Back in 2008, Oracle founder and CTO Larry Ellison had one of history’s less insightful comments on the future of cloud computing, something he likened at the time to a fad. A fad he mostly didn’t really get.
“The computer industry is the only industry that is more fashion-driven than women’s fashion. Maybe I’m an idiot, but I have no idea what anyone is talking about. What is it? It’s complete gibberish. It’s insane. When is this idiocy going to stop?”
What Ellison dismissed as a fad 8 years ago turned out to be not so much a fad.
By 2012, Ellison was instead touting the benefits of “the most comprehensive cloud on the planet Earth” his firm was developing. He also admitted that it had been “a long time coming.”
As of today, Oracle’s future in the cloud-dominated world is unsure, but in the last few week has gotten more interesting with a pair of high-profile partnerships with Pinterest and Snapchat. And while its last earnings were probably not what they’d like, though notably better than Wall Street was expecting, there does seem to be at least some early evidence that reinvention of retail is offering Oracle an opportunity to reinvent itself a little bit too.
The New Paradigm And The Power Of Connecting Online And Offline Worlds
Oracle’s historical business model is as an enterprise applications and database software firm that derives a massive amount of revenue through licensing fees. It has also attracted legions of critics and skeptics who believe that business model is quickly turning stale. That, when combined with Oracle’s size and entrenchment, has led analysts to suggest that Oracle is not really well suited to make the jump into the next phase of computing dominated by mobile devices and the cloud.
Snarkier commentators have noted, “Oracle is just trying to pour its old licensing wine into new cloud bottles.”
But Oracle has been working rather aggressively over the last several years to do more than just pour the same wine. By all accounts they are looking for both new bottles and new formulations with big investments to software-as-a-service (SaaS), platform-as-a-service (PaaS), and infrastructure-as-a-service (IaaS) offerings.
“We made the investment,” Ellison noted in a call with investors last week. “We have the right technology with our second-generation data centers.”
Among those investments was a whopping $1.2 billion in consumer data tracking firm Datalogix about a year-and-a-half ago. At the time the purchase was seen as a bit shocking. Datalogix was far from profitable when Oracle paid over a billion dollars for it and its annual revenue clocked in at about $125 million.
But what Datalogix lacked in revenue, it made up for in … well, data. More specifically information gathered on $2 trillion worth of consumer spending from 1,500 data partners across 110 million households.
“The addition of Datalogix to the Oracle Data Cloud will provide data-driven marketers the most valuable targeting and measurement solution available,” said Omar Tawakol, Group Vice President and General Manager of Oracle Data Cloud. “Oracle will now deliver comprehensive consumer profiles based on connected identities that will power personalization across digital, mobile, offline and TV.”
Apart from buttressing Oracle’s cloud solution, the expensive and ambitious Datalogix acquisition has the unlikely side effect of making Oracle cool again this spring.
Or at least the power behind some coolness.
Solving Their Problem By Solving Social Media’s Problem
As we’ve noted before, social media sites have something of a common problem, with the recent exception of Facebook. There are lots of eyeballs and committed users sharing, chatting, inspiring each other, etc., but there’s no direct path to turning all of those eyeballs into dollars.
And those eyeballs are undeniably connected to commerce, but not in ways that are easy to quantify. Solutions like embedding “buy buttons” directly have turned out to be less than helpful. Social media motivates consumers to shop, but consumer are not necessarily motivated to shop while they are there directly.
Finding better ways to quantify how and when social media advertising reaches consumers and, more importantly, when it motivates them to make a real world purchases (where 85 percent to 95 percent of all purchase are still made) is a useful piece of information to offer.
And it’s exactly what Oracle through its Datalogix tool is offering to Pinterest and Snapchat.
For Pinterest, Oracle’s Data Cloud is doing the anonymous matching of visitors to their offline buying behavior by creating control populations of non-users and stacking up their various behaviors. This allows it to accurately measure lifts in sales generated by Pinterest campaigns.
“Even with the early iteration of this campaign where we were only measuring 29 consumer packaged-good campaigns, the Oracle Data is demonstrating very strong results,” noted Jon Kaplan, head of global sales and Pinterest, in an interview. “The difference was striking – Promoted Pins are driving five times the incremental in-store sales. And that is per impression of the ad.”
Oracle announced a similar partnership with Snapchat last week that will also be starting in consumer packaged goods before branching out more generally to all retailers.
“We’ve been listening closely to advertisers and delivering the data they need,” Snapchat Global Head of Revenue Operations Clement Xue said in a statement.
“As retail is changing, we are all relearning the rules of sales and when customers buy. I think for the first time brands are really understanding that the end point of the journey is the decision at a cash register, and there are a lot of points they can jump into that story and influence the consumer. We are building a network of interconnected services that essentially make finding those tough points easier.”
It’s a tall order, and a service much in demand. And there are many who doubt Oracle is up to the full scope of what it is hoping to do.
But Oracle has at least in one regard found an area of the retail landscape where there is a lot of action, but a surprising amount of mystery about what that action means – or how to understand how it turns into money.
And if Oracle actually can fix that problem, it’s made one very useful step for its own reinvention and the reinvention of retail.