Adobe Powering A Growing Premium Video Ad Market

According to a comScore report, 2012 U.S. Digital Future in Focus, in 2011, 4.8 trillion display ad impressions were delivered across the web in the U.S. as brand advertisers shifted to digital marketing. The report says that large brand advertisers continued to invest in digital advertising last year. In the quarter ended December 2011, the number of advertisers delivering more than one billion display ad impressions grew 38% over the year to more than 145. The number of advertisers delivering more than three billion impressions grew 77% over the year to 46. The researcher believes that the growth of digital investment among these advertisers suggests increasing comfort with the medium in terms of delivering effective, brand-building advertising to the desired consumer targets. To catch onto this growing market, digital media giant Adobe is expanding their product portfolio.

Adobe’s Financials
Adobe’s (Nasdaq:ADBE) Q1 revenues grew 1.5% over the year to $1.045 billion, shy of market estimates of $1.053 billion. EPS of $0.57 fell a cent from previous year’s $0.58, but was in line with Street’s projected earnings of $0.57.

By segment, Adobe’s digital media revenues fell 4% over the year to $730 million. Digital marketing revenues, however, grew 22% to $260 million.

For the current quarter, Adobe expects revenues of $1.09 billion-$1.14 billion with EPS of $0.57-$0.61. The market was looking for revenues of $1.102 billion with EPS of $0.60. The company expects to end the current year with revenues growing 6%-8% over the year, with EPS of $2.38-$2.48. Analysts are projecting earnings of $2.42 per share.

Adobe’s Product Expansion
Adobe continued to drive their digital media and marketing strategy by launching new products last quarter. They recently launched Adobe Photoshop Touch for the iPad. The app is already available for Android-based tablets and has features that include capabilities for creating and sharing images. Over the year, Adobe plans to continue to launch updated versions of their six touch apps.

Earlier in 2012, Adobe launched the first ever fully integrated digital video solution. Known as Project Primetime, the solution powers  TV-like experiences for ad-driven videos via the web and delivers premium video and ad content across platforms. The offering integrates Adobe’s streaming technologies, content protection, analytics, and optimization with their video advertising platform.

They are also working to release Adobe Creative Cloud, a cloud-based offering that will include their Creative Suite desktop products along with web services, online storage, website hosting, e-commerce offerings, and connectivity with their apps and social networking features. Adobe will be selling these services through a subscription-based model and will let users receive product updates and access to newer solutions for content creation.

Adobe’s stock is trading at $34.31, with a market capitalization of $17.00 billion. It touched a 52-week high of $35.99 in May 2011.