Tuesday, September 15, 2009

Adobe Buys Omniture: Good for Marketers, Bad for Marketing Automation Vendors

Summary: Adobe's agreement to purchase Omniture illustrates the on-going convergence of Web content management and Web analytics systems. This puts pressure on marketing automation vendors, who also want to provide Web analytics and content management, and who are already being pressed by customer relationship management (CRM) vendors. That's a pretty unpleasant position.

Adobe's announcement that it will purchase Omniture for $1.8 billion makes perfect sense. As I discussed in July, marketers have a lot to gain from tight integration between a Web content management system (CMS) like Adobe's Dreamweaver and Web analytics and optimization like Omniture.

Let's take it as a given, then, that major Web content management systems will soon include integrated analytics. This sets up a new clash between marketing automation vendors and Web CMS vendors. One of Omniture's major selling points before the merger was its ability to combine information across all online marketing channels, and I think they were working towards adding offline channels as well. Although short-term priorities will probably shift now towards Adobe integration, I doubt their long-term ambitions in that direction will evaporate.

And even if the CMS vendors do restrict their focus to online, they will still be competing with Web CMS and analytics solutions from marketing automation vendors who realize that online is too big a sector for them to ignore. Even though both sets of vendors will need to provide some degree of openness so their clients can move data from one platform to another, both will really want to sell their clients the entire execution and analysis stack, and will tightly integrate them to encourage this.

I think I've made this point before, but I'll repeat it again: the marketing automation vendors are really being squeezed between the Web vendors on one side, and the CRM vendors on the other. This is a very unpleasant position, since both CMS and CRM vendors are much larger than the marketing automation specialists. It's hard to see how they can survive as anything but niche products in the not-too-distance future.

This position probably puts me at odds with industry analysts who see great opportunities for growth in the marketing automation space. (I'd point to specific examples but can't find any just this minute.) The general argument seems to be that low adoption rates mean there's plenty of unmet need that will eventually lead to sales. I agree that adoption is low -- but there's no guarantee that the marketing automation specialists will be the ones who fill the gap. Improved CRM or CMS offerings might actually meet marketers needs. And if since nearly everyone has or needs a CRM and CMS system, it will actually be easier for companies to use the expanded features in their existing systems than to buy a separate marketing automation product.

If anybody has a good counter argument, I'd be happy to hear it.

Two further thoughts:

- When I asked one of the marketing automation vendors recently whether he considered CMS vendors as competitors, he said he didn't because CMS vendors still sell primarily to IT, while marketing automation is purchased by marketing. Assuming this is true, then Omniture also helps Adobe by giving access to marketing departments.

- The acquisition may make marketing automation vendors more attractive acquisition candidates for CMS vendors wishing to beef up their marketing capabilities. Autonomy (Interwoven), Open Text, and EMC (Documentum) could all swallow a Unica, Aprimo or Alterian without stopping to chew.


kjoyce said...

Hi David,
I have an alternative view of the situation. There will be some consolidation in Marketing Automation vendors over the next 3 years, as there are 70+ today, but Marketing Automation will definitely survive as a category. The reason is that the SMB CRMs will continue to focus on integration of only the marketing technologies that have broadest appeal. As a result SMBs will continue to find additional benefit in plugging in their own Marketing Automation, their own CMS, their own Web Analytics, their own Project Management, etc. The high end will (and has) consolidated to just a few large players. Omniture has 5000 customers. Which end of the market do they play at? The high end. The majority of the Marketing Automation sales to date have been to mid-market companies. SalesForce.com for instance is doing a great deal to foster growth in Marketing Automation companies. The forces of the mid-market will inspire much greater connectivity between these products, not mergers of firms that target the mid-market.

Erik said...

Hi David,
I am going to have to disagree and agree. I think this is actually really good for Marketing Automation vendors because as a colleague of mine said this was a 24% premium over the current stock price. Pretty decent.

When we started Marketbright the whole concept was Marketing Automation integrated at the DNA level with your CMS. The whole concept of CMS is tired and stale. It has to be about the customer experience, not about the management of content. I think for a while people went off on a tangent into geeky document management requirements within large companies because that's where the money was. Nowadays, with the web moving as fast as it is, people are realizing they can't have their website segregated from their campaigns. That the entire web experience has to be part of the equation and this can't reside with their IT teams because they don't have the subject matter expertise. You leave your website to your IT team, and you'll end up with a pretty bad customer experience. That has been proven over and over again. They will always look for features that are inwardly focused. So the website is headed to the cloud. That's a given.

