The Social Land Grab Begins With Oracle's Out-of-Nowhere Deal for Vitrue
There's a whole ecosystem of social platforms that have grown in tandem with Facebook. More than 250 of them, in fact. In light of Facebook's IPO, we knew it was only a matter of time before one of the big enterprise companies snapped one up.
That Vitrue, the number three in its category, would sell, was not a surprise. Six years old with $33 million in venture backing, the company was poised for a big move, be it fundraising or acquisition. Vitrue hadn't quite gathered the traction of competitors Wildfire Interactive and Buddy Media (both with around $45 million in revenue, the latter valued in its last funding round at $500 million), but it still has a massive list of top tier customers including McDonald's, P&G and MTV*.
And besides, social media is a rising tide that, for now, lifts all boats.
That its acquirer would be, of all companies, Oracle--the database company, the provider of middleware, the hardware systems company, the supply chain software provider, the very very unsocial SaaS company--is a surprise. Oracle is a savvy acquirer, sure (this should give you a sense of what a deal-doing machine the company is) but it's steered clear of social media plays that might need to be integrated into existing offerings.
Competitors like Salesforce, for example, have embraced social, but thus far only from a CRM standpoint. And really, any expert would tell you that CRM, which equates to listening and addressing customer service complaints, is only a starting point for brands in social media. Salesforce acquired Radian6, a social CRM company, for $326 million last year. To compare the deals: Radian6 is basically a listening tool, and Vitrue is a talking tool. Brands and agencies use Vitrue listen, yes, but more importantly, they use it to manage their activity on social media. Vitrue helps companies go beyond basic customer service on platforms like Facebook and Twitter into actual content. We're talking status updates, Tweets, branding and actual ad buys.
That's what makes this deal so out-of-left field. The first company to buy a true social marketing platform isn't much of a marketing company at all, and hasn't a single advertising play to speak of. Compare Vitrue, the marketing platform which also facilitates the purchasing of ads on sites like Facebook, Twitter and YouTube with Oracle's other recent acquisitions: Last fall, the company paid $1.5 billion for Rightnow Technologies, a call center automation company, and more recently, $1.9 billion for Taleo, a cloud company. We've noted before that even those early-2000's SaaS companies might be too hip and modern for Oracle's sales culture of elephant-hunting. The same skepticism arose when SAP bought SuccessFactors in December last year.
Oracle noted that Vitrue will be integrated with its social sales, commerce and service capabilities and become the foundation of the company's social marketing capabilities. So basically, Oracle is now a marketing company, too.
The stock rose slightly on the news, but not everyone is sold. Vitrue's competitors are already licking their chops. Wildfire CEO Victoria Ransom put out a statement saying that the deal legitimizes Wildfire's business model, while adding in the same breath, "We think Vitrue’s existing customers may start looking for other options." Ouch.
With a company so closely tied to branding and advertising like Vitrue, Oracle is making a dramatic shift away from it's core--not just on the way its software is bought and sold, but in whether it's still selling middleware, databases and applications to begin with. That, or this acquisition is doomed.
- These lists always scare me, though, as the definition of 'client' can be variable and it looks like Vitrue's is worded carefully enough to include past clients… Further, often several competing companies will list a massive company like P&G as a client, giving us no idea how much business the conglomerate actually gives them.