It doesn’t make much sense on the surface and is something of a head scratcher. But Adobe has agreed to acquire Omniture for $1.8 billion. The acquisition is described as an effort to jump-start Adobe’s Web site development and service efforts by linking it with Omniture’s analytics. Adobe’s Creative Suite includes Photoshop, Illustrator and Flash.
From a local media perspective, the deal matters because Omniture is used by a wide range of newspaper companies, including Gannett, Belo, Freedom, MediaNews Group, The Houston Chronicle, CanWest and Ottaway Newspapers (it also works with Cox Communications for cable). These local companies, and many others, have typically relied on Omniture to understand user navigation and clickthrough patterns for ads and articles. By most accounts, Omniture has been very helpful to its local media customers, especially newspapers that have used Omniture’s reports to optimize their wide-flung editorial. But the analytics space, of course, is increasingly competitive.
Is there natural flow-through from Omniture to Adobe’s Web site development tools? Adobe is hoping that the two will find programming (and marketing) synergies, helping to position it alongside Microsoft and Google in the vanguard of tool providers. The company also hopes to expand Omniture’s exposure beyond its current base of 5,000 customers. The $600 million analytics industry is still immature. One projection, by JP Morgan, is that the industry will soon be worth $2.3 billion per year.
But Adobe is paying heavily for the uncertain synergies — a 24 percent premium to Omniture’s stock price. Taking on Omniture also means taking on its losses. At this point, the company is far from profitable.
We don’t know that local media companies will be more inclined to use Adobe products as a result of Adobe owning Omniture — and vice versa. Looking down the road, we’ll find out whether there is real synergy, or whether this deal goes down in history with other high concept deals like Compaq/Zip2 and eBay/Skype.