Yesterday our client Adobe announced its intention to acquired Omniture, the web analytics company for $1.8bn, which at about six times revenues is a bit of a premium in a down market. But Omniture’s customer list is pretty amazing. The move came out of the blue, but does it make sense?
As Cote explains in his own quick and dirty analysis of the deal, strategically the combination does seem to makes sense – creating a closed loop system for high volume consumer-facing web sites. Indeed- this kind of move may be essential to Adobe in finding ways to make money from the Flash platform – allowing for an indirect enterprise revenue stream.
Making money on the web (or with network-reliant applications) is largely an analytics game that requires lots of SEO, user behavior tracking, and other analysis that the web app teams pipe into their product management decisions: what are the features and ways of exposing those features on the web that make us the most money?
In conversation people might call them feature flags, switches, valves, levers or knobs, but building them in means you can do things like dark launches, incremental launches, A/B tests, or turn off intensive features to accommodate heavy traffic.
We’ve all heard the stories of how flickr does multiple releases daily, Amazon tunes the pages to sell more, and so on. That’s the kind of thing we’re talking about here.
Spot Light On the Deal
I had my own opportunity to parse the deal with a guy in the know – after all I am not a media business expert. Dan Light on the other hand is one of the smartest digital marketers in a city stuffed full of them. If there is a cool movie being launched, he is the go to guy in London for web stuff. 300, Watchmen- that kind of thing. Oh yeah- he is also founder of the VHSMovieClub.
I was drinking with Dan and naturally the conversation came on to the Omniture deal. He has plenty experience of the toolset. We pretty quickly realised that Adobe is basically going head to head with Google in this space. Both want to instrument the web from a user experience point of view. And Google Analytics is utterly pervasive.
Now- Google Analytics may only provide a fraction of the data that Omniture does, but its a very useful fraction. Want to know which countries are still downloading screensavers, which are buying stuff, and so on. Dan and his team use Google for that. The other thing I had not immediately thought of is that Flash is not a closed system when it comes to event data. On the contrary its very very easy to publish Flash events… straight to Google Analytics. Every click and hover. Flash is open web as far as Google Analytics is concerned.
So we have relatively expensive high end infrastructure competing with low end but ever improving and pervasise Google services – that’s not necessarily a place I’d like to be. Then again- the kind of people Dan works for are the kind of people that buy Omniture – they want a Rolls Royce, even if the practioners reporting to them run around on motor scooters. As long as I have been in the industry I have known businesses under indulge in collecting data. Its going to be very interesting.
I also worry a bit that by becoming data-driven Adobe may create tensions with its core customer base of designers. These people like to design great user experience. They don’t want to do things by the numbers. What am I talking about? Ask Doug Bowman – who quit Google because they were too data obsessed. He joined Twitter instead, and his Goodbye Google posts are extremely instructive. I will quote at length:
When I joined Google as its first visual designer, the company was already seven years old. Seven years is a long time to run a company without a classically trained designer. Google had plenty of designers on staff then, but most of them had backgrounds in CS or HCI. And none of them were in high-up, respected leadership positions. Without a person at (or near) the helm who thoroughly understands the principles and elements of Design, a company eventually runs out of reasons for design decisions. With every new design decision, critics cry foul. Without conviction, doubt creeps in. Instincts fail. “Is this the right move?” When a company is filled with engineers, it turns to engineering to solve problems. Reduce each decision to a simple logic problem. Remove all subjectivity and just look at the data. Data in your favor? Ok, launch it. Data shows negative effects? Back to the drawing board. And that data eventually becomes a crutch for every decision, paralyzing the company and preventing it from making any daring design decisions.
Yes, it’s true that a team at Google couldn’t decide between two blues, so they’re testing 41 shades between each blue to see which one performs better. I had a recent debate over whether a border should be 3, 4 or 5 pixels wide, and was asked to prove my case. I can’t operate in an environment like that. I’ve grown tired of debating such minuscule design decisions. There are more exciting design problems in this world to tackle.
I can’t fault Google for this reliance on data. And I can’t exactly point to financial failure or a shrinking number of users to prove it has done anything wrong.
Goog’s loss is Twitter’s gain. He is beginning to make an positive impact on the Twitter UI. So what about designers and data? Now a new set of Adobe customers are going to be breathing down the necks of Adobe’s existing loyal customer base, telling them the blue is wrong, or the type face not quite rounded enough. Business people thinking they know best. Designers love that. Just ask Doug.
As I said above, Adobe needs to find indirect revenue streams- they need their own “Adwords” so Flash can be free. Omniture could be the missing piece that brings Adobe some much-needed revenue. That’s all to the good.
I also want to at least nod to enterprise application user experience, which is generally terrible. It could be that Adobe will learn some really valuable lessons from Omniture that can be applied to its growing enterprise UX business. Its all about front ends and portal plasticity. Back over to Coté.
This business model is drawn largely from the public web, but non-consumer-facing companies are beginning to figure out how it applies to them, to “the enterprise.” You can see how the idea of “Agile Infrastructure” (which underlies this method of applications delivery) is starting to pan out in the three part podcast series I co-host over at The Agile Executive (part 1, part 2, and part 3). Chalk it up under “the consumerization of IT.”
In summary then- Adobe has made a potentially astute deal, especially now Microsoft has pulled out of the ad metrics business. But – buying into near head to head competition with Google in a battle to instrument the web – that’s um… let say bold. This is going to be interesting. I’d love to know your thoughts on the deal. Looking forward to hearing with Jeremiah has to say about it.
picture credit: no i do not have permission to use this picture, from the movie 300. If they ask me I will happily take it down.