Adobe ties web design to business results

Adobe ties web design to business results

Summary: Acquiring Omniture looks like a smart move. It will bring much-needed SaaS DNA into Adobe and joins up website content creation to results measurement in a way that suits the needs of today's real-time Web.

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The more I think about Adobe's decision to acquire Omniture for a mouthwatering $1.8 billion (Techmeme coverage), the more it feels like a smart move (though I know others are wondering how the deal makes sense). The growth of SaaS and cloud services gives Adobe a looming problem, which depends for its revenues on sales of conventionally licensed software, most of it to the creative people who design corporate websites. Even if those users turn out to be the last people on earth to switch their allegiance to cloud-based applications (as well they might), they're still going to slow their spending on licensed alternatives in the meantime. Adobe needs a way to tap into the faster growth that's available from online solutions, and Omniture, which I once named one of The four horsemen of SaaS, will help it jump on the gas.

By the way, some financial analysts are saying Adobe overpaid because competition from the free-of-charge Google Analytics service is already putting Omniture's revenues under pressure. I don't think the analysts who are saying that really understand much about business. Omniture's core customer base are enterprises that spend huge amounts of money on web marketing and their online presence, and who want to measure the effectiveness of and return on that spending. They're going to rely on a free-of-charge service for such a critical business process? One that's provided by the same company that accounts for a large proportion of their online ad spend? Puh-leeze!

But back to why Adobe made this move now. Its existing strategy, which I described last year in a post on SAP, Adobe, Microsoft: three monkeys take on SaaS, has been to develop a new line of collaborative applications that compete on Microsoft's turf rather than cannibalizing its own licensed revenue stream. That strategy continues, but it's inevitably taking a while to build it out. Hence the decision to open a new front in the company's transition into online services.

Omniture makes a superb fit for reasons that are succinctly summarized in this graphic presented on yesterday's analyst call:

The thinking behind this is the same meme that led SuccessFactors last week to refocus its strategic positioning around the notion of 'business execution'. The new strategy at SuccessFactors makes an explicit link between employee performance management and business goals. Similarly, Adobe's new strategy makes an explicit link between website design and business goals. Instead of simply enabling its customers to build websites, adding Omniture's service means that now its customers can also measure and tune the effectiveness of that activity, as part of an integrated, round-trip process. Not everyone in Adobe's customer base is going to like having all this instrumentation and accountability thrust upon them, but it's in tune with the way the world increasingly works these days. The connectivity and real-time data streams of the Web allow us to join up processes that have always previously been disjointed.

Of course there are other elements of synergy in this deal, such as being able to do a better job of tracking user behavior when navigating Flash objects, especially multimedia — companies like Omniture have always struggled with the Adobe web technology. Similarly, there's a lot of scope to do a better job of tracking how readers interact with online documents, which maps well to Adobe's other online service strategy as well as its PDF technologies. Finally — and perhaps most importantly — Omniture's top management will bring much-needed SaaS 'DNA' into Adobe — CEO Josh James has wowed several SaaS conference audiences with his pitch on how to drive SaaS revenue growth.

But the reason this notion of joined-up web design and usage analysis is so front-of-mind for me is because I know how much history and expertise in this already exists within Omniture. One of the earliest SaaS content management vendors was a company called Atomz, which launched an on-demand website search engine in 1998 — my website at the time, ASPnews.com, was an early user, and I continued to use it on subsequent web properties. Atomz, which later launched a complete on-demand web CMS, ended up being acquired in 2005 by web analytics provider WebSideStory, in a deal which presaged some of the synergies I've outlined above. As Atomz founder and CEO Steve Kusmer said at the time: "So much is possible by taking the analytics data you have and marrying it with the applications running your Web site." WebSideStory's then CMO Rand Schulman elaborated on this notion in an interview later that year:

"the effect of combining the full suite is to give marketeers the ability to assess and react to the success of their online marketing in real-time ... Traffic analysis allows them to measure where visitors have come from and what they do while on the site. By controlling search and content they can make changes at any time to optimize how potential customers explore the site and find the information or products they’re looking for. Keyword bid management allows them to fine-tune the efficiency of their spending on contextual advertising, bringing new prospects to the site more cost-effectively. Because all this happens on-demand and in real-time, marketeers can put themselves directly in control of the effectiveness of their campaigns."

WebSideStory, which renamed itself Visual Sciences after an acquisition, was itself acquired by Omniture in January 2008. I feel sure that legacy of knowledge and experience of what can be achieved from marrying web content design and management with web analytics formed a big part of the sales pitch when Omniture negotiated the price of its deal with Adobe.

Topics: Browser, Cloud, Data Centers, Emerging Tech, Enterprise Software, Software Development

Phil Wainewright

About Phil Wainewright

Since 1998, Phil Wainewright has been a thought leader in cloud computing as a blogger, analyst and consultant.

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5 comments
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  • What about Business Catalyst?

    Am I the only seeing a tie between Adobe's recent purchase of Business Catalyst and Omniture?

    They are building a tool to keep web developers in the Adobe frame of mind. I think at least partially that is due to the increasing strength of Microsoft's competitive online technologies (Silverlight being one of them).

    If Adobe creates the "Business Management" platform that allows design agencies to run Value-Added businesses in a single suite, including analytics - it would make it very difficult to compete.
    chris.kluis
  • RE: Adobe ties web design to business results

    While in my experience Business Analytics is a red herring that has as many meanings as stars in the sky, I believe this deal is a winner and a game changer too.

    Omniture will help companies undertand the interaction between CONTENT and CUSTOMERS.

    On the other hand the Omniture analytics capabilities are stunted from the ability to merge different perspectives including text.

    Just a thought.

    Cheers,
    Nick Trendov
    http://www.speedsynch.com

    NeuroPersona
    • RE: Adobe ties web design to business results

      @NeuroPersona I believe the decision of acquiring omniture is one of the best decision of adobe. What I felt is that Adobe is now going forward from providing amazing tools to business solutions. A big thumb up for such brilliant decision. <a href="http://www.e2solutions.net/website_design_company_india.htm">website design company</a>
      raghavtt
  • RE: Adobe ties web design to business results

    "They?re going to rely on a free-of-charge service for such a critical business process? One that?s provided by the same company that accounts for a large proportion of their online ad spend? Puh-leeze!"

    Actually....yes. More and more large advertisers are leaning on free tools such as Google Analytics and Yahoo Web Analytics to measure the effectiveness of their online campaigns. They use Google Analytics to measure their Google Ads, Yahoo Analytics to measure their Yahoo ads, and Omniture to measure their website effectiveness.

    Could Omniture do it all? Sure. But advertisers seem to prefer the online ad tracking tools in Google and Yahoo. I see it all of the time.
    URLs
  • RE: Adobe ties web design to business results

    Good memory Phil! Yeah, we saw the direction some time ago. It's not about about metrics, it's about action.

    Rand Schulman
    rand schulman