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Oracle buying marketing software vendor Responsys for $1.5 billion

The marketing software market is heating up as CMOs get IT purchasing power

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Oracle is set to acquire business-to-consumer marketing software vendor Responsys for US$1.5 billion in a bid to flesh out its own capabilities as well as strike back at rivals such as Salesforce.com and Microsoft.

Responsys' board has approved the deal, which is expected to close within the first half of next year, according to Friday's announcement.

Oracle previously bought marketing software vendor Eloqua last year for $871 million, and acquired content marketing software seller Compendium in October.

Salesforce.com has spent heavily on marketing capabilities as well, paying $2.5 billion for ExactTarget earlier this year. Microsoft has invested in this area as well, scooping up MarketingPilot in 2012.

While not stated in Friday's announcement, part of Oracle's rationale for buying Responsys may have been to take the company off the table from rivals.

But the deal is not yet set in stone, as it's subject to shareholder approval. It's also not clear whether any rival offers can or would come in, but Salesforce.com CEO Marc Benioff has suggested the ExactTarget purchase came after a bidding war. "This was a very competitive process and we're thrilled to be the winners here," he said in June when the deal was announced.

The combination of Oracle and Responsys' technologies will give chief marketing officers a one-stop shop for running both business-to-consumer and business-to-business marketing campaigns, Oracle said in a statement.

Responsys' products help companies run marketing campaigns across multiple channels, such as email, websites and social media streams. These campaigns can be fine-tuned to a particular customer's preference. Responsys also has software that helps companies build detailed customer profiles and analyze the effectiveness of marketing campaigns.

Marketing is just one component of an ongoing effort by software vendors to build out so-called "customer experience" product portfolios, which encompass sales, support and service.

CMOs are viewed as having more IT spending power than in the past, as well as greater challenges reaching customers amid the explosion in digital data and emergence of new channels.

Benioff has said marketing software will help develop a US$1 billion revenue stream for his company.

Given that Eloqua is primarily focused on business-to-business transactions, picking up Responsys and its business-to-consumer tools is "huge," said analyst Ray Wang, principal analyst, founder and chairman at Constellation Research. "Most vendors can only deliver one or the other."

Consolidation in the marketing software segment speaks to a broader issue, Wang added. "The challenge now is that large software companies are having a tough time building out innovation and a customer base so they are now buying that innovation, customer base, and culture," he said. "It's like Big Pharma buying out biotechs."

"The good news is most large software companies can't retain the stars so there's always the opportunity to create another startup," Wang added.

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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