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Archive for September, 2009

More color on Adobe + Omniture

Wow, everyone seems to have an opinion about this acquisition. Some people think Microsoft will ride in at the 11th hour and out-bid Adobe because Microsoft and Adobe compete, and because Google has Google Analytics. On this point I am inclined to agree with Joe Davis, CEO of Omniture competitor Coremetrics, who comments that Omniture has been shopping the company around for some time and it is unlikely that Redmond hasn’t already had the opportunity to play (given the significant investment Microsoft has in Omniture.)

Other folks appear to be worried that Adobe will be integrating Omniture into Flash and this raises privacy concerns. While certainly folks have concerns about tracking and the possibility of embedding tracking into Flash Local Shared Objects (LSO) I just have to believe that management at Adobe is smart enough not to risk Flash’s dominance by subjecting the technology to the scrutiny, navel-gazing, and paranoia of the “privacy police.”

Their customers, at least the ones I am talking to, are more or less 2 to 1 against the acquisition at this point citing a variety of concerns (transition, failure to execute on stated product plans, talent flight, Adobe is not adept at services, etc.) Far be it from me to tell anyone’s customers they are wrong when expressing concerns, especially since this is an out-of-sector acquisition and Omniture is now more or less a medium-sized cog in a very big machine. Arguments for include loving Adobe (I love Adobe!), being relieved that Adobe is a big, grown-up company, and hopes that Adobe will focus on fundamentals like customer support, product execution, and global expansion.

Another customer complaint is that Omniture is now losing the (thin, pasty) veneer of third-party objectivity and that some companies may not actually want Adobe to have access to their site’s data.  I think this may be the same boondoggle that Omniture (and others) have used to explain why “the Enterprise wouldn’t use Google Analytics” — except there is more and more (and more) evidence that the Enterprise does use Google Analytics — but it will be interesting to see how the “free-standing” analytics vendors work to make Omniture eat their own words now that they too are part of something larger.

The comment that has me most concerned is one best detailed by Carter Malloy from Stephens, Inc. Research Analyst who I have known for years and who I know to be pretty level headed regarding the sector.  Carter sent me this, which I am simply repeating with his permission:

“I don’t understand the strategic rationale on adobe’s part. Different end market buyers. Very different products. No real cost savings or integration between the two products. OMTR is very capital intensive vs. adobe not much at all. Seems like Adobe is buying growth with hopes for cross sells. I would be surprised to find out that OMTR did not shop the business around before accepting the bid from Adobe – we should find out soon in public filings required by the SEC. Omniture will still have to report 3Q09 earnings in October, but I think the deal will get closed before Q4 in Jan/Feb. I also think Adobe will show Omniture’s revenue performance on an informal basis going forward. It will be <10% of Adobe’s total revs, but I still think they will give analysts at least some idea of what growth looks like.”

This was in response to my comment detailing a thesis that I have heard from several of Carter’s peers: that Omniture was about to blow Q3 earnings and that the result would be a dramatic dip in OMTR share price as investors head for the exit. The rationale is, apparently, that the company has over-promised and under-delivered for too long, both to investors and customers, and the economy has been the “last straw” for many who have opted to look elsewhere for web analytics technology. This, combined with slower-than-hoped adoption of non-core solutions (data warehouse, Test & Target, Search Center, Survey, etc.) resulted in a “company who’s greatest days are behind them” (direct quote, and I begged to attribute but was told “no” due to company policy.)

Don’t get me wrong: This is not my thesis, at least not yet.

While I have seen evidence of larger Omniture customers switching, increasingly to Unica, I have not seen enough evidence of the kind of massive shift away from SiteCatalyst that would warrant a sudden exit. The good news is that Carter’s thesis can easily be tested: Either Omniture will make expectations for Q3 or they won’t. I’m sure this will make for an interesting Q3 call, at least for those investors who are taking a bath on the acquisition price.

My concern is this: If the investment banker thesis is correct, if Omniture was about to report a second quarter of, um, disappointing results, then what does that mean for the larger industry? Is Adobe really evidence that the larger market is taking an interest in digital analytics? Or was the company thrashing about looking for something new to cover for recent declines and this really isn’t about Omniture or web analytics at all?

Again, I don’t know, at least not yet, and I don’t think any of us do. But given the very mixed reviews about the acquisition I think we as an industry should take a step back and consider the larger ramifications. Personally I don’t think web analytics is going ANYWHERE — hell, I’m recruiting at Web Analytics Demystified — but we can all admit we collectively haven’t done the best job explaining what we do and what the data we live and die by means.

This interesting acquisition will certainly get more interesting as the days pass. Congrats again to all involved.

Published on September 16, 2009 under General Web Analytics, Vendors

Thoughts on Adobe + Omniture

Wow, I have to admit that I was surprised mid-day today at a new client meeting in Chicago when, at the same moment, my phone, my SMS, and my email all went off at the same time. When we got to a break I quickly glanced down and the SMS message said “Adobe buys OMTR for $1.8B!!!!!!”

Wow.

I didn’t get to talk to the press (John got the honors, congrats) and am just not getting a chance to cogitate a little on what Adobe’s entrance to the web analytics market means after non-stop phone calls for the past five hours.  A lot of interesting comments have already been published so I will try and reference the stuff I think is insightful in an effort to avoid repetition.

