Oracle's Responsys purchase highlights competition to win CMOs

Industry pundits see Oracle's US$1.5bn acquisition of the B2C marketing automation player as a jostling of IT vendors to win over chief marketing officers and own the marketing technology stage

Oracle’s US$1.5 billion acquisition of Responsys is indicative of the rapidly changing marketing software landscape and the jostling between leading global IT vendors to win over CMOs, industry pundits claim.

Oracle announced its purchase of the B2C campaign management provider in December in a deal expected to close within the first half of this year. According to a statement, Responsys will give Oracle a foothold in the B2C marketing space and complements the company’s acquisitions of B2B marketing software player, Eloqua, 12 months ago as well as content marketing provider, Compendium, last October.

Oracle claimed the combination of Responsys and Oracle Eloqua under its Marketing Cloud umbrella will give chief marketing officers a single platform to support B2B and B2C business models, but industry pundits have also suggested a second motivation was to take Responsys off the table for Oracle’s rivals.

Ovum consumer IT and integrated media, technology analyst, Gerry Brown, pointed out Responsys has been the subject of acquisition speculation for some time, firstly by Adobe prior to its purchase of Neolane last June; Oracle’s long-time competitor, Salesforce, which opted for ExactTarget instead; and SAP last November.

“Perhaps this is what forced Larry Ellison’s [Oracle CEO] hand to buy – to thwart potential competitors and show to financial markets that Oracle has not lost its acquisition mojo,” he said.

Brown was surprised at the deal, and claimed other vendors vying for a stake in the marketing technology field, such as Infor and SAP, were in more need of Responsys’ capabilities and its 400 marketing automation customers globally. But he admitted other reasons for Oracle’s decision, such as Responsys’ position at the leading edge of the marketing automation market, as well as its profitability.

Messaging and positioning was another potential driver, Brown said. “President Scott Olrich’s ‘New School Marketing’ value proposition stands head and shoulders above its peers,” he claimed.

“Responsys can certainly ‘talk the marketing talk’, which Oracle has struggled with in the past, and certainly adds market and brand credibility to Oracle.

“Marketing data integration could also be a factor, although it could be argued that Oracle can already do this. None of these [reasons] are game changing but are more added value for Oracle from a market perspective.”

Marketing technology commentator and CTO at Ion Interactive, Scott Brinker, was less surprised by the news and pointed out not all marketing automation software is the same.

“As the space has grown over the past few years, different vendors have specialised in serving different markets,” he said. “Oracle’s stated rationale for the acquisition – that Eloqua was better for B2B marketing and Responsys was better for B2C – makes sense. There is overlap in capabilities, but having both of these in the portfolio gives Oracle the option to offer more targeted solutions to different customers. Overall, it gives the company a larger footprint in the marketing world.

“Oracle is clearly very determined to be at the centre of the modern marketing organisation, and historically been willing to be aggressive in its acquisition strategy to achieve its goals.”

Gartner analysts agreed the acquisition sends out a strong signal about Oracle’s ambitions in the marketing sphere. “This latest deal indicates Oracle’s continued attention on address the needs of today’s CMO, and its focus on digital marketing in both B2B and B2C context as an area of growth for the company,” it stated in response paper on 24 December following the announcement.

According to Brown, Oracle’s Responsys acquisition directly counters Salesforce’s competitive position with ExactTarget (for B2C) and Pardot (for B2B), as well as the “potency” of Adobe’s Neolane (B2C) acquisition. Gartner also saw the deal shining the light on the future the few remaining independent marketing automation and email marketing providers, including Marketo and Silverpop.

“For those, like SAP, still looking for a bed-fellow, it makes Silverpop and Marketo the only game in town,” Brown said. As an aside, he added Marketo is today valued at US$1.6bn, $200m more than Responsys even though it is half the size and still losing millions each quarter.

“Investors clearly believe their imminent acquisition is a foregone conclusion,” he added.

What is clear is that the marketing software landscape is changing faster than most can keep up with. For Brinker, there are two “simultaneous narratives” in the marketing automation space at work: Consolidation and diversification.

Brinker has just compiled a new and complex graphic of the current marketing technology landscape breaking down 947 marketing technology vendors into experience, backbone, infrastructure and middleware categories.

“Oracle, Salesforce.com, Adobe and IBM are leading the consolidation charge. But there are also many new ventures entering this space,” he said. “My recent marketing technology landscape identified 51 different vendors in the marketing automation category alone. The common thread with both of these narratives is that marketing technology is clearly a growth market for the immediate future.”

Read more: Apple buys Beats Electronics for US$3bn

In light of the acquisition, Gartner advised Responsys customers to seek forward pricing assurances, continuity of customer support, roadmap commitments and account management moving forward.

“Oracle’s rate of acquisitions has resulted in a number of new technologies under the Oracle Marketing Cloud umbrella, brought together in relatively short order,” the analyst group continued. “Acquiring the pieces isn’t a sufficient measure of the value of a digital marketing hub. Over time, look for evidence that Oracle is integrating and packaging the products in a way that delivers on the promise of its stated vision.

“Customers have cited concerns over roadmap and integration plans in the past following similar acquisitions by Oracle; this will need to be a focus moving forward for customers to benefit fully from the promise of the Marketing Cloud portfolio.”

According to Brown, key challenges Oracle now faces is retaining the momentum gained from the Responsys acquisition are to ensure retention of key Responsys executives; decide on development priorities, position and rationalise its marketing cloud platform; and organise and drive direct and indirect sales channels to execute.

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