Adobe’s $1.68 billion acquisition of Magento signals the ever-changing landscape in digital marketing technology and heightened expectations for integrated client solutions. While Adobe improves their eCommerce capabilities, the transformation continues for Magento—a company that’s achieved approximately $150 million in annual revenue in 2017. Most importantly, the race continues between Adobe, SAP, and Salesforce to strengthen their unique cloud offerings and establish their individual brand as the eminent leader in digital customer experience.
With Adobe heavily focused on providing customers with real-time customer experience solutions, the Magento acquisition strengthens the value that both platforms already provide and opens the opportunity for a significantly fruitful partnership. We asked thought leaders at R2i for their perspective on what this new marriage might look like as well as the near and long-term effects it will have on the industry.
This move was important as both Adobe and Microsoft had gaps in their eCommerce capabilities and Magento represented an opportunity to compete against Salesforce’s acquisition of Demandware and CloudCraze.
Beyond the added solution offering, the Magento acquisition gives Adobe a better avenue into the mid-market—a place where Magento has established a strong footprint in both B2B and B2C. As Salesforce and SAP continue to target organizations at the enterprise-level, Adobe really has a unique opportunity to corner the SMB market and reach organizations in historically underserved industries, most notably manufacturing, energy, and professional services. The marriage allows current Magento customers to leverage content targeting, personalization, and customer analytics to spur tangible purchasing decisions. With many of these companies prioritizing digital transformation, this is something that will continue to receive attention.
The acquisition of Magento fills a significant product gap for Adobe. By bringing Magento’s eCommerce platform into their marketing cloud, it will connect the consumer buying journey to the broader experience journey. With the proliferation of mobile payments and consumer expectations for a seamless brand and buying experience, the timing of Adobe solving this gap was critical. Add in Adobe’s Sensei AI capability, connecting to the consumer profile, and mid-market brands will receive the needed support across customer intelligence and insights.
Adobe’s acquisition of Magento provides an important opportunity for Adobe to now offer a complete customer experience across an entire marketing and commerce journey. Enhanced connectivity between the two platforms will greatly increase efficiency and effectiveness within Adobe Analytics, Target, Campaign and Audience Manager specific to predictive analytics, personalization, and A/B testing. Adobe and Magento made great strides in flexing their strengths in content and data coupled with open commerce innovation that will help strengthen customer-centric experiences.
The need for a commerce solution in Adobe’s product offering has been a clear gap. This is a worthy marriage given Magento’s B2C enterprise strength and more importantly their differentiation as a B2B and B2C mid-market leader. Adobe benefits in balancing out their footprint as an enterprise player and expanding into the mid-market. Combining their respective strengths could prove to be a strong superpower to enterprise competitors (Oracle, IBM and Salesforce) that have lacked a clear strategy to penetrate the mid-market. With predictions of double digit growth in SMB platforms over the next five years, this was a smart acquisition for Adobe.
In our business we see a lot of mid-market and divisions of enterprise company’s re-platforming and modernizing their technology solutions to enable a personalized experience. There is a common focus for mid-market and enterprise organizations, customer insight and experience is at the heart of their enablement decisions. Adobe’s reign in personalization and customer experience coupled with Magento’s commerce capabilities also offers a strong alternative to the prebuilt integration of leading ERP solutions such as Oracle and SAP Hybris.
It appears all sides win from this marriage; mid-market buyers advance their digital maturity in new and creative ways and Adobe/Magento expands market growth in new and existing customers.