The Saga of Oracle's Advertising Aspirations: A $2 Billion Vision Unravels

Oracle, a leading software and cloud services provider, has announced the wind-down of its advertising division. After ten years of trying to become a significant player in the digital advertising landscape, this decision comes amid declining revenues and evolving market trends, as revealed in the announcement. company’s fiscal 2024 Q4 earnings call .

The Rise of Oracle Advertising

Oracle ventured into the advertising domain back in 2012 by going on an ambitious acquisition spree. During a six-year period, the company poured billions into establishing a robust marketing and data cloud to compete against heavyweights like Salesforce and Adobe.

As part of its acquisition strategy, Oracle explored various facets of marketing and advertising technology. In its formative years, it acquired Eloqua, a B2B marketing automation tool; Responsys, a cross-channel marketing software provider; and Vitrue, known for social media publishing solutions. Following these, Oracle made data-centric acquisitions, including BlueKai, a data management platform, and Datalogix, which specialized in offline purchase data.

Oracle's acquisition efforts extended to obtaining Crosswise, a vendor for cross-device graph technology, AddThis, which provides social bookmarking and content recommendation tools, and Maxymiser, specializing in A/B testing and personalization. Additionally, by acquiring Moat and delving into contextual targeting with Grapeshot, Oracle invested heavily in enhancing its digital analytics and measurement capabilities.

These strategic purchases aimed at bolstering Oracle's proficiencies in digital analysis, cross-channel marketing, data management, and social media marketing. The objective was to construct a comprehensive set of tools for marketers and advertisers, leveraging its existing strengths in business software and data stewardship.

A Pivotal Moment Leading to the Closure of the Division

Despite significant investment and early promise, Oracle's advertising ambitions encountered significant hurdles starting in 2018. Two major events transpired during that period.

First, Meta (previously Facebook) announced that it would restrict Oracle and other third-party data providers from directly selling targeted data through its platform. This shift severely impacted Oracle Advertising's revenue, particularly due to the aftermath of the Cambridge Analytica scandal, as it curtailed the company's ability to leverage its data assets within one of the largest ecosystems in digital advertising.

Secondly, new stringent consent requirements for data collection and processing were introduced, which created further complications for the company’s data-driven advertising model, particularly for AddThis and similar companies that lacked robust permission mechanisms. GDPR in Europe These legislative changes forced Oracle to rethink its approach towards data collection and utilization, especially in the European marketplace. Consequently, Oracle

closed its AddThis audience data operations in Europe in 2019 as part of a strategy to scale down its advertising activities in the region. Increased scrutiny and legal challenges concerning its data practices also became a concern for Oracle. In 2020, the company faced a complaint regarding third-party cookie tracking in Europe.

This led to a class-action lawsuit in the United States in 2022. Over time, these challenges compounded, as reflected in Oracle's financial results. By 2022, Oracle Advertising reportedly generated nearly $2 billion in annual revenue.

The Decline of Oracle Advertising

However, that figure began to plummet rapidly. According to CEO Safra Catz during the Q4 earnings call, Oracle Advertising's revenue for the fiscal year of 2024 had dwindled to approximately $300 million, marking a dramatic $1.7 billion decline in just two years. Catz revealed in Q4 that the company had opted to exit the advertising industry following the substantial drop in revenue, which fell to around $300 million in 2024. Several factors contributed to the decline and ultimate shutdown of Oracle Advertising. Privacy regulations, including the GDPR in Europe and similar laws elsewhere, significantly impacted Oracle’s ability to gather and monetize user data. Changes on platforms like Meta resulted in fewer effective targeting avenues for advertisers relying on Oracle's supply.

Moreover, there has been a notable shift among marketers towards prioritizing first-party data over third-party data sources. One of Oracle's major hurdles was the challenge of integrating and managing data from its myriad of acquisitions.

What Has Triggered the Shutdown?

Adding to Oracle's complexity is the need to reassess many traditional digital advertising strategies as major browsers move toward phasing out third-party cookies.

Oracle's withdrawal from the advertising space has broad implications for the advertising technology and marketing technology sectors. The closure has intensified the grip that a select few dominant players have on the digital advertising industry. It underscores an urgent need for the establishment of privacy-compliant solutions across the board.

Image: Marketing Technology Landscape, Chiefmartec

Effects on the Marketing Sector

In light of Oracle's setbacks, advertisers and publishers should reassess their collaborations with data brokers and third-party data vendors. The industry is likely to see an accelerated shift towards models that leverage contextual targeting and first-party data.

The shutdown of Oracle Advertising is expected to lead to significant job loss. Estimates suggest between 1,001 and 5,000 positions may be affected, although precise figures have yet to be finalized. Many professionals, including engineers and data scientists, are currently navigating the job market.

Oracle's Future Landscape Post-Shutdown

As it departs from the advertising field, Oracle is shifting its focus to alternative growth sectors, particularly in cloud computing and artificial intelligence. Oracle Advertising’s LinkedIn page Alongside announcing the advertising closure, Oracle reported a total revenue of $53 billion for the fiscal year, reflecting a 6% year-over-year increase, and a profit of $10 billion, which is up 24% from the prior year.

Catz expressed optimism regarding Oracle’s trajectory, forecasting double-digit revenue growth for the current fiscal year. She anticipates that both Oracle's sales and remaining performance obligations (RPO) will surge in fiscal year 2025, driven by heightened demand for AI solutions.

Additionally, the company disclosed plans to relocate its headquarters to Nashville, Tennessee, to be closer to the healthcare domain, which is rapidly embracing AI and undergoing significant digital transformation. This transition is yet another signal of the mounting pressure on the surveillance advertising framework. Catz outlined the financial and legal struggles Oracle has faced since 2018, including the repercussions of Meta's decision to eliminate its partner category and ongoing privacy-related litigation. Zach Edwards views the shutdown as a cautionary tale for the industry. He emphasized that companies engaged in data markets while striving to comply with data privacy regulations are likely to face economic challenges. Edwards also noted that many individuals, particularly those with sensitive backgrounds and interests, might regard Oracle’s exit from its advertising operations as a net positive for privacy.

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Victoria is an accomplished writer covering a broad range of technology subjects, including Web3.0, AI, and cryptocurrencies. Her extensive experience equips her to craft informative articles for a diverse audience.

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