Following the news that Oracle Corporation (NYSE:ORCL) has acquired marketing automation vendor, Responsys, Gerry Brown, senior analyst at Ovum outlines the merits of buying Responsys and what impact this may have on competition and enterprise customers:
Responsys has been the subject of acquisition speculation for some time – first Adobe (with whom Responsys has 100s of joint customers), but Adobe acquired Neolane in June 2013. Salesforce looked at Responsys at about the same time, but chose ExactTarget instead. Finally a SAP acquisition was rumoured to be very close to fruition in November. Perhaps this forced Larry Ellison’s hand to buy. But what are Oracle buying?
What does Responsys do well? “Produce profits (unusual for a SaaS-based vendor) – it’s a very well-managed company. Responsys sells mainly email and data integration customised marketing automation solutions to large retailers and consumer goods companies. Responsys has the best messaging for such customers. President Scott Olrich’s ‘New School Marketing’ value proposition stands head and shoulders above its peers. Responsys can certainly ‘talk the marketing talk’, which Oracle Corporation (NYSE:ORCL) has struggled with in the past.”
What does Responsys not do so well? “Growth has been sacrificed for profitability. Responsys has not grown or scaled its business like ExactTarget (recently acquired by Salesforce) has, for example. Responsys has not been a strong acquiring company, so its organic product development proposition is stretched. For example, it rebrands AppNexus’ display advertising Real Time Bidding platform. Responsys has a limited presence in continental Europe and Asia and brand recognition outside of the US is relatively low.”
What does this mean for Oracle Corporation (NYSE:ORCL)’s Competitive Position? “A lot of Responsys’ product functionality is already contained in Eloqua (who Oracle Corporation (NYSE:ORCL) acquired in December 2012)’s products. Oracle’s claim to now be the only vendor to offer both B2C and B2B marketing automation is ambitious. Responsys would never turn their backs on a B2B customer, nor would Eloqua turn their backs on a B2C customer. The technology is very similar, but the emphasis is slightly different. Responsys’ marketing-oriented services capability is interesting to have, but Oracle already has great data integration capabilities.
“The Responsys acquisition directly counters Salesforce’s competitive position who acquired ExactTarget (for B2C) and Pardot (for B2B). Equally, Oracle Corporation (NYSE:ORCL) buying Responsys blunts the potency of Adobe’s Neolane (B2C) acquisition. For those, like SAP, still looking for a bed-fellow, it makes Silverpop and Marketo the only game in town. Interestingly though, Responsys shares are now trading above Oracle’s offer of $27 per share – so some investors think the bidding game is not over yet. Marketo just can’t believe their luck. Marketo is today valued at $1.4Bn, the same price as Responsys, although they half the size of Responsys and are still losing $10m per Quarter.”
What does this mean for Enterprise customers? “Not an awful lot. It does give Oracle customers a bit more marketing automation software to choose from. Expect Oracle to start aggressively marketing Responsys to their customer base when the deal closes during H1 2014. Oracle’s really big move was this time last year when it bought Eloqua. The Responsys acquisition was likely brought on to please financial markets with the message that Oracle Corporation (NYSE:ORCL) has not lost its acquisition mojo, and to counter or thwart competition, rather than to gain a significant piece of new technology.”