  • In general, the more I think about the deal the more it makes sense, at least for Omniture. Given increasing pressure from lower-cost (and free) solutions, the economy, and a customer base that is more and more prone to complain about service issues and the high cost of doing business with the company, exiting now makes good sense.  Why fight the sea change in the analytics market when you can saddle someone else with the responsibility?
  • Like others, I don’t really see the synergy in the deal, but I admit that I love Adobe and so I’m willing to be surprised. I think of Adobe as a software company for creative types; Omniture sells software-as-a-service to analytical types; these are different business models and very different customers. The idea that somehow this acquisition bolsters Adobe’s position in content management or as a global delivery platform just doesn’t resonate with me.
  • Similarly, I don’t see this acquisition as creating anything new regarding measurement being embedded into rich media applications. Thanks, perhaps ironically, to Macromedia (owned by Adobe) we have been embedding tracking codes into Flash, Flex, Silverlight, AJAX, etc. for years … and while the integration is botched as often as not, I don’t see how adding a “Click here to Omniture-ize” button into Dreamweaver and Adobe’s RIA development suite will solve that problem.
  • I do agree with Alex Yoder’s general thesis that this acquisition increases the overall visibility of the sector and that this is a good thing. I also agree that this acquisition is likely not the last — both WebTrends and Coremetrics are owned by investors and you know how those guys are. His citation of Microsoft and Oracle is interesting given both companies historical interest in the sector (although neither has had the chutzpa to actually pull the trigger — at least in a substantial way.)
  • I also agree with Gary who is somewhat skeptical about acquisitions, especially out-of-sector ones like this (anyone remember NetIQ? How about you Deepmetrics customers?) and since the Instadia, HBX, and Visual Sciences acquisitions that Omniture made didn’t really generate the benefits promised. However, where Gary favored IBM (who I didn’t realize wanted back into the sector after selling SurfAid to Coremetrics) I liked the idea of WPP increasing their $25M investment by, well, I guess about $1775M or so. Given my position on how companies will deploy web analytics in the future, WPP adding a premium measurement brand to their analytics tools and giving them the ability to pass world-class analytics along to their best customers made sense to me. Oh well.

Regarding Omniture customers … I am getting feedback from across the spectrum. Some customers are encouraged by the news, largely because they believe that Adobe will bring a new level of rigor to product development, integration, and customer support.  Others (including those customers still on HBX) are somewhat discouraged by the news, given that they’ve been hearing a lot of promises lately and they’re not sure what a new owner will mean.  Still others have expressed that they really liked what the company had been doing this past year and so are bummed that things might slow down while the deal and integration are completed.

Prospects are a different question. Since I am working with a number of companies currently evaluating Omniture products … the best guidance I can give is “wait and see.” Again, I think Adobe is an awesome company and every interaction I have ever had with them has been positive. Hopefully this acquisition will be mostly painless and largely transparent to outsiders. We’ll know soon enough if Omniture’s recent aggressive pricing and willingness to cut deals to close business differs from Adobe’s business practices. And while competitors will almost certainly claim “Omniture is out of the game,” I am personally encouraging my clients to think carefully about what Omniture and Adobe have been able to do independently before writing the combined company off.

At the end of the day I’m really happy for the bright folks I know who have been plugging away at Omniture all these years in a variety of their companies. The teams at Omniture, HBX and Visual Sciences, Offermatica, and hell even Matt Belkin (remember that guy!) who hopefully get to participate in the largess that Omniture has created should all get credit for the thousands of hours they spent on the road, fighting for the big green machine, never willing to concede until they’d finally lost (and sometimes even after they’d been asked to go home!)

Congratulations to Josh, Chris, Brett, John, Kristi, and the entire senior management team at Omniture! Also, best of luck to the management team at Adobe with your new acquisition; your new customers are among the best in the business and will look to you to make a good thing even better.

Published on September 15, 2009 under Vendors

X Change 2009: Sold Out!

You may have already noticed this when you went to the registration page if you’re still considering the X Change next week but we officially put a cap on things last Thursday. While I’m disappointed that more people won’t be able to join us, it is incredibly gratifying to know that in the midst of the worst business economy in decades that smart people are still able to get management approval for continuing education, networking, and professional development.

I am certainly excited about the group we have coming next week: some great vendors, some awesome consultants, an incredible keynote event, and many of the best and brightest practitioners in the digital measurement industry. Excellent!

Also, as Gary pointed out in his blog post today, if you really, really, really need to join us in San Francisco and have already gone to bat for the budget, just let me know. We can always squeeze one more in, but we’ll probably make you attend Gary’s Think Tank training session just so he feels a little better (see his blog post for the back-story …)

If you can’t make it and you’re on Twitter please watch for conversation and insights on the #xchange hashtag in Twitter. Like Gary, I’m not foolish enough to promise to blog from the conference (hell, I barely blog as is anymore … too busy with work I guess!) but I will definitely try and push up 140 characters here and there, or slightly less when I co-tag with #xchange and #measure LOL!

If you’re coming to San Francisco, I look forward to seeing you next week!

P.S. piggybacking on Gary’s comments about WebTrends … I’m with Gary and Phil on the whole “9″ release. I’m encouraged by the company making a move in the right direction, but I feel that the release was dramatically over-marketed and set a new, all-time high for “hype over substance” in this industry making even the great green machine look conservative. When your own staff are forced to admit the release is not “the new UI” despite marketing’s claim that “[9's] clean, professional interface lets you creatively explore your data like never before,” well something has gone wrong somewhere.

That said, it’s great to see Alex committing to the product and, at the end of the day, it’s not what Gary, Phil, or I think … it’s what their customers and prospects think that counts. I know a handful will be at the X Change, along with someone from WebTrends marketing, so that interplay will be … ummm … interesting to watch!

Published on September 5, 2009 under X Change

 


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