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Adobe Digital Marketing Performance in Fiscal 2Q16

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Jun. 28 2016, Updated 5:05 p.m. ET

Adobe’s Digital Marketing segment grew 12.5% in 2Q16

Previously in the series, we saw how consistently strong growth in the Digital Media segment helped Adobe Systems (ADBE) post positive fiscal 2Q16 results. Let’s look now at the performance of Adobe’s other operating segment: Digital Marketing. It caters to the rapidly growing big data analytics, mobility, and social media spaces, which are rapidly changing the IT (information technology) landscape.

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Adobe Marketing Cloud, LiveCycle, and Web Conferencing subsegments make up Adobe’s Digital Marketing segment. Adobe Marketing Cloud plays a significant role in the growth of this segment. The segment grew 12.5% to $412.2 million in fiscal 2Q16 on the back of an 18% increase in Marketing Cloud revenue. Although Marketing Cloud continued to grow, a consistent decline in LiveCycle and Web Conferencing revenues brought down the segment’s overall revenue in fiscal 2Q16.

Adobe has a dominant position in the Digital Marketing space

Ovum, a global analyst firm, named Adobe an overall market leader for digital marketing platforms in late 2015. In fiscal 2Q16, Adobe Campaign Solution was named a leader by Forrester Research in its 2016 Cross-Channel Campaign Management Wave report and by Gartner in its 2016 Magic Quadrant for Multichannel Campaign Management report.

Forrester Research’s report further stated that along with Adobe, Salesforce.com (CRM), SAS, and Oracle (ORCL) are leading the cross-channel campaign management pack.

IBM (IBM) is also targeting this space in order to record growth. In 2016, IBM made three acquisitions—Ecx.io, Aperto, and Resource/Ammirati—to boost its Interactive Experience unit as well as strengthen its presence in Europe (EZU). Matt Candy, the European lead for IBM iX, thinks that Eastern Europe is a rapidly growing market for digital marketing and customer experience software.

Although Adobe has a dominant position in the Digital Marketing space, this space is witnessing increased competition due to expectations of high growth. We’ll take a closer look at this later in the series. This explains the slower growth of Adobe’s Digital Marketing segment.

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