Adobe Buys B2C Marketing Automation Leader Neolane: One Gap Filled, But Where's CRM?

Adobe today announced plans to acquire Neolane, the largest remaining independent B2C marketing automation vendor (excluding email-focused providers like Responsys and Silverpop). Price was $600 million, which is roughly in line with the 8x revenue paid for ExactTarget and Eloqua recently.  (Neolane announced $58 million revenue in 2012 and has been growing around 40% per year, which would yield about $80 million 2013 revenue.)

The deal is not particularly surprising. Adobe was on everyone’s list of potential buyers, and Neolane was ripe for acquisition or an initial public offering. It reinforces suspicions that Adobe was the mystery bidder for ExactTarget mentioned last month by Salesforce.com.  Indeed, my take on the ExactTarget deal explicitly mentioned an Adobe/Neolane possibility. That frankly didn’t take much insight, but I’ll brag a bit more about having pegged Adobe as needing to add marketing automation as far back as this post in 2009 and again in 2010.

Neolane is more of a mid-tier solution than an enterprise product, which may be a slight mismatch with Adobe.  I’d say that reflects a lack of enterprise systems available for Adobe to purchase, more than any particular desire to target the mid-market.

Predictable or not, this deal does fill a gaping hole in Adobe’s marketing cloud. It still doesn’t put Adobe on equal footing with Oracle, Salesforce, SAP or Microsoft, since they all have major CRM platforms which Adobe does not. Adobe obviously has a leadership position in content creation, although I’ve never felt that does much good in selling customer management systems. (To be more precise, content creation COULD give Adobe an advantage if it very tightly coupled auto-personalized marketing treatments with content creation, but that doesn't seem to be happening.)

More important, Adobe also has an unmatched position in Web analytics, Web advertising, and Web content management. In fact, adding Neolane gives it a profile very similar to IBM, which also has strong Web and marketing automation products but not CRM (and which also shares Adobe’s digital-is-everything mono-vision).

Come to think of it, the contrast still comes down to the dueling strategies I described in 2011: Web-plus-marketing automation (Adobe and IBM) vs. CRM-plus-marketing automation (Oracle, Salesforce, SAP, Microsoft). Everything will eventually converge Web-plus-CRM, with marketing automation baked in so deep you can't see it.  But that’s still some way off, except arguably for Oracle, which has all the pieces but hasn’t fully integrated them. In the meantime, we’ll see which approach is more popular – and what becomes of the stand-alone marketing automation vendors who are caught in between.

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Dueling Strategies: Adobe and Oracle Take Opposite Paths to Customer Experience Management

Adobe on Monday announced a new “Digital Enterprise Platform for Customer Experience Management”. The platform fills the center of Adobe’s three-part corporate mission to “make, manage, and measure” digital content and experiences. The other two pieces were already in place: “make” is Adobe’s original content creation business, while “measure” is Omniture Web analytics.

The strategic significance of the announcement seems more important than the actual product enhancements. These include improved integration of the company’s Web content management system (formerly Day C5) with Scene 7 dynamic content and Omniture Survey and Test & Target; features for salespeople and customer service agents to customize standard documents in a controlled fashion; integrated content reviews and workflows; and a platform to build and share content in multiple formats. The announcement also included beta versions of tools for social engagement, online enrollment, and agent workspaces. Good stuff but nothing earth-shaking.

Adobe's strategy itself is a curious mixture of broad ambition and narrow execution. Adobe describes its scope as nothing less than optimizing customer experience and marketing spend across the entire customer journey, from first learning about a company through validation, purchase decision, product use, and commitment. But Adobe also explicitly limits its scope to digital channels, and implicitly limits its concern to content creation, delivery, and evaluation. In fact, the only customer-facing technology Adobe offers is Web site management. Otherwise, Adobe expects even digital content such as emails to be delivered by third party products. Offline interactions, such as telephone and retail, are definitely out of the picture. Nor does Adobe manage the underlying customer database, marketing campaigns, or deep analytics. The only exceptions are customer profiles, segmentation, and content to support Web personalization.

