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Adobe’s Success Story Continues with Its Fiscal 4Q16 Results

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Part 4
Adobe’s Success Story Continues with Its Fiscal 4Q16 Results PART 4 OF 7

Adobe’s Increased Initiatives to Strengthen Its Marketing Cloud

Marketing technology space could see huge growth

Earlier in this series, we discussed Adobe’s (ADBE) Digital Marketing segment’s performance in fiscal 4Q16 and fiscal 2016. As expected, Marketing Cloud played a significant role in this growth. Adobe’s Marketing Cloud is expected to command a $27 billion market by 2018.

The robust growth expected in the marketing cloud space is attracting other players, as can be seen from the slew of acquisitions by Salesforce (CRM), Oracle (ORCL), and IBM (IBM).

Adobe’s Increased Initiatives to Strengthen Its Marketing Cloud

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Jay Vleeschhouwer, an analyst at Griffin Securities, shared his opinion on the growing competition in the marketing cloud, stating that for Adobe, “It’s not enough to merely be integrated, it must be competitive within any given point, so they absolutely have to put money back into the solutions.”

IDC estimates show that spending on marketing technology is expected to grow at a CAGR1 of 12.4%. This spending could reach $32.3 billion by 2018 as companies work to refine their analytics and their capacity to respond to the insights it delivers.

Adobe’s strategy to boost its Marketing Cloud offering

During the week ended December 16, 2016, Adobe announced the release of its TVMM (TV Media Management) platform. This platform provides comprehensive data that measures customers’ viewing habits and preferences to improve targeted ad selling. Media companies like NBC or Comcast (CMCSA), which are already Adobe’s customers, expect to benefit from this platform.

In fiscal 4Q16, Adobe announced the acquisition of TubeMogul, to strengthen its Marketing Cloud and Digital Marketing segmenta. Prior to acquiring TubeMogul, Adobe acquired Livefyre, which offers several tools that companies and brands can use to engage with their audiences.

On November 10, 2016, Brad Rencher, Adobe’s EVP and general manager of digital marketing, noted, “With the acquisition of TubeMogul, Adobe will give customers a ‘one-stop shop’ for video advertising, providing even more strategic value for our Adobe Marketing Cloud customers.”

Adobe entered into a partnership with Microsoft (MSFT) in fiscal 4Q16. Under this partnership, Adobe shifted its Marketing Cloud, CC (Creative Cloud), and Document Cloud services to Azure, Microsoft’s cloud computing platform. In return, Microsoft noted that it plans to use Adobe’s Marketing Cloud as the “preferred marketing service” for its Microsoft Dynamics 365 Enterprise.

Microsoft is behind only Amazon in the cloud space and reported 100% growth in 2Q16. So, its partnership with Microsoft is expected to expand the reach of Adobe’s Marketing Cloud in the cloud space.

In response to this growing level of competition in the marketing cloud space, Adobe continued to push for dominance in the space by utilizing product launches, partnerships, or buyouts.

  1. compound annual growth rate
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