Adobe And Omniture On Merger's Rationale: Joining Content Creation, Distribution And Tracking

The first question on the Adobe’s investors conference call was one everyone was wondering about: in buying audience measurement company Omniture for $1.8 billion, where are the synergies? After all, Adobe (NSDQ: ADBE) is mostly known for applications like its Flash multimedia platform, Acrobat PDF reader and its Photoshop software, connect with Omniture, which offers internal web traffic, which publishers use to measure their web traffic. As Adobe President and CEO Shantanu Narayen (pictured) explained it, the company’s customers had been asking for an end-to-end solution, that is the ability bring together the creation, distribution and tracking of content.

Plus, given the company’s difficult Q2 results, the addition of Omniture’s subscription services will provide long-term revenue benefits, said Mark Garrett, Adobe’s EVP and CFO. From a practical standpoint, Omniture brought in $300 million revenue last quarter. And whole Adobe went through a painful restructuring last December, when it laid off 600 staffers, Omniture will bring along most of its 1,200 employees. At the outset, Adobe’s workforce is made up of over 7,000 people.

“Our customers want content solutions that can be measured,” Narayen said. “They want us to take better advantage of Flash, for example. The ability to monetize content on the web is a pain point for all out clients.”

Omniture CEO Josh James added that while the companies have worked on Flash system for several years, the merger will naturally allow for more seamless collaboration. James said he was certain that Omniture’s clients would make more of an investment in using the Flash platform. Secondly, the merger will help Omniture penetrate the government and mobile segments, to name a few areas that it has been weak in. James: “Most marketers are not aligned with technology companies. When you introduce content, you need to embed optimization and tracking at the beginning of the creative process. That’s the basis of this relationship.”

As we noted earlier, WPP Group invested $25 million in Omniture last January. Omniture also has developed partnerships with other agencies. Asked if this merger will impact those existing agency relationships, James said no. “About 20- to 30 percent of new bookings have come from partners, primarily the ad agencies. To be clear, with this deal, we’re not changing our strategy, we’re accelerating it. I have not talked with our agency partners about the particulars of this deal yet. We especially need to have a talk with WPP. At this moment, I can tell you that WPP has 500 people trained on our products. And we have similar relationships with other agencies as well. This strengthens the existing connections.”