The company argues the tools it does provide, combined with the cross-channel content sharing, are enough to build a unified digital customer experience. I’m not so sure that’s correct, and even if it is, I question whether customers will be happy to have only their digital experiences be unified. Either way, marketers will certainly need other vendors' products to manage their full customer relationships.

On the other hand, I do agree with Adobe’s argument that its approach lets clients create a unified digital experience without replacing their entire enterprise infrastructure. This is certainly an advantage.

Adobe’s announcement was released on Monday, but I didn’t get around to writing about it until today. The delay is unfortunate, since the attention of the enterprise marketing automation world has already shifted to yesterday’s announcement that Oracle is acquiring Web “experience” management vendor FatWire Software. I’m not sure I accept “Web experience management” as a legitimate software category, but FatWire does combine conventional Web content management with unusually strong targeting, personalization, content analytics, digital asset management, mobile, and social features. Perhaps that justifies calling it more than plain old Web content management.

The strategic purpose of the FatWire acquisition is self-evident: to fill a gap in Oracle’s customer-facing technologies, which already had ATG ecommerce and general Enterprise Content Management for Web sites, as well as Oracle CRM and Oracle Loyalty. (Oracle isn’t very creative with product names.) FatWire will allow much richer, more personalized and targeted Web site interactions. It also provides some Web analytics, although I still think Oracle has a gap to fill there.

The Oracle and Adobe announcements do highlight a clear strategic contrast. Adobe has largely limited itself to digital interactions, and has largely avoided customer-facing systems except for Web sites. Oracle has embraced the full range of online and offline interactions, including customer-facing systems in every channel. Oracle has also hedged its bets a bit with Real Time Decisions, which can coordinate customer treatments delivered by non-Oracle systems and powered by non-Oracle data sources. Of the other enterprise-level marketing automation vendors, IBM, SAS and Teradata share Adobe's focus on digital channels and its avoidance of customer-facing systems, although they resemble Oracle in offering deep analytics and customer database management.

Based on my fundamental rule that “suites win”, I think Oracle’s strategy is more likely to succeed. But only time will tell.

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Day Software Acquisition Adds Some Marketing Features to Adobe, But Gaps Remain

Summary: Adobe added Web content management, digital asset management and social media features to its arsenal when it purchased Day Software last month. But it still lacks key pieces of a complete marketing solution.

Last month, Adobe announced their $240 million acquisition of Web content management vendor Day Software. Adobe was already a major force in Web development through its Dreamweaver, Flash and ColdFusion products, not to mention Omniture for Web analytics. But Day fills out its line by adding enterprise-class content management, digital asset management and social (blog, Wiki, etc.) publishing. In fact, the fit is so obvious that it doesn’t seem to have generated much comment, at least among the marketing gurus I read.

But the significance to marketers may be greater than they think. Back in February, Day released its 5.3 version, which specifically aimed at letting marketers manage their Web promotions without help from technical specialists. Of course, this is a goal shared by so many vendors that it verges on cliché. In particular, it’s also one of the main benefits offered by the landing page, Web form and microsite features of marketing automation systems.

Still, as I’ve argued many times, it ultimately makes more sense for marketers to build their pages in the company’s core content management system than in separate marketing automation tools. This can only happen if the content management system provides the features that marketers need to do their jobs.

Day’s 5.3 release attempted to do this by adding targeting capabilities, including segmentation and segment-driven personalization. Segments can be based on anonymous visitor characteristics such as referring site, search keywords and geolocation; on history captured in a registered visitor’s profile; and on attributes of the pages viewed. Profiles can also be enhanced with non-Web data, such as purchase history.

