A French kiss for Adobe's digital marketing ambition

Profile picture for user slauchlan By Stuart Lauchlan June 27, 2013
Summary:
A timely reminder that there have been things going on other than the Ellison/Benioff reshaping of the cloud world order came with the news that Adobe's beefed up its marketing cloud credentials with the purchase of Neolane for a cool $600 million.

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A timely reminder that there have been things going on this week other than the Ellison/Benioff reshaping of the cloud world order came with the news that Adobe's beefed up its marketing cloud credentials with the purchase of Neolane for a cool $600 million.

That's not as much as it paid for Omniture back in 2009 ($1.8 billion) but more than it did for Day Software in 2010 ($240 million).

But if you're intent on becoming a billion dollar marketing cloud, you've got to speculate to accumulate. Others have the same ambition  (yes, that's you we're looking at Mr Benioff!).

So what does Adobe get for its money this time?

Based in Paris, privately held Neolane's pitch is the orchestration of marketing campaigns across multiple channels, including Web, email, social media sites, mobile, call center outreach, direct mail and point-of-sale locations via a flagship product called Conversational Marketing Platform.

Adobe already offers social media-tracking and analysis tools via Adobe Social, but Neolane’s undoubtedly functionally richer, with tools for handling leads, marketing resource management, high-volume email marketing campaigns and a real-time offer recommendation engine for personalized, one-to-one messages.

Neolane will become the sixth solution in the Marketing Cloud, joining its existing Analytics, Target, Social, Experience Manager and Media Optimizer offerings.

Brad Rencher, SVP and GM, Digital Marketing, explains the rationale behind the latest deal thus:

Adobe has built our Marketing Cloud over the past four years and has today the broadest set of solutions available anywhere. Neolane adds cross-channel campaign management technology to the Adobe Marketing Cloud. This is a critical addition to our complete set of analytics, targeting, social, content management and media optimization solutions.

Neolane will integrate with our solutions to empower cross-channel and highly personalized campaign management across the web, email, social, mobile, point of sale, direct mail, call center and other emerging channels.

The combination of Adobe and Neolane will give customers richer customer profiles, greater activation of social and mobile data, better definition of highly valuable customer segments, and more sophisticated automation and execution platforms. Many customers already rely on both Adobe and Neolane and will benefit from further integration between the Adobe Marketing Cloud and Neolane’s cross-channel capabilities.

As we move forward with Adobe’s acquisition of Neolane, we are ready to unite our technologies into a complete cross-channel solution to better meet the increasing demands of the consumer and to really deliver on the promise of personalization.

The implications

Forrester's Rob Brosnan notes that the deal:

  • Addresses a market that Adobe previously ignored. Neolane closes Adobe's strategic and longstanding gap in campaign management. Whether you call it a marketing platform, suite, or cloud, Adobe now offers a broad spectrum of products to marketing departments, and now extends into offline. It is now also a much more serious competitor to the large, enterprise marketing providers: IBM, Oracle, SAS, and Teradata.
  • Offers a moderate extension of Adobe's marketing cloud. Neolane offers its products through a mix on-premises, hosted, and multi-tenant cloud delivery, though most clients opt for on-premises. While Neolane doesn't immediately transform the marketing cloud, Adobe's success with CQ5 shows that it's comfortable with hybrid delivery. Over time, however, Neolane's unified architecture and Adobe's SaaS-bonafides will allow it to shift more and more clients into campaign management as a subscription.
  • Creates a ripple in the email space. While Neolane offers email services, the majority of the company's revenue derives from technology licenses, so this deal shouldn't be viewed as a direct response to the Salesforce/ExactTarget acquisition. Adobe has many partners in the email and messaging world, and it will continue to support them and their marketing customers through the Genesis program.

rob_brosnan
Forrester's Rob Brosnan

Beyond that, Brosnan sees potential to:

  • Leap from campaigns to interactions. Neolane's rapid entry into interaction management through orchestrated, personalized, cross-channel experiences offers Adobe the opportunity to build for the post-campaign future. If Adobe shifts Neolane further into a SaaS offering, it can accelerate past traditional enterprise marketing management, it can more quickly incorporate the blindingly fast developments in open source data management technologies, particularly for managing anonymous and known customer profiles. Further, it can monetize a NoSQL stack because a) it doesn't need to defend a particular database technology, and b) Neolane's unified application code and data model agnosticism can be adapted relatively quickly to an unconventional architecture.
  • Create a disruptive pricing dynamic. The most interesting aspect of this deal is that it offers the 25 year old company the opportunity to be a disruptor. Because it now monetizes data and orchestration, it could afford to shift the marketing value chain in messaging away from the existing incumbents. By scaling Neolane's existing email offering, effectively driving the price to a super low or free CPM, Adobe could dramatically reduce the number of email providers. Adobe's pitch to its customers is that it alone is uninterested in sending more email. Instead, using data, analytics, and real-time orchestration, it can send the right amount of email, improving revenue lift and the customer experience.
  • Accelerate email and campaign management consolidation. Regardless of it's long-term strategy, expect investors to begin to lose taste for pure play email providers above the low cost transactional providers. The market will further consolidate on those, like Responsys and Experian, with strong customer lists and non-messaging assets. But the mid-market is now a no-man's land, especially for those (Bronto, What Counts, etc.) squeezed between the now supersized players and the transactional email services.

It's all a further sign of consolidation activity in the digital marketing realm. Earlier this year Salesforce.com announced a $2.5 billion takeover of ExactTarget, while Oracle bought Eloqua last year. It's an increasingly competitive marketplace out there.

Angela
TechMarketView's Angela Eager

Angela Eager of TechMarketView notes that beefing up credible functionality is more and more important for digital marketing plays:

The key is not just gaining the tools to enable customers to manage campaigns but to link campaigns with analytics and real time activities in order to own complete B2C interactions.

That opens the door to more effective, personalised campaigns and for Adobe, rich data insight and potentially the ability to offer marketing and data services.

Once the deal closes, there is integration work to done and Adobe will have to change the Neolane business mix so a higher proportion comes from the cloud which could cause trip points.

But with Neolane in its portfolio it has become a more credible marketing software provider.

Verdict

As Eager notes, successful exploitation of this purchase is clearly going to depend on the effectiveness of integration of Neolane into the wider Adobe stack.

But this acquisition is further evidence that Adobe is serious about the marketing cloud and digital marketing opportunity, fleshing out the functionality of its offering to become an end-to-end solution.

For the digital CMO, the range of options in the market is becoming wider and the selection decisions to be made perhaps becoming more complex. But choice is good, right?

From a competitive landscape perspective, the deal will keep Adobe firmly in the marketing pantheon alongside the likes of Oracle, Marketo, Salesforce.com and IBM.

It will also spur further consolidation as the stakes are upped. The only question: who's next?

 

Disclosure: at time of writing, Oracle and Salesforce.com are premium partners of diginomica.