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Adobe Systems announced Sept. 15 that it has entered into an agreement to acquire Omniture in a deal valued at $1.8 billion.
In a conference call with financial analysts regarding Adobe’s third-quarter earnings as well as the Omniture transaction, Adobe President and CEO Shantanu Narayen said the deal was largely customer-driven-a move to integrate Adobe’s creative design tools with Omniture’s Web analytics technology.
Narayen said Adobe customers have been asking for more visual media, more video and more RIA (Rich Internet Applications). “We created the best [creative] tools in the world,” he said. However, he said, “what we found is customers would like us to do more. They wanted us to help them understand which media content was performing the best and to understand click-through rates on ads,” among other things. He also said developers asked for help in building intelligence up front in Web applications so they can be better tracked and optimized.
In a statement, Adobe said its acquisition of Omniture “furthers its mission to revolutionize the way the world engages with ideas and information. By combining Adobe’s content creation tools and ubiquitous clients with Omniture’s Web analytics, measurement and optimization technologies, Adobe will be well positioned to deliver solutions that can transform the future of engaging experiences and e-commerce across all digital content, platforms and devices.”
Josh James, CEO of Omniture, said he sees the deal as a way to improve Omniture’s ability to integrate its analytics and optimization technology “into the front end of the creative process.”
According to Adobe’s statement, “The combination of the two companies will increase the value Adobe delivers to customers. For designers, developers and online marketers, an integrated workflow-with optimization capabilities embedded in the creation tools-will streamline the creation and delivery of relevant content and applications. This optimization will enable advertisers and advertising agencies, publishers, and e-tailers to realize greater ROI from their digital media investments and improve their end users’ experiences.”
“Adobe customers are looking to us for solutions to deliver engaging experiences and more effectively monetize their content and applications online,” Narayen said in a news release from Omniture and Adobe. “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.”
Moreover, “A lot of our customers are telling us they want us to find new ways to monetize the Flash platform,” Narayen said.
James said Omniture already has integration capability with Flash. “Our customers demand that we figure out how to analyze and track Flash,” he said.
What Omniture Will Do for Adobe
In the news release, James said, “Omniture’s mission has been to enable our customers to optimize every digital interaction. By joining forces with Adobe, we will accelerate our ability to deliver on that vision and together bring new innovation to the market that improves content engagement, advertising effectiveness and the overall user experience, which will drive more advertising dollars online.”
According to the release:
““This acquisition will significantly expand Adobe’s addressable market and growth potential, broadening solutions Adobe provides to the rapidly growing Internet advertising, e-commerce and digital media markets.”The combination will also expand Adobe’s offering of mission-critical solutions to the enterprise customer. Adding the capabilities of Omniture will further enhance Adobe’s offerings and ability to appeal to online marketers, including chief marketing officers.”The acquisition of Omniture will further diversify Adobe’s business, adding a scalable SAAS (software as a service) platform that captures over a trillion transactions per quarter, an expansive partner ecosystem, and a recurring revenue model.”“
Mark Garrett, executive vice president and chief financial officer at Adobe, cited Omniture’s “broad-based subscription model” as a way of diversifying revenue.
“For Omniture, joining Adobe will provide global operational scale and the ability to more quickly penetrate new geographies and markets, thereby accelerating its go-to-market strategy and growth potential,” the companies said in the news release.
“We’ve always been laser-focused on getting this business to $1 billion,” James said. Through the deal with Adobe, he said, “we can get to $1 billion faster.”
According to the statement, “As part of the expected integration of the two companies, Omniture will become a new business unit within Adobe. …[Omniture CEO James] will join Adobe as senior vice president of the new business unit, reporting to … Narayen. … [The deal] is expected to close in the fourth quarter of Adobe’s 2009 fiscal year.”
In a separate statement, Adobe announced that “in the third quarter of fiscal 2009, Adobe achieved revenue of $697.5 million, compared to $887.3 million reported for the third quarter of fiscal 2008 and $704.7 million reported in the second quarter of fiscal 2009.”