Oracle Corporation (ORCL - Free Report) recently announced that it has entered into an agreement to buy marketing data analytics company, Datalogix. The acquisition will primarily boost Oracle's digital marketing cloud business by bringing into its folds enormous amounts of data on consumer spending patterns. The financial terms of the deal have not been disclosed, however, going by news reports, the deal is likely worth $500 million to $1 billion.
Given the rise in Internet usage and surge in social media, the demand for effective marketing technology that could exploit the opportunity unfolding in the digital world has touched new highs. In the current digitalized environment, marketing has gone beyond a good sales pitch, TV commercials and handouts. It seeks to track down every move of the target audience including the kind of ads that attract them and their purchasing patterns. The insight gained from this tracking makes it much easier for enterprises to efficiently launch their products, enhance sales and offer a cost effective CRM system.
As a result, major players like IBM, Oracle, SAP, HP, Salesforce and Adobe Systems Inc. are developing comprehensive marketing tools to analyze the huge volumes of customer-related data.. Harnessing the cloud in these efforts has also become necessary to help these companies collect, store and analyze the data. Hence, cloud technology has become an integral part of the digital marketing and is imperative for the success of any business.
Given a significant demand surge in cloud-based digital marketing, competition in this segment has also intensified. Apart from growing organically, companies offering digital marketing cloud solutions are gaining competitive edge through acquisitions.
Companies like Oracle, considered a late entrant in the digital marketing cloud space, are aggressively buying small start-ups to counter competition. Following the Eloqua acquisition in 2012, the company acquired four major marketing companies, including Responsys in 2013. This year, Oracle closed the BlueKai buyout.
The Datalogix acquisition deal represents another milestone for Oracle to beef up its market share in digital marketing data as a service platform. Datalogix boasts over 650 customers, 1,500 data partners that track $2 trillion in consumer spending. In addition, its top notch clients including Ford, PepsiCo, Kraft Foods, Unilever and Lenovo and key digital media publishers such as Facebook (FB - Free Report) , Twitter (TWTR - Free Report) and Google (GOOGL - Free Report) make it a valuable deal for Oracle. Going ahead, Oracle may consider digital marketing company Marketo and Adtech to further build its capabilities.
Nevertheless, we are hopeful that the combined synergies of all the acquired cloud-marketing companies will enable Oracle to create a cost effective and efficient cloud marketing platform and improve its competitive position.
Oracle currently has a Zacks Rank #4 (Sell).