On May 21, 2018 Adobe announced that it has entered a definitive agreement to acquire Magento Commerce.
The obvious objective of Adobe is to integrate Magento’s commerce capabilities into their own experience capabilities. According to Brad Rencher, executive VP and general manger, Digital experience, with this acquisition Adobe is the “only company with leadership in content creation, marketing, advertising, and now commerce – enabling real-time experiences across the entire customer journey”.
Magento Commerce (Magento) is a ”leading provider of cloud commerce” software to merchants and brands. Magento covers both, B2C and B2B vendors. The company is listed as a strong performer for both, b2b- and b2c ecommerce solutions in this year’s Forrester Waves on Commerce Suites.
The Bigger Picture
Adobe is all about ‘delivering experience’. You should read the second part of friend Paul Greenberg’s recent ZDNet article on Adobe where he explains customer experience, brand experience, and consumable experiences – and where he sees Adobe in this triple – in his uniquely great fashion.
A marketing suite like Adobe’s Experience Cloud needs channels into which the insights, that the marketing solution generates, are pushed. The most important one being e-commerce. E-commerce is also the channel that offers most potential. The technology is no more bound to just a commerce web site. The site is just one possible interface. As is a chat bot in Facebook Messenger. As is Alexa. Or Siri. Or Google Assistant.
You get the picture.
Further, an e-commerce site is not only the foremost channel to send marketing communications to (and to deliver experiences), but also one of the most important input channels for information that enables the delivery of an experience.
With this, Adobe can now offer a closed loop scenario using own means instead of relying on partnerships.
While Magento has a reputation as an open source platform, which implies focusing on SMBs, it actually has quite some Enterprise Customers. The company seems to focus on the larger end of companies. After all, this is where the money lies.
With Magento, one of the few remaining players with credible ambitions and a record in the enterprise market went off the plate. And this has some implications for all players, customers, as well as competitors (and strategic partners).
The remaining ones seem to be Intershop, Apttus, Insite, maybe Digital River – and possibly Shopify.
My PoV and Advice
Brad Rencher is mostly right with his broad statement, insofar he maintains the complete enumeration of topics – and has an audience with the right notion of ‘experience’ (again, I strongly recommend reading Paul’s article). But Adobe is not exactly the company (yet) that is able to deliver a complete picture of customer experience.
There is no serious marketing without at least one (preferably more) strong communications channels.
With the capabilities of Magento, Adobe takes a big step out of the pure marketing area.
This acquisition is a great move that surely heats up the competition in the enterprise market. Where analysts (including myself) added Adobe into the Clash of Titans as the .5 next to the big 4 Adobe now emphasizes on being treated as an eye-to-eye competitor in the wider CRM space. This is, because a CRM offering cannot be complete if there is no e-commerce channel part of it. And referring to partner solutions in this critical area just doesn’t cut the mustard, especially if one is competing in the high end (hello, Microsoft?).
Additionally, this merger offers the possibility of reviving Adobe’s open source and community roots.
There are three main pieces of advice.
One for Adobe and Magento customers
I do not think that there is a need to be concerned about ongoing Magento support.
Look out for a Magento roadmap and an integration roadmap, and inquire about plans for CRM beyond e-commerce and marketing. Being able to support omni-channel marketing and omni-channel commerce is one thing. Becoming a full stack provider is a totally different ball game, especially if not only enterprises shall get addressed.
One for SAP, Salesforce, and Oracle
Observe and learn. Adobe has the leading experience suite and now owns a leading e-commerce solution along with a huge eco system.
This also makes integration between different parts of the own solutions crucial. It must work seamlessly and be dead simple to achieve.
Secondly, together with the customer service module of Magento the company is getting closer to offering a full featured CRM. Using the various Magento editions Adobe also can make a credible step into the SMB market. Scaling down is difficult, but this ability now becomes even more important.
One for Microsoft
Adobe is an important strategic partner for Microsoft, with Adobe being the preferred marketing service for Dynamics 365. With this acquisition Adobe becomes an even better fit, but gained some more independence from Microsoft.
Microsoft itself only recently delivered an own marketing solution that is targeted towards SMBs, which may grow over time.
Microsoft also does not own an e-commerce stack. Adobe now does. With a market capitalization of around $ 120B Adobe is probably too expensive to be acquired but the value that Adobe can offer to Microsoft is significant. So, keep this partnership as intensive as possible.
And a Bonus One for Adobe
The Adobe Experience Cloud is a great product, which can deliver a lot of value. It, however, has a pretty significant price tag, which causes a barrier, especially when looking at more and more saturation in the enterprise market and a MarTech landscape that lists almost 7,000 companies and growing (fast). The acquisition of Magento offers the possibility to strengthen the footprint in the mid sized business market, which still has tremendous potential, especially since the big 4 are struggling to penetrate this market, too. The risk of not extending the view to this market is being pushed upwards and then out of the market.