Personal blog of Yzmir Ramirez

For years, marketers have been trying to optimize the online shopping experience to better understand their customers and deliver more customized interactions that ultimately drive more sales. Artificial intelligence was supposed to accelerate that, and today Adobe announced enhancements to Adobe Target and Adobe Experience Manager that attempt to deliver at least partly on that promise.

Adobe has been trying to lift the enterprise side of its business for some time, and even though they are well on their way to becoming a $10 billion company, the potential for even more revenue from the enterprise side of the business remains tantalizing. They are counting on AI to help push that along.

Adobe’s Loni Stark says companies are looking for more sophisticated solutions around customization and optimization. Part of that involves using Adobe’s intelligence layer, which they call Sensei, to help marketers as they tweak these programs to drive better experiences.

For starters, the company wants to help users choose the best algorithms for any given set of tasks. Adobe is bringing AI in to assist with a tool it released last year called Auto-Target. “One of the challenges marketers face has been which algorithms do you use, and how do you map them to your personalization strategy. We are enabling Adobe Sensei to choose the best algorithm for them.” She says giving them a smart assistant to help choose should make this task much less daunting for marketers.

Adobe is also bringing some smarts to layout design with a new tool called Smart Layouts, first introduced in March at Adobe Summit. The idea here is to deliver the right layout at any given time to allow marketing teams to scale personalization and increase the likelihood of action, which in marketing speak means buying something.

Once again the company is letting AI guide the process to generate different layouts automatically for different segments, depending on visitor behavior at any given moment. That means a retailer should be able to deliver ever more granular pages based on what it knows about visitors as they move through the shopping process. The more customized the experience, the more likely the shopper turns into a buyer.

Adobe is also looking at new delivery channels, particularly voice, as devices like the Amazon Alexa become increasingly popular. As with the web, mobile, print and other delivery approaches, marketers need to be able apply basic tasks like A/B testing on different voices or workflows, and the company is building these into their tools.

All of these new features are part of Adobe’s ongoing attempt to streamline its marketing tools to make life easier for its customers. By using artificial intelligence to help guide the workflow, they hope to drive more revenue from the digital experience side of the house. While these tools should help, Adobe still makes the vast majority of its money from Creative Cloud. The Digital segment still lags at $586 million (up 18 percent YoY) out of total quarterly revenue of 2.20 billion in the most recent report in June.

The company spent a hefty $1.68 billion in May to snag Magento. They are due to report their next quarterly report on September 18th, and it will be interesting to see if the Magento acquisition and increasing use of artificial intelligence can help continue to grow this side of the business.

Adobe reported its Q2 FY’18 earnings yesterday and the news was quite good. The company announced $2.2 billion in revenue for the quarter up 24 percent year over year. That puts them on an impressive $8.8 billion run rate, within reach of becoming the next $10 billion software company (or at least on a run rate).

Revenue was up across all major business lines, but as has been the norm, the vast majority comes from the company’s bread and butter, Creative Cloud, which houses the likes of Photoshop, InDesign and Dreamweaver, among others. In fact digital media, which includes Creative Cloud and Document Cloud accounted for $1.55 billion of the $2.2 billion in total revenue. The vast majority of that, $1.30 billion was from the creative side of the house with Document Cloud pulling in $243 million.

Adobe has been mostly known as a creative tools company until recent years when it also moved into marketing, analytics and advertising. Recently it purchased Magento for $1.6 billion, giving it a commerce component to go with those other pieces. Clearly Adobe has set its sights on Salesforce, which also has a strong marketing component and is not coincidentally perhaps, the most recently crowned $10 billion software company.

Moving into commerce

Adobe CEO Shantanu Narayen speaking to analysts on the post-reporting earnings call sees Magento as filling in a key piece across understanding the customer from shopping to purchase. “The acquisition of Magento will make Adobe the only company with leadership in content creation, marketing, advertising, analytics and now commerce, enabling real-time personalized experiences across the entire customer journey, whether on the web, mobile, social, in-product or in-store. We believe the addition of Magento expands our available market opportunity, builds out our product portfolio, and addresses a key underserved customer need,” Narayen told analysts.

