Oracle Acquires Eloqua! – An Analyst Perspective

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Bada bing bada boom; more movement in the Marketing Automation space. Today Oracle announced plans to acquire Eloqua for approximately $871M. Eloqua, the long-time 800-pound gorilla in the marketing automation space, went public back August 2012. Eloqua has more than 1,200 customers and 100,000 global users, from companies large and small. This week, Gleanster actually published a new 46pg benchmark report on Revenue Performance Management, which currently available for complimentary download.

A flurry of recent activity in the Marketing Automation space made 2012 an exciting year of competitive growth and acquisitions. Back in October 2012, Atlanta based Pardot (arguably a top 3 provider of marketing automation) was acquired by ExactTarget for $100M. Marketo acquired Crowd Factory in April. Microsoft bought MarketingPilot in November. The list goes on.

The nature of marketing automation solutions demands integration for a return on investment- integration with marketing technologies, integration with CRM, and integration with other back-office solutions. As such, an Elqoua acquisition by a large platform provider like Oracle, SAP, Salesforce.com or Microsoft comes as no surprise. Marketing Automation delivers a consolidated and centralized platform for multi-channel customer engagement, and Eloqua in particular is known for having one of the most robust enterprise-class marketing automation platforms. Multi-channel communication happens to be one of the top three challenges for organizations in 2012 – it’s getting messy supporting multiple disparate marketing technologies. Perhaps that’s why 85% of Top Performers are currently engaging, or planning to engage, in system consolidation initiatives in marketing.

What does this mean for Oracle?

This is definitely a great acquisition for the Oracle portfolio. Oracle plans to pull Eloqua into the Oracle Customer Experience Cloud, an offering that addresses every potential interaction with a prospect or customer across marketing, sales, and service. The announcement deck from Oracle stated the Customer Experience Cloud “enables organizations to provide a highly personalized and unified experience across channels, to create brand loyalty through social and online interactions, to grow revenue by driving more qualified leads to sales teams, and to provide superior service at every potential interaction with prospects. Delivering end-to-end management of the customer journey through unified data, integrated business process management and business analytics.”

According to Oracle, Eloqua will likely be integrated with Fusion CRM, Taleo, ATG, and the Marketing Cloud and ultimately build out the Customer Experience platform as the core system of record for marketing. From a build or buy perspective, the acquisition was likely a no brainer for Oracle – the most robust marketing automation on the market along with a client base that both overlapped and provided up-sell opportunity for Oracle. Buy it – done. According to Oracle, 14 of the existing large enterprise Eloqua clients already use the Oracle Customer Experience platform. That’s actually not the most compelling story given the volume of Eloqua clients using competitive CRM offerings like Salesforce.com, but it’s a start.

While this remains a strong story for Oracle, the execution of this strategy may be a little more complicated. Let’s not forget, Oracle acquired a similar platform, Market2Lead, back in May 2010. As such, many of the core features within Eloqua have already been integrated into the Siebel CRM Marketing app and already exist within Oracle. That said, Market2Lead was not a strong on-demand story like Eloqua. With continued pressure from Salesforce.com and the explosion of demand for SaaS offerings, Oracle may have also been looking at this acquisition as more of a strategic move than a pure augmentation of the Customer Experience platform capabilities In fact, a huge portion of the Eloqua client base are Salesforce.com customers. While Oracle maintains that they are committed to supporting any CRM platform for integration with Eloqua, let’s be honest, this gets a little complicated for companies committed to SAP, Microsoft, and Salesforce.com. The question remains, will Eloqua continue to gain the same traction under Oracle?

What does this mean for Eloqua?

The IPO was a huge strategic step forward for Eloqua (see the Market Insight: What the Eloqua IPO Means for Marketing Automation) and marketing automation in general. It validated the business model behind marketing automation – the features are essential and the business justification is clear. At the same time, adoption of marketing automation is far from mature, and the biggest impediment to mainstream use is still user education and company culture. There is still a huge market for Eloqua, especially among the large enterprise. Customer adoption trends also demonstrate strong growth in “non-traditional” industries such as Telecom and Entertainment, that weren’t exactly early adopters of marketing automation. Eloqua will likely continue to look up-market as “the” enterprise class solution for any large enterprise looking to augment marketing and sales with a core system of record to apply multi-channel business rules against. Eloqua just can’t be beat… yet.

