Friday, July 25, 2014

LinkedIn Buys Bizo and Oracle Adds Database Services: Everything Is Going According To Plan

The past week brought two industry announcements: acquisition of Bizo by LinkedIn and new “Data as a Service” offerings from Oracle. Both illustrate the continuing evolution of marketing technology towards a data-centric world.

The Bizo purchase, priced at $175 million, makes perfect sense.  It gives LinkedIn more tools to expand its marketing offerings and lets Bizo use LinkedIn data to improve targeting within its own products. Some eyebrows were raised by a statement on LinkedIn’s blog that it will sell off Bizo’s Data Solutions business, which markets Bizo’s 120 million name database of business contacts. But LinkedIn doesn't need that data: it already has vastly better information in its own files.  Retaining Bizo's data business would only have raised questions about whether LinkedIn data was somehow leaking into the marketplace through Bizo. Many LinkedIn customers would have considered this unacceptable use of their profiles, regardless of whether LinkedIn’s privacy policy actually allows it (which my quick reading suggests it does). The more interesting question is who, if anyone, will buy the business from Bizo.

The Oracle announcement provided unintentional symmetry with Bizo: as LinkedIn was leaving the customer data sales business, Oracle was expanding its offerings. Arguably Oracle’s announcement was little more than relabeling of the BlueKai data management platform it purchased in February. But Oracle presented it in terms that make clear it sees a new, central role for data in the marketing technology stack – a view I share wholeheartedly.

In fact, Oracle’s discussion made almost exactly the same points I’ve been making about Customer Data Platforms: that marketers need a shared customer database which integrates information about each individual and makes the consolidated information easily available to analysis and execution systems. The key notion is that this consolidated database has its own very high value, apart from the value of any applications that use it. Oracle is supporting this vision by ingesting data from hundreds of partners; doing advanced quality assurance, identity matching, and “signal extraction” from unstructured data (i.e., intent, sentiment, themes, topics, entities, etc.); and providing connectors to dozens of ad targeting, site customization, testing, and analysis systems. It also highlights functions to manage data access rights in compliance with privacy, regulatory, and contractual obligations, something that's also important even though I haven’t given it quite as much attention.

While this is quite similar to what BlueKai did before Oracle bought them, it’s a big difference to have Oracle’s muscle behind the vision of making it easy for marketers to access to a rich, powerful customer database. Among other things, the Oracle product will set a benchmark for pricing of similar services by other vendors.  I didn't see a price announcement, but if Oracle prices aggressively and executes well, it will be much harder for smaller vendors to compete. The likely result is to switch the focus of competition from assembling data and providing a database to making clever use of the data through things like advanced analytics. That’s really where smaller vendors can shine and, from some lofty cosmic viewpoint, the world is better off if the smart people focus their creative energies on that rather than on duplicating the basic data assembly capabilities.

Back to that question of who will buy Bizo’s data business: I wouldn’t be at all surprised to see take it over, since it would supplement their existing business and give an advertising-oriented data management platform to balance against Oracle/BlueKai. In the on-going tit-for-tat competition between Salesforce and Oracle, that is probably reason enough for Salesforce to do the deal.

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