Adobe moves into web analytics with $1.8 billion Omniture takeover

Adobe makes a bold move into the analytics space with a shock takeover of Omniture. Shantanu Narayen, Adobe CEO, and Josh James, Omniture CEO, explain the deal.

Adobe has made a bold move into the digital and marketing analytics space with a surprise $1.8 billion takeover of web optimisation and analytics firm Omniture.

Adobe's software helps people create, read and share digital material using its Flash technology, used to create and play animated Web pages. By adding Omniture's technology, Adobe's customers will be able to outfit their online ads or other content with software that measures how long and in what way people interact with web pages.

The firm has snapped up about a dozen software and other companies over the past four years. But the Omniture deal will be Adobe's biggest purchase since it bought Macromedia for $3.4 billion in April 2005.

“This acquisition not only aligns two highly-innovative and successful companies, it positions Adobe to provide an end-to-end platform with the power to transform digital media and advertising,” says Shantanu Narayen, Adobe CEO. “Adobe's mission has been to revolutionise how the world engages with ideas and information. Increasingly, our customers have been asking us to help them deliver more effective solutions for assembling and delivering targeted Web content and applications that can be measured and optimised, effectively creating an end-to-end solution.

“In addition, the inability to effectively monetise media on the web is a pain point we hear about frequently from customers, especially in the advertising media and entertainment industries. That's why we are excited today to announce our intent to acquire Omniture. Omniture is the largest provider of Web analytics and online business optimisation solutions. Their online marketing suite is a critical tool for today's online marketers and chief marketing officers (CMO).”

The sum greater than the individual parts

Narayen clearly sees the sum of both companies as being greater than their individual parts. “By combining Adobe's powerful creative tools and broad client reach with Omniture's analytics and optimisation technologies, we are positioned to deliver a platform that transforms the future of engaging experiences and e-commerce across all digital content, platforms, and devices,” he claims. “Together, Adobe plus Omniture will complete the loop of content creation, delivery and optimisation, enabling our customers to extract more value from their digital content and applications. This acquisition will expand Adobe's addressable market and growth potential, broadening the solutions Adobe provides to the rapidly growing Internet advertising, e-commerce, and digital media markets.

“More specifically, Adobe's Creative Suite products and Flash platform help customers create and deliver engaging experiences. The addition of Omniture's online marketing suite will help customers measure, analyse, and optimise the impact and value of those experiences, creating a continuous feedback loop to maximise business results. We see opportunities to enhance the measurement, analysis and optimisation capabilities of content and media, created with the Adobe Creative Suite, applications developed on the Adobe Flash platform, and rich media delivered by Adobe Scene 7 and the Flash media server.

“From a go-to-market standpoint, adding Omniture will expand Adobe's offering of mission-critical solutions to the enterprise customer. From a business standpoint, the addition of Omniture's SaaS model with recurring revenue, diversifies Adobe's overall business model and revenue profile. Omniture brings recognised expertise in SaaS delivery and go-to-market capabilities Most importantly, from an employee standpoint, we share a culture of delivering innovative solutions to solve real customer problems.”

Keep up to speed

For Adobe, the acquisition of Omniture enables it to keep up to speed with a fast changing market that involves richer media, more video, mobile access to information, rich Internet applications and meet the needs of more demanding customers.

“What we found is that as we've been talking to our customers, in the conversation with them it's clear that they would like us to do a lot more,” admits Narayen. “For example, the chief digital officers that we talk to at media companies have been telling us that they want to understand which content was performing the best so that they could feature it more prominently and increase their ad revenue.

“Advertisers and agencies were using Flash to produce rich ads but they were telling us that they really wanted to understand what the click-through rates of those ads were in real time, to be able to take more advantage of it. Web developers, who've been using Adobe technologies to create these rich internet applications have said that they want to build intelligence so the site can automatically recommend the best products to drive higher conversion rates.

“It clearly dawned on us that all of them want us to complete the loop between the offering part, the delivery part, and consumptions, and they wanted Adobe to play this bigger role, which really for us was a natural extension of what we were trying to do to transform these experiences. What was interesting was that a number of these customers actually wanted us to integrate with solutions like Omniture. And we found, ironically, that we were having exactly that same experience with our own Web site in our own ecommerce site, which was adobe.com.”

Narayen sees a significant overlap between the two companies in the profile of customers and job roles within them. “In terms of the actual buyers of these products, with the Creative Suite we're finding that increasingly it's the mission-critical solution that the chief digital officers are deciding in terms of the entire platform. The chief marketing officers are thinking about what the experience is. And so as it relates to the go-to-market synergies as well, both companies have actually built direct enterprises that are serving these customers. So we think that there is natural synergy between both the creative professionals who create this content and the chief marketing officers who are increasingly making the decisions on how to optimise their business.”

A logical extension

Josh James, CEO of Omniture, will be joining Adobe as a senior vice president, reporting directly to Narayen. James pitches the takeover as a logical extension of Omniture's game plan with Adobe's reach adding global clout. “The mission of Omniture has been to enable our customers to optimise every digital interaction,” he argues. “By joining forces with Adobe, we will accelerate that vision by improving our ability to integrate measurement into the front end of the content creation process and optimise the user experience for websites, applications, advertising, mobile, video, and other emerging digital media. The bottom line: this improves content engagement, advertising effectiveness, and the overall user experience, driving the acceleration of ad dollars from offline to online.

“We set out to change the market for web analytics and online business optimisation. We believe we have accomplished that. And as we've built out our solution and ecosystem of partners, we have realised there is an opportunity to be a foundational platform upon which companies build their online businesses. Through this combination with Adobe we can be involved with our customers and be their trusted partners for decades to come Adobe has the global operational scale and rates that will enable us to more quickly penetrate new geographies and new markets, like the government and mobile segments, to name a few.”

James has also seen a shift in the type of customers his organisation has been dealing with. “Over the last few years especially, we've seen that the customers we talk to have increasingly become more and more the CMOs and other executives in the marketing organisation. This relationship [with Adobe] increases the opportunity, first of all, because of the brand. There are more relationships that we can go in and have very meaningful business opportunities, because these executive officers in the marketing organisation are now going to be able to look at us and say this is who they should be partnering with.

“Interestingly enough, when you look at the landscape, in most industries and in most departments inside a company, there are big technology companies that are very focused on that particular department. When you look at marketers, that's not necessarily the case. There are not real large technology companies that are focused on those executives. So the fact that we can get in there and bring them a solution that at a high level helps them understand the analytics, the optimisation, but then they go and they say okay, these folks that are creating it, they need to be able to get the tracking put in it. They need to be able to get the analytics in there. Together, Adobe plus Omniture will complete the loop of content creation, delivery and optimisation, enabling our customers to extract more value from their digital content and applications."

More details on the proposed integration of the two firms will emerge from Adobe's forthcoming MAX Conference in San Francisco. For now, there's time to let the dust settle – and for James to talk to other partners including financial stakeholder and global media giant WPP. But he is confident that the logic of the merger will be apparent to all. “One of the things that gets us most excited about this relationship with Adobe, this combination with Adobe, is the fact that we're not changing our strategy, we're accelerating our strategy,” he declares.