Adobe's Pricey Omniture Purchase

The maker of Web-site creation software spared little expense in buying a set of Web-analytics tools it hopes will goose sales

By Aaron Ricadela

Over an early August dinner in a tree-lined neighborhood of San Francisco, Adobe Systems' (ADBE) executives were candid about the performance of the company's flagship software product. Creative Suite, a package of tools for creating Web sites and print publications, was not living up to its potential, and Adobe would use acquisitions to fuel growth, Adobe management told BusinessWeek at the swank Spruce restaurant in San Francisco's Laurel Village.

CEO Shantanu Narayen said he hoped the next version of the software, which bundles Adobe's popular Photoshop, Illustrator, and Flash, would be popular with big ad agencies and compel smaller customers to upgrade. Adobe makes a broad range of products that help companies produce Web sites, publish online videos, and manage documents and digital files. Yet, "people still aren't aware of the depth and breadth of what we do," Narayen said.

On Sept. 15 Adobe made clear it hopes to become an even broader purveyor of the tools that companies need to thrive in the world of Internet media through its $1.8 billion acquisition of Omniture (OMTR), a maker of software that helps customers measure and analyze Web site traffic. By selling its content creation software alongside Omniture's Web traffic measurement programs—and building technical linkages between the two—Adobe will try to attract more business from companies that want to make Web site design and analysis tools work more effectively together.

With products such as Flash, which helps companies add animation, video, and interactive features to Web sites, Adobe "created these amazing markets from casual gaming to video on the Web," Narayen said in an interview after the deal was announced. Now customers including Nike (NKE), Disney (DIS), and ad agencies such as WPP (WPPGY) want to build methods for measuring Web sites' effectiveness and for tailoring those sites to different audiences as they're building them.

Tool for Negotiating Ad Rates

That's where Omniture's tools come in. The company specializes in software that helps companies quantify the number of people who visit a Web site and chart traffic patterns as a user navigates from page to page. Companies use that data to determine demand for content and negotiate rates with advertisers. Omniture's sales are expected to rise about 15%, to $354 million, this year from 2008, analysts estimate.

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