22 Nov

Why Did Adobe Acquire TubeMogul?

WRITTEN BY Anne Shields

Adobe strengthens its marketing cloud capabilities

Earlier in this series, we discussed the fiscal 3Q17 performance of Salesforce’s (CRM) various cloud offerings. Among offerings in its subscription segment, Salesforce’s Marketing Cloud grew the most. Let’s look at Adobe’s latest marketing cloud acquisition, TubeMogul.

On November 10, 2016, Adobe (ADBE) announced the acquisition of TubeMogul (TUBE) for approximately $540 million. TubeMogul is a video advertising platform that helps advertisers schedule, purchase, and evaluate video advertisements.

Adobe’s interest in TubeMogul has worked in the latter’s favor, and its shares rose over 20% on the acquisition announcement. Adobe’s offer values each TubeMogul share at $14, which is a premium of more than 75% to its closing price before the deal was announced.

Subject to approval, this acquisition is expected to close in Adobe’s fiscal 1Q17 quarter. Brett Wilson, TubeMogul’s CEO, will continue to work in the same capacity.
Why Did Adobe Acquire TubeMogul?

TubeMogul will become a part of Adobe’s Digital Marketing segment

Adobe has stated that TubeMogul will be integrated into its Digital Marketing business. Adobe’s Digital Marketing segment continues to grow with the rising revenue of the marketing cloud space. This segment caters to the big data analytics, mobility, and social media spaces, which are rapidly changing the IT (information technology) landscape.

The ongoing SMAC (social, mobile, analytics, and cloud) revolution, coupled with increased spending in the digital marketing space, has benefited Adobe. With the acquisition of TubeMogul, Adobe will provide a video advertising platform to its customers, which is expected to be highly beneficial.

In the words of Brad Rencher, Adobe’s executive vice president and Digital Marketing general manager, “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.”

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