Thursday, January 29, 2009

Omniture Gets Cozy with WPP

Omniture dropped news today of its newly minted partnership with the WPP Group. WPP is the second largest media conglomerate on the planet and not a bad dance partner for OMTR.

The partnership involves three key facets:

    1) An investment by WPP into Omniture to the tune of $25M. This gives WPP a 3.5% stake in Omniture.

    2) A commitment to joint development of new technologies and integration of existing solutions. This will include integration of some WPP assets into the Genesis platform and potentially new offerings.

    3) An educational component that includes training 500 WPP consultants on OMTR products.

Here are a few thoughts on why this is a strong play:

It’s good for Omniture because:
  • WPP brings marquee advertising brands like Gray, Ogilvy, Y&R Advertising and Wunderman which will all have exposure to Omniture’s suite of optimization products.

  • They have the opportunity to train 500 new consultants on their products; thereby elevating the accessibility of OMTR trained experts.

  • Omniture just gained 130 new resellers.

  • Their visibility into advertising analytics just increased exponentially with a slew of new integrations to the Genesis platform.

  • WPP derived $4 billion worth of revenue from consumer insights. If OMTR gets even a sliver of this business, expect their market cap to rise.

  • It reaffirms their solid placement as a leading vendor in the optimization space, despite their recent hiccups and bad press.

    It’s good for WPP Group because:
  • They can benefit from the increased knowledge of customer insights that OMTR provides.

  • It expands their research capabilities by incorporating the business optimization intelligence that OMTR delivers.

  • It brings a foundation for measurement and accountability to marketing activities conducted by agencies. Clients can monitor success through a hosted 3rd party tool that is configured to demonstrate results.

  • It provides a foray into new business opportunities for WPP companies.

    It’s potentially good for the Marketing industry because:
  • We may start to see some common analytics definitions and standards that both advertisers and site operators can agree on.

  • It elevates the practical use and understanding of optimization technologies to a wider audience. This offers the potential for more companies to reach out to their agencies for help performing analysis and making the jump from data to action.

    Okay, so when you tally it all up, it appears that Omniture should be all smiles about this deal. And they are…

    I had the chance to speak with Aseem Chandra today (Omniture’s SVP of Product Marketing). When I asked…”Why the $25 mil? From an outsider’s perspective, it seems like you could have established this partnership without any financial terms.” He responded that the investment was proof of commitment to ensure that WPP had some skin in the game. Aseem went on to say that the investment also ensured that both parties would advance the partnership and develop mutually profitable solutions that would in turn aid their clients in achieving success. He was clear that the partnership does not preclude Omniture from forming relationships with other agencies, so the door is still open for more expansive agency relationships. That said, WPP retains the option to purchase more shares if undisclosed performance goals are achieved.

    So, congrats to Omniture and let’s hope this new partnership bears innovation that benefits the entire analytics industry and moves us forward.


    St├ęphane Hamel said...

    I totally agree with you John. I think it also:
    - shows there are things more important than being a free tool
    - sends a signal that analytics alone, doesn't guaranty success. What does is strategy, good solutions and innovation, a focus on measuring success and continuous improvement.


    Anil Batra said...

    Where does Nuconomy fit in the picture? WPP invested in Nuconomy last year.

    John Lovett said...

    Stephane - Glad that we are in agreement. I've said it before...It's not the tools, it's the craftsman. And this partnership will put a bunch of new talent on the market. But the even greater opportunities exist for the industry at large.

    Anil - You're right that Nuconomy also took an investment from WPP...But is also one of WPP's holdings. This tells me that WPP is trying to get its arms around the measurement thing from all angles. Nuconomy represents the mid to lower end of the market, Compete offers the audience measurement piece and now Omniture brings the enterprise-class insights. Not to mention the multiple advertising properties they hold.

    WPP is doing a fine job of amassing the critical components necessary to portray a holistic view of online consumer behavior.

    Anonymous said...

    Hm... Dont see any chances for integration here. Yes Omniture can leverage WPP client base, but its not enough in a long run, technology needs its own space to grow. There should be high level of internal integration in the network as well with a lot of autonomy for Omniture and for this WPP and its companies are just not ready yet. Typical WPP strategy is to buy everything and leave internal rivalery to put everything in its own places. Maybe Omniture in WPP will become more profitable in a short run, but in a long run this move will also put them so behind on inovation and on competitiveness...

    John Lovett said...

    No chances for integration? It’s explicitly stated in their press release?!? The integration will occur at the Omniture Genesis platform, where they will open up the possibility of exploring data collected from 24/7 data sources such as their: Ad management system, SEM system and the custom media audience network. And from TNS, they can integrate industry data from and “Stradegy” (ad frequency and expenditure data). I never said integrations were easy. They will have to work at this – and new technology development must be an independent endeavor, but this isn’t an impediment to innovation…it’s an opportunity.

    Anonymous said...

    John, I dont mean technological integration, I mean mentality and organizational integration. Entire WPP growth strategy untill now was based on agressive acquisitions, without any synergy, internal integration, no vision for organic growth... Every year they just buy more companies from same industries and then leave them to compete with others in the same WPP network...

    John Lovett said...

    Okay, that makes more sense. I agree that WPP does have a hands off approach to managing their acquisitions. But this is also a good thing for Omniture. It means that no one will be messing with their strategy and they have no direct competitors within WPP to worry about. But we will have to wait and see what the future holds.