So Adobe (ADBE) is acquiring Omniture (OMTR) for $1.8bn. While this is well within Adobe's comfort zone (the management team at Adobe swallowed up Macromedia for $3.6bn with barely a ripple) it does look pricey for a company that has $300m revenues and around $100m earnings - 6 times revenues, 18 times earnings - Adobe better hope that the promise of cross selling analytics to it's customer base holds true - some major sales acceleration is going to be required to provide a return to Adobe stockholders.
This acquisition underlines Adobe's intention to move up the value chain for web creation - from their core strength in boxed software creative tools, through to value added ongoing services - the data analytics provided by Omniture is one example, and I'd expect to see more acquisitions of companies that provide value around the advertising space - both for creative companies building advertising and running campaigns, and also the exchanges that provide advertisment serving online.
If Adobe+Omniture can use their joint business intelligence to enable digital content creators to improve the traffic and experience on their sites then everyone wins - consumers get a better online experience, business get a more efficient, effective online presence and Adobe and Omniture get an increased share of the value created.
A key risk here is that consumer growth on the internet continues to grow.
While it may be "self evident" that the internet is going to continue to grow 10 years ago much the same could have been said about the TV broadcast industry, with an explosion of digital channels surely there was going to be massive growth in the opportunity for TV broadcasters?
Audience attention today is fragmenting away from the internet - mobile phones have already proved that they can fragment voice revenues, the experience of sitting at a desk, and choosing to call someone using a mobile phone rather than landline sat next to it is an experience that most business people have daily. The convenience of using a mobile (integrated contacts, wireless) is too tempting for many people.
With larger screens and wireless data connections mobile devices are starting to do the same to traditional PC based, online activities. For the early adopters who read this blog I ask the following question:
"Have you ever checked your email on your phone/iPod Touch while sat on the sofa, and only decided to get your PC if there is something interesting there?"
Most people answer "Yes" with a look of recognition. Mobile devices are fragmenting attention away from the PC. For discovery and quick interactions consumers are choosing the most convenient device - the one that fits in your hand, and delaying the PC experience to a more "in depth" activity once content has been discovered.
This behaviour - consumers picking the convenient device is going to continue, and fragment audience attention. The challenge for Adobe + Omniture here is that Adobe's traditional strengths are solely in the online and print experiences. Omniture is great at providing metrics around the online experience, and it's very hard to get metrics from print - but neither company is strong in the fragmented mobile market - the rise of application experiences will further weaken this position. (more on why I think mobile applications will win the battle for consumer attention)
Of course this fragmentation creates new opportunities to drive consumer engagement across multiple screens - and that's exactly what my company Live Talkback is working on.
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