Adobe Systems Acquires Auditude, Pursues End-To-End Video

Although no longer cast solely as a multimedia platform provider, Adobe Systems caught the industry off guard this week with its acquisition of video ad management and monetization platform Auditude. Reports put the deal in the range of $120 million, but neither Adobe Systems or Auditude would discuss financial terms on Tuesday. All that’s out there is rumors and speculation,” said Todd Teresi, vice president and general manager of Media Solutions at Adobe.

Through Auditude's technology, Auditude Media Group provides advertisers and agencies with access to premium long- and short-form broadcast and professional video content.

The Palo Alto, Calif.-based company also works with clients such as Comcast and Warner Bros. to help them monetize online video. Its technology automatically analyzes uploaded video clips to identify copyrighted programming -- a "Daily Show" or "Colbert" segment -- then serves targeted overlay ads within that content.

With the help of Auditude, Adobe says it can provide an end-to-end video offering by connecting authoring, publishing, monetization and optimization. “It’s a natural extension for us,” Teresi said on Tuesday. “We signaled our interest in the marketing side of the content equation when we purchased Omniture -- and that product, Adobe Digital Marketing Suite, is now a core offering for Adobe.”

What's the best way to describe Adobe's interest in the video ad space?

“There are two ways our customers can monetize their content,” Teresi said. “They can get viewers to pay for it or they can generate revenues through advertising. We think we’ve done some great work ensuring content owners get a fair return if they want to charge for content: The DRM we have built into Flash Media Server for streaming video, the subscription services built into Digital Publishing Suite for digital magazines.  Our interest is to help our customers generate revenue via that second stream: advertising.” 

“Adobe can now offer an unparalleled platform,” David Wadhwani, senior vice president and general manager, Digital Media Business Unit, Adobe, said Tuesday.

Gaining market traction, Auditude recently announced a deal with Major League Gaming. Per the exclusive deal, Auditude now controls insertion of video ads in MLG's live-streamed tournaments and video-on-demand content. Used by content owners and distributors for IP-based video ad technology, Auditude also recently signed another major partnership with Major League Baseball.

According to Wadhwani, Auditude’s advertising server platform meshes nicely with Adobe’s video technologies, such as Adobe Flash Media Server 4.5 software and Adobe Pass. 

Adobe also plans to integrate Auditude with the Adobe Digital Marketing Suite, which consists of integrated analytics and optimization products to collect and drive customer insight.

On average, consumers are spending 36% of their media time online, compared to 19% just five years ago, Forrester Research reported earlier this year. Still, it found that digital ad dollars have ample room for growth, as just 15% of domestic advertising spend is currently online.

The gap between time spent online and advertising dollars spent online equates to a $35 billion annual advertising opportunity, Jordan, Edmiston Group reported. It points to a continuing movement of ad dollars to the Internet in the coming years.

As a result, major media companies such as Hearst, Meredith and Gannett have been investing in marketing services to better assist their customers and capture more revenue. Plus, ad agencies and marketing services companies are retooling their business models via investment in integrated and interactive marketing solutions. 

Large technology companies like Adobe -- along with IBM, Cisco, and Akamai -- are aggressively entering the marketing services market and investing in analytics, optimization and digital advertising solutions.

These trends made marketing and interactive services among the most active sectors for M&A, accounting for 27% of all transactions in the first half of 2011, according to JEGI.

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