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What’s at Stake as Microsoft and Adobe Team Up?

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Strengthening marketing software businesses

Microsoft (MSFT) and Adobe (ADBE) have teamed up to strengthen their marketing software businesses. Microsoft and Adobe provide digital marketing software for business customers through their Dynamic 365 and Marketo brands, respectively. The newly forged partnership will enable Adobe to tap into Microsoft’s LinkedIn (LNKD) platform to help its marketing clients find potential customers and better target their marketing campaigns.

Adobe is counting on the partnership to help it aid its marketing clients in getting their messages to the right audiences so as to maximize their returns on investment. On Microsoft’s part, the partnership promises to help it acquire more users for its marketing software.

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Microsoft and Adobe pursuing a $105 billion revenue opportunity

At the end of the day, Microsoft and Adobe hope to capture more digital marketing software dollars and grow their revenues—and the opportunity ahead is attractive. The global digital marketing software market was valued at $35.2 billion in 2017, and it’s poised to reach $105.3 billion by 2025, according to predictions by Grand View Research.

If all goes well, the Adobe partnership could also help LinkedIn attract more ad spending. LinkedIn is a professional network that Microsoft bought in 2016 for $26 billion. According to eMarketer estimates, Microsoft captured 4.1% of digital advertising dollars in the United States in 2018 compared to Google’s (GOOGL) 37.1% and Facebook’s 20.6%. Amazon (AMZN) and Verizon captured 4.2% and 3.3% of the market, respectively.

Microsoft recorded a 12% year-over-year increase in company-wide revenue to $32.5 billion in the second quarter of fiscal 2019, which ended in December.

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