If Adobe could find a way to expand that marketing and commerce revenue, it could easily surpass that $10 billion revenue run rate threshold, but so far while it has been growing, it remains less than half of the Creative revenue at $586 million. Yes, it grew at an 18 percent year over year clip, but it seems as though there is potential for so much more there and clearly Narayen hopes that the money spent on Magento will help drive that growth.

Battling with Salesforce

Even while it was announcing its revenue, rival Salesforce was meeting with Marketing Cloud customers in Chicago at the Salesforce Connections conference, a move that presented an interesting juxtaposition between the two competitors. Both have a similar approach to the marketing side, while Salesforce concentrates on the customer including CRM and service components. Adobe differentiates itself with content, which shows up on the balance sheet as the majority of its revenue .

Both companies have growth in common too. Salesforce has been on quite a run over the last five years reaching $3 billion in revenue for the first time last quarter. Adobe hit $2 billion for the first time in November. Consider that prior to moving to a subscription model in 2013, Adobe had revenue of $995 billion. Since it moved to that subscription model, it has reaped the benefits of recurring revenue and grown steadily ever since.

Each has used strategic acquisitions to help fuel that growth with Salesforce acquiring 27 companies since 2013 and Adobe 13, according to Crunchbase data. Each has bought a commerce company with Adobe buying Magento this year and Salesforce grabbing Demandware two years ago.

Adobe has the toolset to keep the marketing side of its business growing. It might never reach the revenue of the creative side, but it could help push the company further than it’s ever been. Ten billion dollars seems well within reach if things continue along the current trajectory.

At the Adobe Summit in Las Vegas this week, privacy was on the minds of many people. It was no wonder with social media data abuse dominating the headlines, GDPR just around the corner, and Adobe announcing the concept of a centralized customer experience record.

With so many high profile breaches in recent years, putting your customer data in a central record-keeping system would seem to be a dangerous proposition, yet Adobe sees so many positives for marketers, it likely believes this to be a worthy trade-off.

Which is not to say that the company doesn’t see the risks. Executives speaking at the conference continually insisted that privacy is always part of the conversation at Adobe as they build tools — and they have built in security and privacy safeguards into the customer experience record.

Ben Kepes, an independent analyst says this kind of data collection does raise ethical questions about how to use it. “This new central repository of data about individuals is going to be incredibly attractive to Adobe’s customers. The company is doing what big brands and corporations ask for. But in these post-Cambridge Analytica days, I wonder how much of a moral obligation Adobe and the other vendors have to ensure their tools are used for good purposes,” Kepes asked.

Offering better experiences

It’s worth pointing out that the goal of this exercise isn’t simply to collect data for data’s sake. It’s to offer consumers a more customized and streamlined experience. How does that work? There was a demo in the keynote illustrating a woman’s experience with a hotel brand.

Brad Rencher, EVP and GM at Adobe Experience Cloud explains Adobe’s Cloud offerings. Photo: Jeff Bottari/Invision for Adobe/AP Images

The mythical woman started a reservation for a trip to New York City, got distracted in the middle and was later “reminded” to return to it via Facebook ad. She completed the reservation and was later issued a digital key to her room, allowing her to bypass the front desk check-in process. Further, there was a personal greeting on the television in her room with a custom message and suggestions for entertainment based on her known preferences.

As one journalist pointed out in the press event, this level of detail from the hotel is not something that would thrill him (beyond the electronic check-in). Yet there doesn’t seem to be a way to opt out of that data (unless you live in the EU and will be subject to GDPR rules).

Consumers may want more control

As it turns out, that reporter wasn’t alone. According to a survey conducted last year by The Economist Intelligence Unit in conjunction with ForgeRock, an identity management company, consumers are not just willing sheep that tech companies may think we are.

The survey was conducted last October with 1,629 consumers participating from eight countries including Australia, China, France, Germany, Japan, South Korea, the UK and the US. It’s worth noting that survey questions were asked in the context of Internet of Things data, but it seems that the results could be more broadly applied to any types of data collection activities by brands.

