Understanding The Significance Of Oracle’s Acquisition Of Datalogix

In late December, Oracle announced its intention to acquire digital marketing leader Datalogix. Datalogix specializes in understanding the relationship between digital marketing and offline purchases by leveraging its partnerships with over 1500 data partners who provide data about the purchasing patterns of roughly 110 million households. Headquartered in Westminister, CO, Datalogix boasts 650 customers including “82 of the top 100 US advertisers” such as Ford, Kraft, Facebook and Twitter. Datalogix aggregates data from its customers to enable digital marketers to personalize content to consumers across a variety of online channels. By acquiring Datalogix and integrating it into the Oracle Cloud, Oracle hopes to obtain an even more comprehensive picture about the online and offline activities of consumers that it can subsequently sell to advertisers and interested parties as illustrated below:

The graphic above illustrates how the acquisition of Datalogix complements Oracle’s larger data as a service platform. Datalogix provides the feather in Oracle’s cap with respect to cloud-based digital marketing by enhancing the data management capabilities of its 2014 acquisition BlueKai as well as the marketing automation functionality of its acquisitions of Eloqua and Responsys in 2012 and 2013 respectively. The acquisition of Datalogix augments Oracle’s analytics capabilities regarding offline and online consumer behavior and enables it to deliver an offering that allows customers to target, personalize and measure the results of marketing campaigns as noted above. Importantly, Datalogix positions Oracle to provide advertisers with the holy grail of data-driven marketing in the form of a master consumer identifier that maps to daily transactional data about brick and mortar consumer purchases as well as online social behavior such as social media-related actions and purchasing activities. In terms of its larger cloud strategy, the Datalogix acquisition catapults Oracle’s positioning within the cloud-based marketing space and gives it access to a trove of data that it can leverage for other products as well. All told, Oracle’s acquisition of Datalogix represents the icing on the cake for Oracle’s marketing-related acquisitions and a key addition to the Oracle Cloud as it gears up to continue asserting its presence in the market for cloud computing products and services.


Salesforce Acquires ExactTarget For $2.5 Billion As Online Marketing Space Heats Up

Salesforce.com announced plans to acquire ExactTarget for $2.5 billion in what represents the biggest acquisition in Salesforce’s history. The deal comes less than 12 months after Salesforce acquired Buddy Media for $680 million. Under the terms of the deal, Salesforce will pay $33.75 a share, or 53% more than the ExactTarget closing share price on Monday of $22.10. Salesforce noted that the acquisition is expected to increase fiscal 2014 revenue by $120 or $125 million, and correspondingly reduce adjusted earnings by 16 cents per share.

ExactTarget is used by over 6000 companies to manage email marketing, text messages and social media camapagins, including the likes of Nike, Coca Cola and Gap. Its acquisition enables Salesforce to offer customers a more comprehensive marketing platform in contrast to Buddy Media and Radian 6, another of its recent acquisitions. Buddy Media specializes in social media marketing and Radian 6 focuses on understanding what is said in social media platforms. CEO Marc Benioff commented on the magnitude of the deal’s size and the broad scope of ExactTarget’s product line by noting:

We can’t just keep making these small acquisitions. That strategy was just taking honestly too long. We needed to do something of consequence and we needed to do something strategic and we needed to do something now.

Shares of similar companies within the email automation and marketing automation space rose upon news of the acquisition, with Responsys closing at $10.53 a share, up 8.78%. Constant Contact shares closed at 15.76 a share, up 5.14%. Privately held Act-On, an integrated marketing vendor that delivers a comprehensive automated marketing solution featuring SEO, integrated Google Analytics support and analysis of search histories, reacted to the news of the acquisition with the following remarks from Act-On CEO Raghu Raghavan:

Marketing software is undeniably one of the hottest markets right now and can be attributed in part to the fact that more CMOs are purchasing marketing-related technology and services from their own capital and expense budgets…All of the recent activity over the past year in the marketing automation space with Oracle’s acquisition of Eloqua, and then last month’s news of Marketo’s IPO are validation of this red hot space that Act-On is operating in. To think that only 5% of the market has been penetrated leaves green fields for marketing software vendors to innovate, expand and grow. This is only the beginning of a long and prosperous road for marketing automation.

The key point Raghavan makes here is that Chief Marketing Officers are increasingly purchasing technology for marketing from their own budgets as opposed to IT, with the result being that the marketing automation is space is exploding as CMOs experiment with different vendors and types of analytics. In December 2012, for example, Oracle acquired Eloqua for $871 million, or $23.50 per share. According to The Wall Street Journal, Salesforce paid 5.5 times the 2014 forecasted revenue price of ExactTarget, less than the 6.1 multiple of forward revenue that Oracle paid for Eloqua. Shares of ExactTarget closed up 52.4% on Tuesday at $33.69 a share, whereas shares of Salesforce declined 7.89% to $37.80. Salesforce CEO Marc Benioff celebrated the finalization of the acquisition but noted that the company was likely to take a “vacation from M&A for anywhere between probably 12 and 18 months.”