As you might expect, Day does a particularly good job of tracking visitor activities within the Web site. The system uses Javascript on each page to track cursor movements and capture the details of what each visitors has looked at within the page. It can also read the visitor’s browser cache to check for visits to specified external sites, a technique that’s legal although many privacy advocates think it shouldn’t be. The system also supports multi-variate content testing, which can be related to customer segments or operate independently. Tests are judged on click-throughs, which are captured within the system.

Are these features really enough to replace a dedicated marketing automation system? Surely not: marketers still need to maintain a marketing database, send emails, respond to trigger events, score leads, and integrate with CRM. In fact, Day itself expects clients to integrate with marketing automation products for campaign execution. The system does have connectors that let marketers create their emails and Web pages within Day and use an external system to deliver them.

Day’s Chief Marketing Officer Kevin Cochrane told me yesterday that he sees marketing automation as separate from Day’s business of building “customer facing solutions”. But companies that want to integrate all their online (and ultimately offine) marketing will want to combine both sets of features. Although Adobe already owns many tools used in marketing departments, it lacks the campaign management features at the heart of marketing automation. I expect that Adobe and other major Web content management leaders will eventually acquire email and/or marketing automation vendors to fill the remaining gaps.

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Adobe Buys Omniture: Good for Marketers, Bad for Marketing Automation Vendors

Summary: Adobe's agreement to purchase Omniture illustrates the on-going convergence of Web content management and Web analytics systems. This puts pressure on marketing automation vendors, who also want to provide Web analytics and content management, and who are already being pressed by customer relationship management (CRM) vendors. That's a pretty unpleasant position.

Adobe's announcement that it will purchase Omniture for $1.8 billion makes perfect sense. As I discussed in July, marketers have a lot to gain from tight integration between a Web content management system (CMS) like Adobe's Dreamweaver and Web analytics and optimization like Omniture.

Let's take it as a given, then, that major Web content management systems will soon include integrated analytics. This sets up a new clash between marketing automation vendors and Web CMS vendors. One of Omniture's major selling points before the merger was its ability to combine information across all online marketing channels, and I think they were working towards adding offline channels as well. Although short-term priorities will probably shift now towards Adobe integration, I doubt their long-term ambitions in that direction will evaporate.

And even if the CMS vendors do restrict their focus to online, they will still be competing with Web CMS and analytics solutions from marketing automation vendors who realize that online is too big a sector for them to ignore. Even though both sets of vendors will need to provide some degree of openness so their clients can move data from one platform to another, both will really want to sell their clients the entire execution and analysis stack, and will tightly integrate them to encourage this.

I think I've made this point before, but I'll repeat it again: the marketing automation vendors are really being squeezed between the Web vendors on one side, and the CRM vendors on the other. This is a very unpleasant position, since both CMS and CRM vendors are much larger than the marketing automation specialists. It's hard to see how they can survive as anything but niche products in the not-too-distance future.

This position probably puts me at odds with industry analysts who see great opportunities for growth in the marketing automation space. (I'd point to specific examples but can't find any just this minute.) The general argument seems to be that low adoption rates mean there's plenty of unmet need that will eventually lead to sales. I agree that adoption is low -- but there's no guarantee that the marketing automation specialists will be the ones who fill the gap. Improved CRM or CMS offerings might actually meet marketers needs. And if since nearly everyone has or needs a CRM and CMS system, it will actually be easier for companies to use the expanded features in their existing systems than to buy a separate marketing automation product.

If anybody has a good counter argument, I'd be happy to hear it.

Two further thoughts:

- When I asked one of the marketing automation vendors recently whether he considered CMS vendors as competitors, he said he didn't because CMS vendors still sell primarily to IT, while marketing automation is purchased by marketing. Assuming this is true, then Omniture also helps Adobe by giving access to marketing departments.

- The acquisition may make marketing automation vendors more attractive acquisition candidates for CMS vendors wishing to beef up their marketing capabilities. Autonomy (Interwoven), Open Text, and EMC (Documentum) could all swallow a Unica, Aprimo or Alterian without stopping to chew.

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