Inside The Fall Of Oracle’s Advertising Business

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By now, the industry is well aware that Oracle, once the most prominent advertising data seller in market, will shut down its advertising division.

It is an ignominious end for Oracle Advertising, a part of the Oracle Data Cloud (ODC) that, at one point, consisted of top players in the category, including Datalogix for offline consumer data, Grapeshot contextual targeting, Moat’s measurement and verification and the BlueKai audience marketplace.

Oracle’s ad business will be supported through the end of September, but on the site it feels as good as gone. “Oracle has determined that the Advertising business is not consistent with its current strategic vision,” per the new cul de sac homepage.

So, what happened?

Conversations with a dozen current and former employees paint a picture of misspent time and energy in the years – and even in the hours – leading up to the moment when CEO Safra Catz told investors the ad unit would be kaput by Q4 this year.  These employees say there was no warning and they found out the ad business was over as the rest of the world did. The Oracle employees AdExchanger spoke to requested anonymity.

The company also didn’t give Oracle Data Cloud (ODC) employees any notice prior to the news, which was shared with investors during the company’s earnings call earlier this month.

“Before I discuss my guidance for Q1 and fiscal 2025, I do just want you to have a couple of notes,” said Catz. “The first is that in [Q2], we decided to exit the advertising business, which had declined to about $300 million in revenue in fiscal year 2024.”

It wasn’t mentioned again during the call by an Oracle exec or during the investor Q&A.

Oracle has not responded to repeated requests for comment.

The fizzle

In the day leading up to Oracle’s announcement and in the immediate aftermath of the news, there was a flurry of outreach about potentially offloading at least the Datalogix and BlueKai businesses, according to two former ODC sales leaders and one current biz dev executive.

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There were no takers, apparently.

What’s perplexing is that Datalogix and BlueKai are perhaps the least sales-worthy subsidiaries. Moat and Grapeshot, for instance, are in desirable categories. Moat has ceded its mindshare to IAS and DoubleVerify, but ad verification is an investable category and Moat still has a meaningful position in the market. Grapeshot remains a top contextual data provider and would command a sizable chunk of change, though it wouldn’t come close to recouping the $400 million Oracle spent.

Aside from three execs with ties to Oracle who’d heard only of Datalogix and BlueKai being in consideration, AdExchanger spoke to two leaders and/or venture capital investors in contextual advertising businesses who would likely have received a call if Grapeshot were up for sale. They had heard nothing of the sort.

All pieces, no puzzle

While rival marketing cloud Adobe pivoted into actual media buying with TubeMogul, Oracle outlined a vision for measurement and analytics with no stake in media or ad buying.

To execute on that vision, it spent $1.3 billion to buy Moat and Grapeshot, which were the building blocks for a post-cookie business model. And Oracle also built the only onboarding business that competed with LiveRamp – Oracle’s version was called OnRamp. All decisions made strategic sense.

Another wise move was seeking partnerships with social platforms. Oracle and Moat had coveted early partnerships with YouTube and Snapchat, long before IAS and DoubleVerify shifted their focus to social platforms.

However, things turned sour for ODC fast in the wake of the Cambridge Analytica scandal in 2018. Facebook responded by pulling the plug on its third-party data seller marketplace, which included Datalogix’s data segments.

Three former employees independently referred to Facebook’s removal of third-party data sellers as “the end of the gravy train” for ODC.

From there, things went from bad to worse. Soon, Europe began enforcing the GDPR, which put Oracle’s third-party data businesses in jeopardy. The AddThis audience data business exited Europe in 2019 and shut down entirely last year. Crosswise and other device graphs became untenable in Europe and have now disappeared as an independent category.

ODC was the anchor tenant of third-party data marketplaces. And just like with big department store chains, having a huge presence in malls across the country is a serious problem when the malls are shutting down.

