In Part II of our series on the rise of the digital marketing suite we laid the groundwork for who is currently operating in the space today and selling into the CMO suite. The market has grown substantially in just the past 5 years and today calls big players like Oracle, IBM, Microsoft, Adobe and Salesforce the category leaders. For Part III on the landscape we continue to understand “how did all of these players get to where they are today, what are their strengths and weaknesses, and where are they going?”
We will again deviate a bit from the normal buckets here and focus instead on each of these 5 main players and their businesses while coming back to our buckets from time to time.
History – Since around 2010, Oracle has only acquired companies to get into this space. They are the most prolific of the 5 majors from a number of acquisitions standpoint having bought 8 companies at roughly 4.0-16.3x revenues for a total of $6.7B. Important to note that while Oracle started very early from an M&A standpoint they really did not conceive the idea of a true marketing cloud until 2013 like Salesforce. That said, their strategy can be considered a bit of “accidental genius” in that pretty much every acquisition they did was to build upon the core Siebel CRM product and drill down into what they called “industry specific enterprise applications” and a “customer experience cloud.” It just so happened that these applications involved buying what their customers wanted like an eCommerce platform, a CMS, social tools, and other value added services on top of the CRM. Step back today and a lot of these tools look good to a CMO.
Anyways, starting with the eCommerce category in November 2010 Oracle acquired Art Technology Group ($881M EV / 4.5x LTM Revs) or “ATG” as it more commonly known to really drill into the commerce vertical. They had success on the CRM side already with retailers and this was a logical next step to further their interests. In July 2011 they bought Fatwire Software ($160M EV / 4.0x LTM Revs) to again build off of the core CRM and into Content Management. Shortly thereafter in October 2011 Oracle made a huge bet in Analytics, acquiring Endeca ($1.1B EV / 8.6x LTM Revs) which today makes up a huge piece of the Oracle Business Intelligence Enterprise Edition (OBI EE) and was a bolt on acquisition to build off of Oracle’s existing BI tools. Not to be trumped, the company again made a huge purchase in October 2011 buying RightNow Technologies ($1.4B EV / 6.6x LTM Revs) to get into the Social space. In May 2012 they made their second purchase in Social, buying Vitrue ($325M EV / 16.3x LTM Revs) for their highest comp ever paid. Then in December 2012, the company acquired Eloqua ($871M EV / 9.7x LTM Revs) to build into the Marketing Automation space. With RightNow, Vitrue, and Eloqua on board this was the first time in the press that you saw Oracle talk about the CMO and a heightened awareness to the marketer. As a result by Q2 2013 after these acquisitions had closed you started to see the transformation to today’s “Oracle Social Cloud” and “Oracle Eloqua Marketing Cloud” from what used to be “Collaboration, Marketing, Selling.” Note that Oracle still does not have a unified sale to a CMO and it is still broken up within a few areas of their Business Solutions group. Following the public appearance of their interest in the CMO though, Oracle made its largest acquisition to date buying Responsys ($1.6B EV / 8.2x LTM Revs) to get into the Campaign Management / Email Marketing space. Their final acquisition to date came just a few months ago drilling further into the Marketing Automation space by acquiring BlueKai ($400M EV / 6.3x LTM Revs).
Strengths / Weaknesses – Oracle has one of the most comprehensive offerings out there today for the marketer and the sheer number of acquisitions in the space has allowed them to cover and go deep in pretty much all of our categories. Eloqua remains a market leader in the Marketing Automation space and the Oracle Business Analytics and Intelligence (OBI EE) suite only really goes head to head with Site Catalyst in the Analytics category. Vitrue continues to have a tight grip on the Social space although competition is increasing and there are a lot of strong products in that category. Some view a few “old and tired” names in their portfolio like RightNow in Social, Fatwire in Content Management, and ATG in eCommerce but these companies still have thousands of customers and solid growth numbers. Overall, Oracle still has a really strong end to end solution built from the CRM layer up that is tough to dispute right now.
Go Forward – Similar to Salesforce we know that Oracle is willing to buy assets to be competitive in the space and that they will pay up for whatever needs to fit their client needs. However they are the farthest along and are probably not really in need of many solutions at this point. There is some logic to them doing a bit of an M&A refresh around eCommerce, Social, and Content Management but that seems like a wild card given they are not losing huge share these days. They face hard integration challenges with recent M&A and still don’t sell a unified product to a CMO (yes they sell a “customer experience cloud” but that isn’t really specific to a marketer) and we think that this will be the focus of the next few years for the company.
That’s it for Oracle. Next we will move on to IBM.