Why Oracle bought Eloqua, and what it means for the market

The deal could tick off a wave of consolidation in the marketing automation software arena

Oracle surprised many tech industry observers by announcing it would pay US$871 million for marketing automation software vendor Eloqua in December. The move seemed a bit unlikely given the amount of sales and marketing software Oracle already had.

But a closer look at the deal reveals a number of probable motives for Oracle, as well as what effects the deal could have on the market.

A strike at Salesforce.com: Although Oracle said Eloqua will remain open to third-party applications, how that actually shapes up remains to be seen. "Eloqua's an important partner in the Salesforce.com ecosystem," said analyst Denis Pombriant, CEO of Beagle Research Group. "I expect that will change."

Salesforce.com recently launched a new Marketing Cloud product line, which combines the social media analytics and social media marketing technologies it gained through the acquisitions of Radian6 and Buddy Media.

The Eloqua deal may prompt Salesforce.com to purchase more traditional marketing automation software, similar to what some of Eloqua's products offer. Salesforce.com had been reluctant to make moves in this area for fear of alienating its many partners that offer such products, including Eloqua, but Oracle's move could force its hand.

Expect other companies, possibly IBM and Adobe, to scoop up marketing automation vendors, as well. Likely targets include Marketo, Silverpop and Responsys.

Will Oracle play nice with Eloqua?: It is highly unlikely that Oracle will do much to alienate Eloqua customers, said Eric Berridge, CEO of Bluewolf, a consulting firm that works with both Salesforce.com and Eloqua technologies.

A large percentage of Eloqua customers are currently using Salesforce.com for CRM (customer relationship management), and very happily so, Berridge said.

"Oracle is fooling themselves if they think they can try to use Eloqua as a wedge to get Salesforce.com customers to move to their own CRM," he said.

It's also far from trivial to move off of a system like Eloqua once it's been implemented, given that customers may have hundreds of ongoing marketing campaigns, said Forrester Research analyst Rob Brosnan.

Berridge had a similar perspective.

"Once you have Eloqua in, it's tied to your website, it's tied to your CRM system, it delivers rich data to you on the state of your funnel, who's buying and why," he said. "Unwinding that just because it's now an Oracle product is probably like cutting off your nose to spite your face."

Filling in the gaps: It will be some time before Oracle demonstrates exactly how Eloqua's products will be slotted into its lineup.

But Oracle certainly had reasons for buying the company apart from taking a shot at Salesforce.com, according to Pombriant. That's because marketing products are varied and "vastly different," he said.

Some provide the ability to run email marketing campaigns. Newer ones focus on social media. Some center on "inbound marketing," the notion of drawing customers to a company website through search engine optimization, blogs and other means. Still others manage "outbound marketing," such as television and radio ads.

"There's a real gauntlet of obstacles when you consider what you need for your marketing programs," Pombriant said.

Eloqua offers a long list of specialized marketing capabilities, including marketing measurement, email marketing, lead nurturing and customer targeting and segmentation.

All told, the purchase will give Oracle "the ability to track, capture and analyze a potential buyer's Digital Body Language including their preferences, behavior and decision-making processes," according to its announcement.

The big picture: "The statement Oracle is making to the market is that customer engagement technologies are really important and where companies need to be spending their time," Berridge said. "They're not out there buying some old ERP vendor right now. In this case, they bought a company that has cutting-edge technology."

The move also speaks to the fact that sales and marketing professionals are having more influence on IT purchasing. "Many organizations have been spending so much capital on back-office ERP projects that they're figuring out how the way to drive value is to look at your customer acquisition, customer service and customer retention [processes]," he said.

Chris Kanaracus covers enterprise software and general technology breaking news for The IDG News Service. Chris' email address is Chris_Kanaracus@idg.com

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