This last week Adobe announced that they are acquiring Omniture for $1.8 billion. I used to work at Omniture/Visual Sciences and I still work closely with them as a reseller/partner. I also have worked closely with Adobe and their suite of products for over 20 years. So I am fascinated by this announcement and the premium that Adobe paid for Omniture. I believe this is a signal of where Adobe is going and who they are going to be competing against today and in the future. Bringing these two together has some interesting implications and opportunities.
Here’s my top 10 take of the Pros and Cons of this acquisition:
Top 10 Pros & Cons of the Adobe Acquisition of Omniture
- Content is King – If content is king then this could give Adobe more of the keys to the Kingdom–On a positive note I think the premise that content is king on the web is still as valid as ever and the better optimized content that we have in all of it’s digital forms the better. This acquisition has the potential to be a bridge between the marketing department that is spending the money and looking for ROI and the Creative departments that are looking for engagement and performance feedback on what they create. Also the possibility of “Commerce Ready Content” or “Aware” content or Self Optimizing content is interesting and could provide some interesting marketing messages for Adobe to use.
- Standardization of Measurement – With the wide range of digital content formats ranging from the Web, to computer desktops to mobile phones and set top devices independent and attached to our TV’s, there is a strong need for a standard method of measurement. Locking in Content wherever it lives with a universal tracking tool could be powerful.
- The Tipping Point – I see a clear “Tipping Point” happening for Omniture. Let’s look at the events of the last few years. Omiture acquires Visual Sciences it’s leading competitor in the Web analytics market place making it the instant market share leader. WPP, the worlds largest marketing communication conglomerate buys 10% of Omniture and standardized all of their online advertising and marketing spend on using the Omniture analytics tools. Now with the Adobe acquisition of Omniture and their combination of Adobe creative tools and Network platform offerings standardizing on the Omniture analytics tools this could clearly be the tipping point for Omniture becoming the standard in digital analytics measurement. If, and it’s a big IF, Omniture can get customer centric and take customer care seriously and continue to enhace their offerings at an economic level that clients can afford.
- Page View Tracking moving to Cross-Platform Event Tracking – The traditional way of looking at analytics has been through the lens of a web page view but more and more the demand is for applications like flash, Flex, Desktop AIR apps, videos, Rich Internet Apps (RIA’s) and Mobile apps which require event and interaction based measurement cross platform. So given this trend the announcement makes a lot more sense in messaging where Adobe is heading in a cross-platform world.
- Operating efficiencies will be difficult– I think the challenges will be in execution between the two companies and reaching operating efficiencies. From what I understand so far the two companies will run independently for some time. This means that the integration of the tool sets could be some distance out. So the direct customer benefits may not be achievable for some time to come. Although the existing Adobe Flash integration has been active for some time. Since Omniture is a Software as a Service (SaaS) based solution and Adobe is primarily a cyclical software release company there will be little overlap on the operating models. Thus very little efficiency of cost savings from the acquisition. I understand Adobe’s interest in having a Software -as-a- Service (SaaS) business model added to their traditional licenced software business model. This provides more predictability and annuity revenue streams. I am a big fan of that if it is done profitably. Unfortunately Omniture has never proven to be able to run a profitable SaaS based business model they lost $44 million last year and $9 million the year before. So for Adobe this acquisition may not prove to be cash flow positive to make up for the $1.8 billion invested in acquiring Omniture.
- The Network is the Answer – I have believed for a long time that their could be several game changing things that Adobe could do and should have done a long time ago. One being to develop SaaS style offering strategies. They have started down this road recently with Adobe Flash Collaboration Service which is a Platform as a Service that allows Flex developers to easily add real-time social capabilities into their RIA (rich Internet applications). Second Acrobat.com is a platform for using Adobe services. With companies like Amazon Web Services, Google and Salesforce.com getting heavily into Cloud Computing and the development of “Elastic Services” there is going to be increased pressures on Adobe and others to compete and reach the efficiencies that platform and Cloud Computing offers.
- Adobe Social and Business Community – Adobe is a dominant market presence within the Creative circles and I think they should do a better job of being a catalyst for these communities, providing both Social interaction as well as monetized exchange and collaboration between the community members.
- Global Reach –The global offices and channels of Omniture and WPP could be very good for Omniture to expand their market reach into critical international markets.
- Cultural Chasm– I am not sure if Adobe is aware of the significant cultural gap between Omiture, which has been a Wild West grow fast and gain market capture at all cost type of culture, as well being a SaaS based real time environment vs. Adobe which is very mature $3 billion software centric company with 18 month to 2 year software release cycle style company. These are two very different cultures and companies.
- Execution is everything– Now the proof is in execution. Can Adobe rapidly integrate the joint products to get the benefits into their Creative Suite 5 release and in the future CS6 as well as their platform offerings? Can Adobe reach operating efficiencies to get Omiture profitable? Can Adobe and Omniture assimilate their two cultures? Still more questions that time will answer.
What is your opinion?
Overall I think from an end user perspective the value over the coming years could be significant. Now the challenge is execution!