“The cost of ubiquity is high,” Oracle SVP and GM of the data cloud business Eric Roza told AdExchanger in 2018. “We have hundreds of people in our organization focused purely on these integrations and partnerships.”

With third-party data marketplaces diminishing, this army of data sellers made ODC a heavy cost investment for its overall revenue.

Sized out

While ODC felt the headwinds from being the biggest ad tech data seller, it was still just a tiny fish in a big Oracle ocean.

“Data sellers with interesting data sets would come to thinking they were going to make millions,” recounted one former ODC employee. People thought ODC had “Oracle money,” but really the group was underfunded and couldn’t afford top data suppliers, he said.

There was a big push internally between 2018 and 2020 for the Oracle Advertising business to eclipse $1 billion in annual revenue to “get on Larry Ellison’s radar,” according to one former biz dev leader. It did surpass $1 billion at its peak, according to sources – though a far cry from reports of Oracle Advertising earning more than $2 billion in 2022.

But with its core third-party data sales business on the ebb, Oracle Advertising became a risk without much reward.

Oracle spent $28 billion on its acquisition of health care tech company Cerner in 2021, for instance. It faced a huge backlash at the time simply because it also operated the data brokers and marketplaces sales business.

One former ODC employee who left since the Cerner acquisition told AdExchanger the new health care business faced interminable setbacks and delays early on because many new healthcare partners flatly assumed the data would find its way to the Oracle Advertising marketplace.

From that perspective, one might understand why Oracle and its investors were happy to essentially shove ODC out of a moving vehicle.

Oracle Advertising also became an unsupportable regulatory risk. If Oracle were to suffer a GDPR fine, for instance, it would more than likely fall on ODC and its data marketplaces, according to many sources who dealt with the company’s internal legal reviews.

In 2023, Oracle Advertising was a fast-decreasing business with $300 million in total earnings. But it put Oracle in the crosshairs of a potential multibillion-dollar fine, if it was the target of a GDPR investigation. That’s all hypothetical, but also something the company’s officers need to be hypothetically prepared for.

What happens next?

The shutdown of Oracle Data Cloud has shocked the industry, because it’s unheard of for large, valuable assets to simply go poof.

“I’ve never seen this before,” said one longtime programmatic data seller who was part of ODC when it was founded.

When Sizmek went bankrupt, its Frankenstein set of products was stripped for parts, and the contextual business Peer39 was peeled off and sold. Grapeshot is a much bigger company with all sorts of IP and whole data classification structures that are unique to its publisher footprint. It would be an eminently desirable acquisition.

There is no solid or satisfying rationale for why Grapeshot, Moat and other businesses aren’t being sold off, especially since they exist as standalone groups internally and retain their branding. Oracle investors didn’t press on the why or how the decision was made, and Oracle PR has not responded to requests for comment.

The end result is a feeding frenzy in the waiting.

IAS and DoubleVerify are net winners, since they can pick up Moat clients who want to jump ship before Oracle shuts it down. Moat employees are already being poached and approached, sources said. Contextual vendors are also in a race now not for Grapeshot’s direct business but for key employees, according to leaders at two other contextual data rivals.

LiveRamp is also a huge gainer, as OnRamp hits the off-ramp. Experian launched a third-party data onboarding business only two weeks ago, which seems prescient, as now a big chunk of that market will be ceded by Oracle.

The $300 million Oracle Advertising earned last year is a pittance for Oracle itself. But those crumbs constitute a feast for the programmatic ecosystem.

“I just feel bad for the ODC people who stayed,” said a former colleague who left years ago, discouraged by Oracle’s lack of investment in the business.

Some people think those Oraclers were hanging around and collecting an easy paycheck, he said. But as evidenced by the eagerness of programmatic vendors to fill in the Oracle-shaped hole in the market, the opportunity was there to turn these disparate pieces into a humming spinning data machine.

“A lot of people stayed because they really saw that vision and were trying to make it work,” he said. “Right up until they found out.”

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