In December, Oracle announced some news that shocked the adtech world: it was one acquiring one of the jewels in the marketing world, Datalogix for an undisclosed sum. Since then, there had been questions and rumours as to how much Oracle paid.
Sources have told the Wall Street Journal’s Yuliya Chernova that Oracle paid big — over $US1.2 billion.
Datalogix solves a really hard online advertising problem. It helps prove that an online ad campaign really makes people walk into the store and buy stuff by analysing purchasing patterns and matching them to campaigns. Facebook COO Sheryl Sandberg raved about the company and in early 2014, Google also signed a deal with it (and with its competitor Acxiom).
Apparently Datalogix was looking for a $US1 billion price tag, and there were rumours of a bidding war.
Datalogix had raised over $US86.5 million plus a mysterious, amount-not-specified investment by VC Jim Breyer of Breyer Capital, characterised as “significant” by the company. It was enough to grant him a board seat. Datalogix had estimated 2014 revenues of $US125 million, but wasn’t profitable, AdExchanger Kelly Liyakasa reports. As of June, it had 400 employees.
If Oracle paid a 10x+ multiple, that would have been high but not out of the ballpark for an established company. (Some of the bigger deals range from 8x to 12x.) Oracle acquires a lot of companies. It is known to buy at fair prices, but not outrageous ones.
But what made this particular acquisition odd — and also explained why it happened at all — was that Oracle had already bought one of Datalogix’s big competitors, BlueKai, almost a year ago, and at a much more reasonable price. Sources told Business Insider that Oracle paid $US350 million to $US400 million for BlueKai.
So why turn around and spent three times as much for Datalogix, especially when the company was facing increasing competition from other adtech firms?
As we previously reported, Oracle had two good reasons.
First, Oracle had asked former BlueKai CEO Omar Tawakol to start a new adtech business for Oracle, known as the Oracle Data Cloud.
Tawakol drove the buy of Datalogix for Oracle, and it will fit into the Data Cloud. This new service is supposed to do more than just help marketeers place ads, but help companies really dig into what people are doing on the net to help them with ads but also sales, hiring, business analysis, Tawakol told AdExchanger.com.
The second reason: Salesforce. While the most likely suitor for Datalogix was Facebook (and we’d guess that Facebook was at least interested in bidding), Oracle’s latest rival, Salesforce, had also just signed a partnership deal with Datalogix for its Marketing Cloud.
Beating Salesforce in this area is worth a pretty penny to Oracle. Both companies are chasing one of the biggest trends in enterprise tech: big IT budgets held by the chief marketing officer, rather than the CIO.
IDC predicts that CMOs will spend $US32 billion on tech by 2018, and between 2014 and 2018 will spend a total of $US130 billion. A lot of that will be on cloud services on recurring contracts, a lucrative business over the long haul.
By the way, we asked Oracle again if it was willing to reveal the price it paid for Datalogix. Oracle had no comment.
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