We’ve actually discussed this possibility in our annual predictions now both for 2012 and 2013. Within the next 18 months it is our opinion that Adobe will purchase an Email Service Provider (ESP), and most likely that ESP will be Responsys. We do not claim to have any insider information, this article is expressly our opinion about why Adobe is already late to the ESP game and why they should begin.
Adobe has built and bought various components of their Digital Marketing Cloud which started in earnest with their acquisition of Omniture. Later came Day Software, Context Optional, Demdex and Efficient Frontier.
These last two acquisitions signaled that after establishing a solid presence in on-site marketing technology (Analytics provided by SiteCatalyst, Conversion Optimization provided by Adobe Target, and Content Management provided by CQ5/Day Software) Adobe has turned its acquisition focus towards off-site marketing technology – via display/retargeting with Demdex and Search Engine Marketing leader, Efficient Frontier. With those two companies being integrated into the suite, Adobe leaves one noticeably absent capability in the acquisition and retention loop: email.
And it’s a big hole
To this day email is one of the most effective digital marketing investments. It is one of the biggest benefactors of analytics and personalization, and Adobe has nothing to offer of their own in this area. Email marketing is typically the first place we look when making recommendations once our customers have successfully implemented web analytics.
So even if you`re one of the many consumers who avoids e-mail marketing subscriptions like a cat avoids a bath, the numbers show that targeted communications are among the most cost-effective digital marketing initiatives available. Consider the value consumers derive from well-timed offers bringing them back to abandoned carts with incentives, targeted offerings and loyalty messaging.
Adobe`s platform has the surrounding modules within it to take full advantage in ways that most digital marketing platforms cannot. IBM offer this capability via the Unica Campaign Manager as provided by their Enterprise Marketing Management (EMM) offering. But Adobe brings their own Data Management Platform (DMP), Personalization and Recommendation engines (Adobe Target), Analytics Suite (Adobe Analytics), Content Management System (Web Experience Manager), and Adobe Social. All of this is delivered in the Cloud, as is our presupposed acquisition candidate; Responsys.
Buy or Build?
The easy question first, there is no way Adobe is going to build a tool from scratch. The ESP category is saturated with players large and small, and the leaders are way too far ahead for Adobe to try to develop a competitive product on its own. Not to mention, Adobe has more of a taste for acquisition than development lately given their inward focus on integrating the products they have recently acquired.
As for why Responsys, that’s a bit more subjective. Adobe has always gone for the recognized market leaders in its acquisitions and ExactTarget is right there along side Responsys by any analysis. We love ET and we think they are a market leader as well and would be a terrific acquisition candidate, but we like Responsys more for Adobe due to the alignment of technologies. There is too much duplicity in ET to make the acquisition a clean purchase for Adobe.
Forrester reports confirm Responsys’ leadership in enterprise class email, SMS, and display communication service. Adobe has shown a willingness to throw some of their earnings to acquire market leaders of the past 3 years.
Responsys stock price is trading low relative to highs they experienced about a year ago. The price is right, the leadership team at Responsys has strong ties to Adobe, they are the top sponsor at each other`s conferences, their integrations are battle-tested, their customer base is the same, and their leadership position in the Cloud is similar for their respective categories but not overlapping. Lastly, the Responsys workflow capability would go a long way at addressing some workflow challenges that nearly every Enterprise level creative team faces.
Bonus technology for Adobe:
At Adobe Summit, Adobe showed a workflow capability that facilitated virtual teams and scores of agency partners to address the collaboration in the creative process. The Responsys workflow engine is the type of system-wide improvement that could be leveraged across the entire Adobe Marketing Cloud.
Not to mention, the relationship between Adobe and Responsys already seems pretty cozy. Anyone at Summit this year would have noticed.