Amid reports of sagging Q3 revenue and profit, Adobe announced that it is purchasing Omniture, known for developing Web analytics and metrics measurement tools, for $1.8 billion. Adobe is banking on the Omniture investment paying dividends that will allow it to reverse the tide and boost revenue.
Omniture did not come cheaply. That $1.8 billion price tag is based on Adobe buying all outstanding shares of Omniture common stock at $21.50 a share. That share price is 24 percent higher than Omniture's Tuesday closing price, and a 45 percent premium over the average value of Omniture stock for the past 30 days.
The purchase is the biggest for Adobe since it bought Macromedia for $3.4 billion in 2005. The acquisition bought Macromedia's Flash technology for Adobe. Flash technology is fairly ubiquitous on the Web for displaying animated Web pages.
The Flash purchase seemed much more in line with the core market of Adobe. Flash was a natural extension of the Adobe product portfolio which included Acrobat and Photoshop.
Omniture brings a whole new angle to the Adobe portfolio. Adding the Omniture technologies and capabilities provides Adobe customers with the tools to gather important marketing metrics. Customers will be able to track how long and in what way users interact with Web ads and components.
There are some other benefits for Adobe as well. Omniture comes with an established network of partners and a recurring stream of revenue from current Omniture subscribers. The Omniture business model also provides Adobe with a SaaS (software-as-a-service) platform they may be able to expand and leverage for delivering other Adobe products and services.
If Adobe's vision is realized, customers will use Adobe products like Flash, Shockwave, AIR, and others to create engaging multimedia content online, then rely on the tools provided by Omniture to monitor and measure how users interact with that content.
The metrics and reports generated by Omniture tools will enable customers to quickly determine which methods are working and which methods are just not catching the attention of users. Rather than throwing good money after bad in some sort of marketing money pit, marketing that is not working can be dropped so that resources can be re-allocated to the marketing methods that are working.
The gamble may very well pay off. Marketing is a necessity, but effective marketing is sometimes hard to come by. Tools that can measure the effectiveness of marketing efforts can help customers streamline their marketing and invest limited marketing budgets more intelligently on the marketing initiatives that work.
With the economic turmoil the world has experienced over the past year, anything that helps companies spend money more wisely will be welcomed with open arms. A bad economy is a double-edged sword from a marketing perspective- companies have no money to invest in marketing, but companies need to invest money in marketing to make money.
Adobe is diverging from its foundation of image creation and management products, but the bold move delivers what customers need to make the most effective use of the Adobe product portfolio. It's a new market for Adobe, but a market that seems to provide value for Adobe customers.
Tony Bradley is an information security and unified communications expert with more than a decade of enterprise IT experience. He tweets as @PCSecurityNews and provides tips, advice and reviews on information security and unified communications technologies on his site at tonybradley.com.