Now, Adobe. I don't see them as a CMS to be brutally honest. They have some products, but I've never seen large enterprise companies use them. The CMS space itself I imagine belongs to Interwoven, Documentum, and maybe Joomla. Not sure what the actual stats are. They have the top editor, no doubt. BUt I don't see them as a CMS. And I don't see them worrying to much about building one. Why would anybody worry about the CMS space when it is dead? It is a commodity. There's no money in it. Interwoven was a pretty small company when they got sold off. Where I think they see an opportunity is in the Test and Target, Optimization and things along those lines. Again, going back to the Customer Experience.

So maybe CMS becomes Customer Experience Management?

Anyways. Food for thought.

David Raab said...

Kevin and Erik -- Thanks for both your comments.

Kevin, I suspect that we'll see SMBs preferring a smaller number of integrated systems rather than separate components, and we'll see vendors expanding their footprint over time to serve them. SMBs have even fewer resources than large companies for integration. MAYBE integration will become easier due to various 'mash up' capabilities (basically APIs), but even so, buying an integrated package will still be easier. So I think marketing automation will be rolled into other systems, or other systems rolled into marketing automation. Note that marketing automation systmes for the very smallest businesses (e.g. Infusionsoft) already include built-in CRM capabilities since those firms don't want to pay for a separate Salesforce.com instance.

Erik -- I agree with most of what you've written. Whether the CMS becomes part of marketing automation or vice versa, you still end up with one integrated system to manage the customer experience. Although CMS itself is indeed approaching a commodity, the main CMS vendors (Autonomy, OpenText, EMC/Documentum) are very large companies with a much broader footprints. It will be easier for them to add marketing automation than for marketing automation vendors to match their breadth of capabilities.

As to Adobe: you're right that they really aren't a major CMS player; my post overstated their position in that market. But I think I was right that the goal of the acquisition was to let Adobe build analytics into the content created with their tools. My error was limiting it to Web content; in fact, it applies to content delivered in other ways as well. So I had the right idea in mind, but understated how broadly it applied.

John J. Bastone said...


I enjoy your perspective on all things “marketing technology”. But I guess I'll have to take the bait on this and make a counter argument. I agree the integration of those 2 businesses will no doubt bring some benefits to the company, as they should be in a better position to understand the user experience of the Adobe platform. And yes, this is indicative of the growing importance of measurement in the interactive marketing area.
But the big question is what value this acquisition affords Adobe and Omniture's own customers. Many of our customers are moving away from segregated reporting capabilities that center around each communications channel, in favor of an integrated analytic framework that revolves around the customer. So I'm not sure I agree the MA vendors are getting squeezed, I think if anything, it is the web analytics vendors that are needing to expand beyond the one channel. And while the alignment with web content management systems makes some sense, the jury is still out on how well the online vendors can truly integrate offline data. It is one thing to marry up an 'income' or 'gender' attribute to an online data mart, quite another to integrate market basket data to understand life stage changes or their propensity to buy.

At SAS, we'll continue to be agnostic on the technologies driving the interactive customer experience. Whether the front end is driven by Flash, Java, HTML, or for that matter, a point of sale system, and whether it is accessed via Webpage, Mobile Device or Social Networking site, we believe more businesses are moving to an integrated view of the customer across all customer touch points. If that trend holds, then the benefits of this merger might not extend to marketers that have concerns about what their customers are also doing outside of their rich media Web sites.

Keep up the great work, David, you are always a pleasure to read.


John Bastone
SAS Institute
Global Product Marketing, Customer Intelligence

David Raab said...

Hi John,

Thanks for the thoughtful comment. I fully agree that combining data from multiple channels is essential. Major Web analytics vendors already see this and talk about integrating non-Web data. How well they actually do it is another question, as you correctly point out.

My point about Web CMS vendors expanding into marketing automation was precisely that I expect them to try to incorporate non-Web data and marketing execution as well. In fact, it's a natural byproduct of absorbing Web analytics vendors who have already recognized that need.

Again, bear in mind that the major CMS systems are already part of firms with much broader product lines (Autonomy, ECM), so those companies are already thinking about non-Web channels. So is Adobe.

Of course, SAS and Teradata are also part of firms that do much more than marketing automation. It's the stand-alone marketing automation systems (Unica, Aprimo, Alterian) that are most at risk of being squeezed between the Web and CRM giants.


David Raab said...

Just to continue this discussion (yes, I am talking to myself here), what's really going on is a battle for control over that central customer database. One fear of marketing automation vendors is that large volumes of detailed information captured by Web analytics tools will not be accessible outside those tools. Web CMS vendors aiming to run that central database have a strong incentive to prevent people from exporting Web data to another system. Marketers who don't want their data held hostage need to consider external access as an important requirement when assessing Web systems.

Insurance Software said...

Combining the two makes so much sense from a sales perspective. Immediate ROI on the technology and tighter integration gets everyone on the same page thereby reducing the resources needed to execute.