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On the heels of Adobe's quarterly earning call, where they announced the grim news about software sales, they also announced the acquisition of Omniture. Is this a play to be a player in the analytics market, to have a strong presence in the SAAS space, to take advantage of Omniture's recurring revenue model, or something else?
There have been varying opinions as to why Adobe is planning to acquire Omniture. There is no question that in some verticals Omniture's margin on "web analytics" has been squeezed harder than a lemon in a power juicer, by pressure from other fee and free web analytics tools including Google Analytics. Retailers that were paying a $600,000 a year contract may be paying only about a third of that as their contracts come up for renegotiation. That is because the real value that I think Adobe sees isn't in the traditional "web analytics" space, but in the publishing and advertising space.
Speaking to Matt Belkin, senior vice president, emerging business for Omniture, about the independent deal Omniture announced with Comscore, allowing them to share data for publishers and advertisers leveraging the Omniture tags and their Genesis solution; Omniture's customers and agency partners account for approximately a third of all online advertising spend. This includes companies like AOL, CBS, NBC, CNN and many others. Adobe CEO Shantanu Narayen said in a statement announcing the deal:
"Adobe customers are looking to us for solutions to deliver engaging experiences and more effectively monetize their content and applications online,... This is a game changer for both Adobe and our customers. We will enable advertisers, media companies and e-tailers to realize the full value of their digital assets."
Adobe controls approximately 90% of market share in every space they are in. What they are looking to do is own the digital create - deploy - test - measure workflows. The piece they are missing is the test and measure aspect. That is certainly what Omniture's solutions bring. According to Omniture:
Genesis automates the integration of all your digital marketing tools into one central location. Your applications, data and processes will become more effective by being integrated into an analytics-empowered digital marketing ecosystem. With Genesis, you’ll be able to:
- Consolidate measurement and reporting around virtually any success metric
- Identify and target the most meaningful customer segments
- Take the most relevant actions to optimize customer engagement and loyalty
Adobe has done a pretty good job bringing their past acquisitions into the workflow, and while it saddens me this may bring a lack of innovation into the traditional web analytics space, this could be a very smart move from Adobe to own more of the digital publishing and advertising space.