Did Rising Competition Hurt Adobe’s Digital Marketing Growth?
Adobe’s 2015 Results Catapulted Shares to Record 52-Week High
Digital Marketing segment reported low growth likely due to rising competition
So far in the series, we’ve looked at the performance of Adobe’s (ADBE) chief operating segment—Digital Media—in fiscal 4Q15 and fiscal 2015. Let’s move on to discuss Adobe’s Digital Marketing segment in fiscal 4Q15. This segment reported $382.7 million and $1.5 billion in revenues for fiscal 4Q15 and fiscal 2015, respectively. On a YoY (year-over-year) basis, Digital Marketing revenues grew 2.4% and 11% in fiscal 4Q15 and fiscal 2015, respectively.
Adobe’s slow growth in this segment could be due to high competition in this space. However, the company was cited as an overall market leader for digital marketing platforms by Ovum, a global analyst firm. IBM (IBM), Oracle (ORCL), and Salesforce.com (CRM) are other leading players in this space.
Teradata and SAS are the market challengers, and Marketo is a follower. These players collectively command ~75% of the annual $5 billion global market spends on digital marketing platforms.
Adobe’s growth could be in jeopardy as its peers scale up
Adobe’s digital marketing solutions score high in market impact and strategy execution. But its lack of e-commerce and vision for consumer communication could allow its peers to win, although they closely follow Adobe’s moves.
Salesforce.com and Oracle, in particular, are motivated to exploit the shortcomings in Adobe’s digital marketing solutions to strengthen their presence. You can read Key Players’ Offerings in the Marketing Cloud Space to know more.
To gain exposure to Adobe, you could consider investing in the iShares Russell 1000 Growth ETF (IWF). IWF, which has an exposure of 13% to application software, invests ~0.43% of its holdings in Adobe.
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