Oracle closes its advertising business unit: a cross-border journey of ambition and frustration

Why did Oracle close its advertising business unit? This article will help you understand the reasons. This article is recommended for companies or self-employed individuals.

Oracle's leading position in enterprise software and database management is unquestionable. With its strong data management capabilities, it has ambitiously planned to expand its business into the advertising technology (ad tech) field in order to gain a foothold in the booming digital advertising market.

However, this grand blueprint did not go as planned, and Oracle's advertising business ultimately suffered a major setback.

In a financial report conference call on June 13, 2024, Oracle announced that it had decided to shut down its advertising business unit due to a significant drop in advertising revenue expected to reach $300 million (about RMB 2.178 billion) in fiscal 2024. This decision marked the end of Oracle's attempt in the field of advertising technology.

So, what exactly caused the failure of Oracle's advertising business? This article will analyze the reasons behind it, explore the market competition landscape in which Oracle is located, and extract valuable experience and lessons from it, hoping to provide a useful reference for other companies when they expand across industries.

1. Oracle’s ambition and failure in the advertising field

Oracle entered the advertising technology field with the initial hope of quickly gaining a foothold and building a comprehensive advertising ecosystem through a series of major acquisitions . The acquired companies include:

• BlueKai (2014): Data management platform, excelling in third-party data collection and integration
• Datalogix (2014): Combining offline purchase data with online user behavior data
• AddThis (2016): A social data platform that provides website plugins to collect user data
• Moat (2017): An advertising effectiveness measurement platform focused on viewability and ad measurement

However, although Oracle has made a lot of layout and investment in the field of advertising technology through these acquisitions, this acquisition strategy is not as good as Oracle expected. It has neither successfully extended its advantages in enterprise software and database management to the field of advertising technology, nor helped Oracle stand out in the highly competitive advertising market.

Oracle's attempt in the advertising industry did not go as planned, and there are four main reasons behind its failure.

1. Difficulty in product integration

Although Oracle's series of acquisitions in the field of advertising technology has enabled it to acquire a number of companies with unique technological advantages, seamlessly integrating these independent technologies into a unified advertising technology platform is an extremely complex task.

These acquired companies each have different technical architectures, resulting in numerous technical obstacles that need to be overcome during the integration process.

More importantly, the complexity of this integration directly affects the customer experience.

Due to the lack of sufficient synergy and compatibility between products, customers have to face the switching of multiple interfaces and systems when using Oracle's advertising technology platform, which undoubtedly increases the complexity of use and reduces the consistency and efficiency of the customer experience.

Therefore, although Oracle's layout in the field of advertising technology seems ambitious, the poor customer experience caused by improper integration has become an insurmountable obstacle.

2. Data privacy and regulatory pressure

The ad tech industry faces an increasingly stringent regulatory environment with the introduction of data privacy regulations, such as the European Union’s General Data Protection Regulation (GDPR), which came into effect in 2016.

Oracle used to rely on third-party data for ad targeting and analysis, but this model has been severely restricted under the new privacy regulations. Furthermore, as social platforms such as Facebook have closed third-party data access rights, Oracle has encountered greater challenges in obtaining high-quality user data .

Data is a core element of the advertising business, and its limited access has undoubtedly directly weakened the advertising effect and had a negative impact on business revenue. In order to adapt to and comply with these new regulatory requirements, Oracle has to increase its compliance spending, which has undoubtedly invisibly pushed up its operating costs.

3. Fierce market competition

Competition in the advertising technology market is increasingly fierce, with new companies emerging like mushrooms after rain. At the same time, established companies such as Google and Facebook firmly dominate the market with their huge first-party data resources and powerful advertising platforms.

To maintain its competitiveness in such a fiercely competitive market , Oracle must continuously invest money and resources in business optimization and innovation. However, this also poses a considerable challenge to the profitability of its advertising business, and it needs to find the right balance between maintaining investment and achieving profitability.

4. Rapid evolution of the ad tech market

The field of advertising technology is undergoing unprecedented technological and model changes. The emergence of advanced technologies such as programmatic advertising, machine learning, and AI is constantly reshaping the rules of the game in the market.

However, in this wave of technological innovation, Oracle failed to adapt to these changes quickly, resulting in its advertising business being unable to cope with the dual pressures of rapid technological iteration and changing market demand, and gradually falling behind the pace of industry development.

This situation undoubtedly brings severe challenges to Oracle and also prompts it to re-examine and adjust its strategic positioning and development path in the field of advertising technology.

Lessons Learned from Oracle’s Failure

1. Post-acquisition integration is key

Oracle's experience has fully demonstrated that after multiple acquisitions, how to integrate the acquired technologies into a seamless whole is the key to ensuring the success of the acquisition.

This requires companies to develop a detailed and thorough integration plan before acquiring an enterprise to ensure the compatibility between the acquired technology and their own business processes, thereby achieving optimal allocation and efficient use of technological resources.

2. Data strategy and compliance are equally important

As data privacy regulations become increasingly stringent, companies also need to remain highly agile when formulating data strategies.

This means that companies must not only comply with relevant regulations, but also actively develop innovative methods to maximize the value of data under the premise of compliance. Strengthening the collection and use of first-party data may be an effective strategy for companies to deal with strict data privacy regulations. It can enable companies to build a more solid data foundation and provide effective support for business development.

3. Build differentiated advantages

In a highly competitive market environment, companies must develop unique competitive advantages if they want to stand out.

This can be achieved by providing excellent customer experience, building strong data insight capabilities , or achieving deep integration with the core business of the enterprise . Through these differentiated competitive advantages, enterprises can occupy a favorable position in the market, better meet customer needs, and thus achieve sustainable development.

4. Keep up with the evolution of technology and market

The advertising technology field is changing rapidly. If companies want to stay ahead in this field, they must always be sensitive to market trends.

This means that companies need to continuously innovate technology and flexibly respond to new market demands. One of the important reasons why Oracle's advertising business declined was that it failed to quickly adapt to the rapid changes in technology and the market. Therefore, it is crucial for any company to keep up with the pace of technological and market evolution.

Oracle’s experience provides valuable insights and lessons for companies looking to navigate the dynamically changing ad technology landscape.

It profoundly demonstrates that in the process of seizing market opportunities, enterprises not only need to have strategic foresight, but also need to have a strong ability to transform strategy into practical actions and execute excellence. The organic combination of the two is the key for enterprises to move forward steadily and seize opportunities in the ever-changing market environment.

Source: adexchanger; Compiled by: Jeff

Source public account: Morketing (ID: 1083455)