From ‘Flash’ to ‘Monetization’

When Knowledge at Wharton spoke with Adobe Systems’ then CEO Bruce Chizen several years ago about the motivation behind the company’s acquisition of Macromedia, he gave a single word answer: “Flash.” In last night’s Q3 earnings call, current Adobe CEO Shantanu Narayen wasn’t quite so pithy in outlining the reasons behind Adobe’s current plans to acquire web analytics company Omniture. Had he given a single word answer, however, it would probably have been: “Monetization.”

Known for its content creation software, Adobe hopes the proposed $1.8 billion acquisition of Omniture will address the final phase of the content life cycle: tracking, analyzing and (perhaps most importantly) generating revenue. In doing so, the company hopes to create, in Narayen words, an “end-to-end platform to transform digital media and advertising.” Narayen also stated that the acquisition of Omniture will help to diversify Adobe’s revenue base.

In response to a question about whether the company would find it more difficult to absorb an enterprise services company like Omniture than it did Macromedia, a more similar shrink-wrapped software company, Narayen stated: “In many ways we think that [the integration of Omniture] will actually be easier because it’s additive.”

It’s a big move for the company, one that extends Adobe’s attempt to expand from a vendor of shrink-wrapped software to a provider of enterprise applications — something both Bruce Chizen and Shantanu Narayen emphasized in previous interviews with Knowledge at Wharton.