Shutterstock).