Jeopardy Answer: Who are Two Companies That Google Will Make Obsolete In the Next Five Years? Question: Omniture and Offermatica
Published: September 7, 2007
Author: David Rodnitzky
This morning I saw the news that Omniture – the Web analytics giant – had acquired Offermatica – the multivariate testing giant for $65 million.
Initially, the deal struck me as a little odd. Both of these companies’ business models are being directly attacked by Google’s “software for free” business model – Omniture by Google Analytics, and Offermatica by Google’s Web Site Optimizer.
It would be like the world’s biggest typewriter (Brothers?) and telegraph (Western Union) companies merging in 1985, when the computer and the telephone/Internet were on the verge of destroying both businesses.
I do believe that both Omniture and Offermatica currently offer far-superior tools to the free tools offered by Google. But I also believe that a) Google will continue to improve their tools and b) there are many current Omniture and Offermatica clients for whom it is a smart business decision to save the $50K to $100K a year for each of these services and use Google’s sub-standard version. And the size of the client exodus will only increase as Google’s tools get better.
So this begs the question – is this acquisition a desperate attempt by two dinosaurs to survive the ice age/asteroid/intelligent design, or is there a more clever reason lurking beneath the surface?
My guess is that the answer is a little of both but mostly the latter. Conventional wisdom in the SEM space says that Microsoft will want to compete pound for pound with Google – both out of hubris and business necessity. That same conventional wisdom suggests that Microsoft needs to either build or acquire a Web analytics platform and to integrate it with AdCenter.
At the moment, there are three likely acquisition candidates for Microsoft – Omniture, Visual Sciences (the artist formerly known as WebSideStory), and CoreMetrics. Perhaps an acquisition of a leading multivariate testing company will give Omniture the upper hand in this race to be acquired – perhaps the incentive to kill two ‘anti-Google’ birds with one stone will be too much for Microsoft to resist.
If that is the rationale for this move – kudos to Omniture exec – your shareholder should be proud. Then again, I often give business leaders too much credit for dumb business decisions. My litmus test for this acquisition is simple: if Omniture is acquired before January 1, look back on this deal and give it a big thumbs up.