As Oracle sunsets its ad business, what can adtech learn from this?

Once a leader in advertising data, Oracle announced in June 2024 that its advertising division, Oracle Advertising, would close.

The decision marks the end of Oracle Data Cloud (ODC), which included platforms like Datalogix, Grapeshot, Moat, and BlueKai. Oracle plans to support its ad business until the end of September 2024, citing misalignment with its current strategic vision as the reason for the shutdown.

Current and former employees were blindsided by the announcement, which was shared with investors without prior notice to the ODC team. Oracle's ad unit, which declined to $300 million in revenue in 2024, will potentially see its assets like Datalogix and BlueKai offloaded.

Despite having valuable assets like Moat and Grapeshot, Oracle’s strategic missteps, regulatory challenges, and internal underfunding were said to have led to its downfall. The company’s failure to compete with Adobe and setbacks following the Cambridge Analytica scandal and GDPR enforcement further hampered its operations. 

Campaign speaks to industry experts to unpack why Oracle decided to exit the advertising industry and what this means for adtech.

Who will fill the gap that Oracle left behind?

Oracle's closure of its advertising division because of revenue decline creates a void in the programmatic advertising market, especially in sectors like viewability and ad verification, where it held considerable sway. 

Two key factors explain the revenue decline. Firstly, competition within big tech has led companies to block each other from collecting data on their platforms. This has resulted in various Oracle Ads technologies being excluded from these walled gardens.

Secondly, from a historical perspective, what is currently popular often becomes an essential commodity. Initially, no data is available, leading brands and agencies to allocate experimental ad budgets to understand the new medium. This pattern was seen in print and radio and now with connected TV (CTV) and podcasts.

Anders Lithner, chief executive of Brand Metrics, explains that many of Oracle’s ad businesses came from scoring viewability as a hot metric. Today, viewability data is not the talk of the town and is something taken for granted. Hence, its perceived value is lower, and money is reallocated towards other metrics, such as attention and brand lift data.

“This proves that you can never stop innovating as a data vendor, especially if revenues are based on knowing media distribution and campaign delivery,” says Lithner. “This knowledge will eventually be replaced by knowledge closer to campaign effectiveness—closer to advertisers' actual business outcomes.”

Another market where Oracle had a strong presence was the ad verification market, where its Moat platform competed with DoubleVerify and IAS.

With the closure of Moat, Oracle's customers must now seek alternative vendors for crucial services such as brand safety, contextual targeting, and data management. This presents an immediate opportunity for other adtech companies to attract new clients. 

However, opportunities for other companies don’t only come in the form of new business. The layoffs at Oracle's advertising division mean that many experienced and skilled adtech professionals are on the job market.

Nadiya Omar, a media consultant, predicts the gap left by Oracle’s departure will quickly be filled as Oracle’s suite of products and services each has an equally capable competitor in the ad tech landscape so that other players will snap up their clients.

She notes the opportunity for other adtech companies would be to accelerate their efforts in privacy-compliant audience targeting solutions to advertisers. 

“In the meantime, advertisers’ spending is still disproportionately skewed to a few dominant companies, like Meta and Google, so that the landscape won’t change much in the immediate term. But there is already massive growth in retail media, which will be fun to watch,” says Omar.

Avoiding a similar fate

Oracle's decline also stems from its heavy reliance on third-party data, which has become obsolete due to stringent data privacy laws. Despite Google ultimately making a u-turn on its decision to remove cookies, it was too little too late for Oracle.

For example, for Oracle, reliance on third-party data and regulatory challenges like GDPR became somewhat evident following Oracle’s decision to settle a consumer data privacy lawsuit for $115 million.

Moving away from third-party data and complying with various privacy regulations are challenging for any advertising business, let alone a company like Oracle that specialises in collecting, transferring and using consumer data.

Michael Sweeney, head of marketing at Clearcode, says it can be hard to see a positive return on investment from acquisitions valued in the hundreds of millions and even billions in a highly competitive and fragmented industry. 

“A few years ago, we saw this play out with telcos. Some of the world’s largest telcos acquired adtech companies for large sums of money, only to sell them for a loss a few years later,” explains Sweeney. “While there are differences between Oracle’s situation and that of the telcos, there’s something to be said about acquiring pricey adtech companies without having a strategic vision in place that’s focused on innovation, growth, and integration with existing systems.”

While moving away from third-party data towards first-party data has been in motion for a few years, other companies have also realised that it is incredibly difficult in today’s constantly changing privacy landscape to maintain and grow a successful advertising or data business built on yesteryear's business models and processes. 

Oracle’s closure of its advertising business and privacy-case settlement highlight the importance of finding privacy-compliant ways to run key advertising processes. 

The challenge for companies today is that complying with privacy laws makes it difficult to operate a successful advertising business, especially one that revolves around collecting personal data. 

While many privacy-friendly alternatives are on the market, such as the IAB Tech Lab’s Seller Defined Audiences, there seems to be little appetite for these solutions.

Omar explains Oracle’s closure should be an explicit instruction to any adtech company that intends to make money without getting into trouble to focus its investment and energy on operating in a data privacy-compliant way. 

“Privacy compliance and innovative ways to reach audiences effectively are priorities for most reputable adtech businesses. They don’t have a choice but to innovate and figure out what the future needs to look like,” says Omar. “Look at what’s already available: UID 2.0, retail media and data, and publisher first-party audiences. There’s no shortage of places advertisers and agencies can turn to. They just need to get on with it.”

The future of the industry

Many companies have focused on collecting and using first-party data in light of GDPR, other privacy laws, and privacy policy changes from Apple’s Safari and Mozilla’s Firefox. The days of wide-scale use of third-party data are essentially over.

Data companies will focus on developing new and innovative solutions that comply with various privacy laws and provide value to their clients in the future. 

We have already started to see this with the introduction of data clean rooms, and we will no doubt see more innovation occur over the coming years, especially around data analysis via machine learning and AI.

Sweeney notes that one of the main challenges of acquiring an existing tech business is integrating it with other systems. For example, Oracle acquired six companies over four years, and many legacy systems must be incorporated.

“The market has shifted when you’re halfway done integrating these systems. Acquiring existing companies for the tech and customer base is a good strategy for increasing market share,” explains Sweeney. “Integrating them and producing growth and value is often challenging, let alone making an innovative solution.”

Retail platforms also sit on a goldmine of data, and it will be interesting to see how advertisers and adtech companies will evolve their partnerships and utilise retail media.

Currently enjoying their walled gardens of abundance, social platforms still seem indifferent to the broader industry. 

However, they also face regulatory challenges, and it's only a matter of time before regulators intensify their scrutiny. Consequently, adtech firms are redirecting their focus elsewhere for now.

“Content marketing and influencer partnerships are potential ways advertisers seek out and reach their audiences. This may be where social platform partnerships evolve in the long term,” says Omar.