Adobe’s TubeMogul Acquisition – Frost & Sullivan’s Perspectives

Nov 23, 2016

Background

On Thursday, Nov 10, Adobe announced its decision to acquire TubeMogul, a leading provider of video advertising solutions for approximately $540 million net of debt and cash. With this acquisition, Adobe has solidified its position as the leading provider of integrated advertising solutions. Given the brand-direct nature of both Adobe and TubeMogul, it makes sense for them to partner as they have a lot of overlap in customers – thus presenting immediate opportunities for common customers to use a one-stop shop for data-driven video advertising.  Here are some initial thoughts from Frost & Sullivan on this acquisition.

The Growing Importance of a Total Marketing Suite

Adobe’s acquisition of TubeMogul is a continuation of the broader trend of marketers tightly integrating advertising data (such as customer profiles and other user data) with media strategies. And Frost & Sullivan agrees with this trend. Adobe is a leading provider of search, display and social advertising planning, delivery, and measurement, while TubeMogul is a leading provider of video advertising solutions. The combination of Adobe and TubeMogul will allow customers to use Adobe’s industry leading data management and analytics capabilities along with TubeMogul’s excellent video advertising capabilities – thus delivering significant operational efficiencies and improved ROI for video advertising customers.

Capturing the Video Advertising Opportunity

Frost & Sullivan’s research indicates that advertising spend on mobile and online video is expected to exhibit strong growth rates through 2022. The greatest value in ad tech may be yet to come as holistic management of video and TV continues to grow. According to Frost & Sullivan estimates, the converged TV and video marketplace is worth an estimated $250 billion globally and is on the tipping point of widespread technology adoption.  In other words, this is only the beginning. Providers that can offer data-driven cross-screen video advertising solutions will see significant traction for their advertising platforms. This is what Adobe hopes to offer with the TubeMogul acquisition.

Conclusion

In the digital age, numerous opportunities exist to generate useful insights about consumers that can be leveraged to deliver efficient ads. The acquisition provides a quick path to recognize this growth opportunity. While acquisitions are often the fastest path to growth, long term success requires a strict regime and commitment to integration. Given the extreme levels of competitive intensity in the US digital advertising market, the cost of any new technology investments cannot simply be passed on to customers. Thus, Adobe must be particularly careful to ensure that the ‘whole’ is greater than the sum of parts.  To know more about the growth opportunities in the US digital advertising market, please read this Frost & Sullivan insight


Vikrant Gandhi

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Fourteen years of product marketing, research, and consulting expertise, which includes supporting clients’ needs through more than 140 syndicated market research deliverables and consulting assignments. Particular expertise in Assessing next-generation telecommunications trends, technologies and market dynamics; Helping clients develop and execute their go-to-market strategies; Providing continuous inputs to clients into new market developments and helping them understand the strategic implications.


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