The King of Digital Marketing: Adobe vs. IBM

In May 2012 both Adobe and IBM held Digital Marketing Summits. Adobe’s Digital Marketing Summit was held in Battersea in London, and IBM’s Marketing Innovation Summit was held in Madrid. Both events attracted over 1,700 attendees. Both companies stressed the importance of providing a complete product solution for marketers and promised to acquire more companies, integrate all the product pieces, and further simplify and improve user interfaces. So far so good.

Both had ‘futurists’ presenting and endeavoured to paint a vision for the future of digital marketing. Surprisingly both did not really embrace social media during their summits – there were no real-time polls or broadcast twitter commenting. Personalisation was on a physical person-to-person level rather than using digital technology. Both had great evening parties with lots of free drinks and food and entertainment.  

Here the similarities end. These two companies are deadly enemies when it comes to fighting for digital marketing market share, although they see the world from completely different viewpoints. IBM is a $107Bn turnover ‘gorilla’ with 400,000 employees and seeks to “deliver value to enterprise clients through integrated business and IT innovation” i.e. it provides every kind of software and service for every user department in virtually every industry in every geographic region. IBM has neglected the Marketing Department in the past, and is now looking to put that right.

Adobe is a $4Bn ‘cheeky monkey’ with 9,000 employees with a specialist creative and document management heritage. Adobe’s goal is “to produce the world’s content and maximize the impact of that content”. Adobe has recently consolidated its business into three Strategic Business Units: Digital Marketing, Print & Publish, and Digital Media. Traditionally Adobe has served the publishing industry, and now it is extending this remit with a greater specific focus on Marketing.

Adobe is a young company which is only 30 years old. It thinks young and acts young and playful. Its SVP & GM for Digital Marketing, Brad Rencher, was born in the year that IBM’s Chairman Sam Palmisano starting working for IBM (1974). The youthful new age bands playing at Summit included Diversity, the dance group of X Factor fame. My 13 year-old niece would have been in heaven. Adobe attracts the creative young things working in advertising agencies and marketing departments who use their software and who like to be “cool”, creative and funky.

IBM’s message is more business-like and adult, for a more risk-averse older crowd – especially the IT Department whose job it will be to implement its products. IBM’s key message is: it works and it’s integrated, modular, scalable and complete. This “left-brained” thinking suits those of us who are more logical, analytical and objective, whilst Adobe’s “right-brained” thinking suits those who are more intuitive, thoughtful and subjective. You won’t find an IBMer (as Adobe did) inviting VIPs back stage with a “to show them the love” message!

In terms of their relative marketplace positions, IBM acquired Unica (for marketing automation), Coremetrics (for web site analytics), DemandTec (for retail marketing mix optimisation), and has announced the acquisition of tealeaf (for web site experience analysis). IBM’s focus is clearly on the automation of the marketing function within the bigger picture of ‘Smarter Commerce’. Marketing is one quartile of their Buy-Market-Sell-Service Smarter Commerce concept.

Adobe acquired Omniture (for web site analytics), Day (for web content management), Efficient Frontier (for PPC optimisation), and Demdex (for online audience segmentation and targeting). Adobe’s focus is more towards the burgeoning online advertising industry rather than marketing automation.

Adobe’s Digital Marketing Suite turnover is $580m per annum, of which $480 is sourced from the ex-Omniture business. Site Catalyst represents 50% of ex-Omniture revenues. A key challenge for Adobe is to increase their product penetration within their existing customer base which is reported to be c. 1.5 products per customer. Adobe sees its main route to market as its partner channel, especially by deepening their relationships with the advertising agencies such as WPP and Publicis who have strong relationships with CMOs and other marketing folk, but any channel will do!

Adobe has the larger market share but IBM is catching up fast with a higher growth rate (the WebSphere family, which includes Unica and Coremetrics, grew at 40% in 2011) and a commitment to spend another $20Bn in acquisitions by 2015. Moreover, IBM is throwing its considerable muscle behind its digital marketing initiative including educating and re-skilling its global sales force and enterprise account teams. In addition, it can call on the considerable skills and presence of its PWC acquisition (Global Business Services) to provide a strategic consulting front-end approach to sales account development.

In some ways you could say that if Adobe and IBM meet each other in competition, one of them is in the wrong place. However, this is a battle of competing approaches and market doctrines rather than an “either-or” choice. After all, both companies have publically stated their goal of “market leadership in the digital marketing space”.

In summary, expect both companies to spend freely on their own marketing to establish a leadership position. More acquisitions will follow from both camps. The scales must be tipped slightly in favour of IBM given the massive resources at their disposal. However the creative mavericks that inhabit marketing departments never like to be predictable, and may just favour the underdog’s quirkiness and dedication to the marketing cause.