There’s definitely a continued need for aggressive growth in marketing automation. While the acquisition makes perfect sense as a natural augmentation of a CRM solution (like Oracle CRM) there will also be a need for a CRM agnostic platforms. The question is, can Eloqua’s “CRM platform agnostic” growth continue to happen under the Oracle brand? The good news is, Oracle has enough up-selling and cross-selling opportunities with existing clients alone to continue growth in Eloqua investments, especially in the large enterprise. While the holistic customer experience platform messaging may be a bit ahead of market demand, the story is still extremely strong. Eloqua will likely continue to play a pivotal role as the heart and veins that make customer data actionable and automated for the mid-to-large enterprise customer experience. In addition, there’s probably a really compelling story to tell around the whole big data (see the Deep Dive: A Crash Course on Big Data… for Marketers) for marketing play. The Eloqua acquisition adds a lot of clout to the Oracle Customer Experience platform; and SAP, Microsoft, and Salesforce.com will likely need to fill this gap to compete in the future.

What does this mean for the Marketing Automation space in general?

I guess there’s a glass half-full and a glass half-empty view of the acquisition. It could be argued that the Oracle acquisition may result in a reduced competitive footprint from Eloqua among traditional marketing automation deals- especially in the small and midsize markets. Eloqua needed continuous traction up market after the IPO to meet shareholder expectations, and nothing really changes under the Oracle umbrella. That means there’s also tremendous opportunity for Eloqua to cross-sell and up-sell within Oracle. Given the existing large enterprise customer base at Eloqua, Oracle should be capable of driving investments from existing clients in non-traditional industries like Telecom, Pharma, Manufacturing, and Entertainment which would ultimately benefit all marketing automation providers. The rising tide raises all boats.

One thing is for sure, marketing automation isn’t all that sticky…yet. We are seeing lots of companies moving to different providers. The biggest hurdle is getting the organization bought into marketing automation as an investment that pays dividends. After the value is justified, organizations move freely across providers looking for just the right solution for their needs. Although, it could be argued that in the enterprise levels, there aren’t all that many alternatives to Eloqua.

The Elouqa acquisition also leaves a gap with respect to mid-to-large enterprise marketing automation. As an independent company, Eloqua had a vested interest in growing marketing automation to meet shareholder expectations and targets. The question is, will this same hunger, drive, and commitment to execution exist under the Oracle brand. It’s quite common to see businesses stagnate or suffer under a boarder portfolio like Oracle. That’s okay for a mature technology like CRM, but not for a technology like Marketing Automation that still demands continued justification and growth. If Oracle fails to invest in Eloqua, one or a few marketing automation providers can likely own the enterprise space- especially in non-Oracle shops. Of course, this demands a more robust platform that addresses security and integration for enterprise challenges. Whichever firm fills that gap can definitely play up the whole CRM agnostic, pre-configured integration positioning. There are enough strong advocates of Salesforce.com to demand a viable alternative to Oracle. Who knows, this may even lead Salesforce.com to build out the marketing suite or acquire the next best alternative… Marketo.

Get ready for more acquisitions. This move by Oracle may lead to strategic retaliation from SAP, Microsoft, and Salesforce.com. If marketing automation is driving bigger investments in CRM (which it is) then competitors are likely to look at a build or buy decision to also shore up the Customer Experience positioning. One thing we do know for sure is the fragmented marketing technology investments are stagnating growth for organizations, and there’s a strong story to be made around the customer experience platform: pull your customer data into one place and apply business rules to it so you can engage in relevant and timely communications. That’s compelling. So we might see Marketo , Exact Target, or Silverpop get sucked up by Oracle competitors in 2013.

Republished with author's permission from original post.

Ian Michiels
Ian Michiels is a Principal & CEO at Gleanster Research, a globally known IT Market Research firm covering marketing, sales, voice of the customer, and BI. Michiels is a seasoned analyst, consultant, and speaker responsible for over 350 published analyst reports. He maintains ongoing relationships with hundreds of software executives each year and surveys tens of thousands of industry professionals to keep a finger on the pulse of the market. Michiels has also worked with some of the world's biggest brands including Nike, Sears Holdings, Wells Fargo, Franklin Templeton, and Ceasars.

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