There are a couple of interesting data points that perhaps brands should heed as they collect customer data in the fashion outlined by Adobe. In particular as it relates to what Adobe and other marketing software companies are trying to do to build a central customer profile, when asked to rate the statement, “I am uncomfortable with companies building a “profile” of me to predict my consumer behaviour,” 39 percent strongly agreed with that statement. Another 35 percent somewhat agreed. That would suggest that consumers aren’t necessarily thrilled with this idea.

When presented with the statement, Providing my personal information may have more drawbacks than benefits, 32 percent strongly agreed and 41 percent somewhat agreed.

That would suggest that it is on the brand to make it clearer to consumers that they are collecting that data to provide a better overall experience, because it appears that consumers who answered this survey are not necessarily making that connection.

Perhaps it wasn’t a coincidence that at a press conference after the Day One keynote announcing the unified customer experience record, many questions from analysts and journalists focused on notions of privacy. If Adobe is helping companies gather and organize customer data, what role do they have in how their customers’ use that data, what role does the brand have and how much control should consumers have over their own data?

These are questions we seem to be answering on the fly. The technology is here now or very soon will be, and wherever the data comes from, whether the web, mobile devices or the Internet of Things, we need to get a grip on the privacy implications — and we need to do it quickly. If consumers want more control as this survey suggests, maybe it’s time for companies to give it to them.

For years, the goal of marketers was to understand the customer so well, they could respond to their every need, while creating content specifically geared to their wishes. Adobe Cloud Platform has long acted as a vehicle to collect and understand customer data inside the Adobe toolset, but today Adobe took that a step further.

The company hopes to transform Adobe Cloud Platform into a company’s experience record keeping system, a central place to collect all the data you may have about a customer from both the Adobe Cloud Platform and external data sources.

Suresh Vittal, vice president of platform and product at Adobe Experience Cloud says tools like CRM were intended to provide a record keeping system for the times, and they were fine in a period when entering and retrieving data was state of the art, but he thinks there needs to be something more.

“A lot of investments for past generations of software evolution have been around batch-based operational systems. While they were necessary back then, they are not sufficient where these brands are going today,” he told TechCrunch.

Adobe Systems world headquarters in San Jose, California USA Photo: Getty Images Lisa Werner / Contributor

Over time, as companies gather more and data, Adobe believes they need something that centers around the dynamic interactions brands are having with customers. “We believe every customer needs an experience system of record, a central [place to record] where the brand brings together experience data, content and a unified profile to power the next generation of experience,” he said.

To achieve this goal, the company is doing more than creating a new construct, it has built a new data model along with tools for data scientists to build custom data models.

Of course where there is data, there needs to be some machine learning and artificial intelligence to help process it, especially in a case where the goal is to pull disparate data into a central record. Adobe’s particular flavor of AI is called Sensei and the company is giving developers access to the some of the same AI algorithms it uses in-house to build its platform.

Any time you start pulling data together from a variety of sources to create a central record keeping system about a customer, there are huge privacy implications, and even more so with GDPR coming on line at the beginning of May in the EU. Vittal says the company has built in a governance and compliance layer into the toolset to help companies comply with various regulations around sharing data.

“You cannot turn all of this data into something useful without safeguards— semantics and control.” He says this involves creating a data catalogue, labeling data in the record and associating rules with each type. That way, data emanating from the EU will need to be handled a certain way, just as any personally identifiable information needs to be safeguarded.

This is where the machine learning comes in. “When you create data across the experience system of record, the data catalog recognizes [certain types of] data and recommends labels based on types of data using machine learning.”

All of this is very likely an attempt to compete with Salesforce, which provides sales, marketing and customer service stitched together with their own artificial intelligence layer, Einstein. The recent $6.5 billion MuleSoft purchase will also help in terms of pulling data of disparate enterprise systems and into the various Salesforce tools.

The tools and services announced today give Adobe a fully intelligent, machine learning-driven solution of their own. The whole notion of a customer experience record, while a bit of marketing speak, also serves to help differentiate Adobe from the pack.

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