Oracle Shuts Down Ad Business

In a shocking twist of events, the Oracle Corporation, which is one of the leading software firms in the world, has put the curtains down on its advertising line of business, a business which had shown so much potential but was struggling for revenues. This was during the company’s third call for the quarter to March 31, 2024, where Safra Catz, the chief executive officer made a revelation that the company will no longer be in the advertisement business since revenues had dropped drastically.

Oracle Advertising as a unit suffered, which was evident from its performance growth in the previous years of $2 billion (about $6 per person in the US) in 2022 and crashing down to $300 million in FY 2024. This dramatic reduction in its income stream made Oracle decide that it is high time for it to bring an end to advertising.

Entry into the advertising market was a bold step for Oracle, which, nevertheless, had been preparing for this move more than during the past nine years of active acquisition. Over the same period, the company spent close to a billion dollars in buying a baker’s dozen ad tech firms, two of which are DataLogix for $1.2 billion (about $4 per person in the US) in 2014 by Uber, and Moat for $850 million in 2017. However, these strategic moves by Oracle, just like the other strategic forms of the company’s advertising business did not gain the required impetus and market share in the highly competitive digital advertising industry.

A few strong issues that led to the failure of Oracle’s ad business include the following. The first major challenge was the restriction of data sharing by Meta (previously Facebook) which ceased to share data with third parties in 2018 including oracle due to the Cambridge Analytica scandal. This action severely affected the capacity of Oracle in offering relevant information to its advertising customers.

Moreover, mounting regulatory concerns, instigated by the passing of the General Data Protection Regulation (GDPR) in Europe, presented key challenges to Oracle’s advertising business models. Due to the strict data privacy laws, the global company lost its discretion to launch third-party data targeting company specialized in serving European market. This forced the removal of the AddThis publisher audience tool in Europe in 2019 and its outright discontinuation in 2022; further undermining Oracle’s advertising powers.

Another factor that Oracle faces in its advertisement plans is the legal ramifications of users’ privacy. The company is currently undergoing class-action litigation particularly concerning user privacy, matters that will exacerbate the problems of the advertising business.

Oracle’s departure from the advertising business is a good example of market dynamism and the level of competition that is being witnessed particularly within digital advertising. Despite the number of heavy investments aimed at acquisitions and expansions, the advertising division has been realized as an unsuccessful business for the software company.

Now, as the curtain has fallen on Oracle’s advertising mission, hundreds of industry experts, and analysts, for sure, will focus on the strategic mistakes and the factors which have led the company to such a crucial step. Oracle’s decision to cease the ad business is an example and demonstrates the risks that the other CACs face as they diversify their offerings targeting the digital marketing ecosystem stress the need to remain nimble and adapt to prevailing conditions.

Join DIGI MEDIA Mailing list!

Fuel your marketing success. Subscribe now and start growing!