Ten years after Adobe bought Omniture, the deal comes into clearer focus


Shantanu Narayan, CEO of Adobe
Image Credits: Adobe / Adobe

Ten years ago this week, Adobe acquired Omniture for $1.8 billion. At the time, Adobe was a software company selling boxed software like Dreamweaver, Flash and Photoshop to creatives. Many people were baffled by the move, not realizing that purchasing a web analytics company was really the first volley in a full company transformation to the cloud and a shift in focus from consumer to enterprise.

It would take many years for the full vision to unfold, so you can forgive people for not recognizing the implications of the acquisition at the time, but CEO Shantanu Narayen seemed to give an inkling of what he had in mind. “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,” he said in a statement after the acquisition became public.

While most people thought that perhaps this move involved some sort of link between design and data, it would turn out to be more complex than that. Tony Byrne, founder and principal analyst at Real Story Group, tried to figure out the thinking behind the deal in an EContent column published a couple of months after it was announced.

“Going forward, I think the real action will continue to revolve around integrating management and metrics, less so than integrating design and metrics. And that’s why I also think that Adobe isn’t done acquiring yet,” It was pure speculation on Byrne’s part, but it proved prescient.

There’s something happening here

John Bates, who is Director of Product Management at Adobe today, was working for Omniture at the time of the acquisition. He points out that Adobe was actually an Omniture customer in those days, so was not entirely unfamiliar with the product, but he said he was still surprised when he learned that Adobe was acquiring the company.

“I remember hearing about it from the news and people sort of mentioning it in the hallways before the official email came out internally. I had thought of a lot of potential suitors, but Adobe was a bit of a surprise,” Bates told TechCrunch in an interview about the anniversary of the acquisition.

He said that Narayen flew out to Omniture headquarters in Utah the day after that email came out, and in an all-hands meeting with the Omniture team, laid out his analytics vision for the company moving forward. “He got on stage and talked about this joint foundation between the content and data,” Bates said. It’s important to remember most companies weren’t making this connection at that time, and that could be why so many people missed why Adobe made this move.

“Most companies at the time, they were thinking about web analytics. They had digital experiences and websites, maybe mobile apps, but it was really more of a passive sort of analytics and tracking game,” Bates explained. What Narayen had in mind was something much more sophisticated and integrated, although it would take some time to get there.

The enterprise connection

Narayen also made it clear that Adobe was going after the enterprise. “At the same time, he talked about the importance that data would play as Adobe really went after creating solutions for the enterprise. And it was at that moment where the light bulb went off and I understood that what Adobe was pursuing and how innovative it was,” he said.

Ten years later, that enterprise focus seems readily apparent, but it was really just the edge of that vision at that moment. Looking back, Byrne certainly sees it now. ” The Omniture acquisition really pushed Adobe into enterprise in a bigger way and also upmarket,” he told TechCrunch recently.

Brent Leary, owner at CRM Essentials, who has been watching the industry for many years says that it marked the first step on a customer experience management kind of journey, although he acknowledges he didn’t exactly know where they were going with it at the time. “It was when they were able to more accurately analyze the impact of digital content on web behaviors. Creating the content was one thing, but understanding its impact on conversions was a whole other ballgame and that was what enterprises were interested in — connecting content to conversions and outcomes at scale was the key,” he said.

Adobe to acquire Magento for $1.68B

Laurie McCabe, a partner at SMB Group, who has also been following this space for years, was similarly puzzled at first by this acquisition. “At the time, it seemed odd that Adobe was veering into the Web analytics space. But as I learned more, I realized that Adobe was onto something — filling the gap to give content creators the data they need to measure and improve brand engagement,” she said.

Byrne says it presaged a few other major acquisitions that would include Day Software the following year for $240 million, then later Magento for 1.75 billion and Marketo for $4.75 billion, both of which happened last year.

To the cloud

The Omniture acquisition also marked the company’s first steps to the cloud and the switch to the subscription model. “It allowed them to go from selling point solutions that covered pieces of the overall puzzle to selling a platform that integrated more parts of the overall customer journey,” Leary said.

Adobe boxed software
This is how Adobe used to sell software. Photo: Ron Miller

It took a while to get there but in 2013, the company pulled the plug on boxed software and announced its full transition to a subscription model. It was a bold move for a company that was founded in 1986, but as Byrne stated, the Omniture acquisition gave the company confidence with SaaS to eventually make that move. “The acquisition gave Adobe experience with SaaS as a delivery and licensing model. They struggled with it a bit at first but learned over time,” he said.

As McCabe said, it really laid the groundwork for a cloud strategy. “Adobe’s acquisition of Omniture set the wheels in motion to create a full-fledged marketing platform, gain entrée to a different set of buyers (business decision-makers vs. creatives), make the (very tough) transition from a packaged software provider to a cloud-based subscription model, and provide customers with a data-driven approach to inform marketing strategy.”

The proof is in the numbers

Today, the company breaks down its revenue into three main components: Adobe Creative Cloud, Adobe Document Cloud and Adobe Experience Cloud, and total revenue across those three properties reached $2.74 billion last quarter, putting the company on rate close to $10 billion per year. The Creative Cloud, which is where all the creative software now lives, still accounts for the majority of Adobe revenue with $1.59 billion for the quarter. The Experience Cloud hit $784 million, up 24 percent year over year and the Document Cloud was good for $296 million.

As Leary put it, subscriptions offered a better way for the company to move forward as a platform play in the enterprise. “The timing really couldn’t have been much better. Subscriptions are a much better fit for what platforms offer on an ongoing basis, including real-time access to data and insights that is nearly impossible to get from installed point software from multiple vendors that need to be integrated and managed on-premise.”

In the end, the Omniture acquisition was much more significant than anyone outside of Adobe could possibly have known. It was a signal of a much bigger shift at the company. It brought together content and data in ways most people hadn’t imagined at that point, and it helped lead the way to a complete business transformation for the company.

Adobe’s Record Revenue Proves Successful Business Transformation Is Possible

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