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Adobeture

Posted on 2009/09/17 by admin2009/09/17

I was unsurprised by Adobe’s Omniture acquisition.

Until I saw the price they paid.

Adobe is sitting on stacks of cash. As is routine with tech companies, cash fat firms buy other outfits during recessions when acquisition prices are normally lower. Omniture was not suffering, so Adobe’s $1.8B buy may be the right price to pay for this strategic move. I asked my acquaintances in both Adobe and Omniture about this … and they wisely said nothing, forwarding me links to official press releases.

I obviously need sneakier friends.

The stock market didn’t think it was a good short-term move. Despite beating the street’s estimates on quarterly earnings, Adobe shares dropped more than 6% on the announcement. Perhaps short-term selling of Adobe stock is warranted because their software sales revenues continue to suffer during the recession. But in the long term Omniture’s less volatile SaaS revenue streams will compliment and amplify Adobe’s Wall Street value.

This is a marriage that should have happened long ago. The enterprise value of analytics is undeniable. It is also an integration nightmare, with many sloppy and incompatible ways of extracting traffic data and many forms of user interaction that are not (yet) measurable at all. Merging the lead source of web creativity with serious business analytic capabilities will soon enough offer a seamless and automatic integration of the two.

Automatic is the key word.

Adobe tools will soon make web analytics a de facto reality. Web engineers and content creators will invisibly have analytics hooks embedded in their work. When management decides to track web activity, all things being equal, they will buy analytic services from Adobeture because (duh) it is already enabled. Adobe is in effect turning every Dreamweaver, Creative Suite and Flash animator into an Omniture sales person.

The other strategic issue that the media missed is microanalytics. Omniture has always been impatient with the state of analytics, venturing from web into mobile and into very tiny parts of the web experience. This is where Adobe will leverage Omniture in a way Omniture could not risk doing it alone. Adobe will be able to generate analytics tags within all Adobe web elements. AJAX calls, Flash files, Cold Fusion back-ends, PDF files. The richness and lower level of detail that will soon be available to marketers will provide very precise insights into web behavior.

This has interesting implications for the market. First, Adobe has by and large been the favored environment for creatively minded web workers and for many enterprises. Integrating Omniture doubles there strength therein. People will have to argue against management to not adopt Adobe for maintaining their web presence.

In turn this means few enterprises will opt for another analytics vendor. This puts great pressure on the few remaining players. Google will own the bottom of the analytics market and Adobe will own the top. WebTrends may get squeezed out completely.

Most important though is how in the long run this will affect marketing. Real-time analytics combined with authoring and host-side tools will allow for instantly aggregating and simultaneously individualizing visitor activity. Hypothesize for a moment that you can tell not only what web page a visitor viewed, but what Flash movie he watched, which part he rewound to, if he stopped watching before the call to action, and what lines in a PDF he copied to his clip board. This level of precision, especially if tied to real-time server-side functions, gives marketers more control over the user experience and better ability to guide them to a specific action.

I’ll wait for Adobe sock to settle, then I’m adding a few shares to my long-view portfolio.

Posted in Market Trends, Marketing permalink

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