Adobe keeps the marketing cloud wars on the digital disruption agenda

Profile picture for user slauchlan By Stuart Lauchlan December 13, 2015
Summary:
Some upbeat numbers from Adobe made Wall Street happy and kept the marketing cloud wars ticking over.

President and Chief Executive Officer of Adobe Systems Incorporated Shantanu Narayen speaks at the Research in Motion Blackberry developer's conference in San Francisco
Shantanu Narayan

There’s been what seems from the outside to be a bit of a lull in the marketing cloud wars of late with that wretched ‘CMO as IT decision maker’ click-bait from Gartner finally sliding off the corporate keynote slide deck.

That’s not to say that there isn’t still a lot going on, such as last week’s expansion of a digital marketing alliance between Adobe and Accenture.

Under a new three-year agreement, the two firms will develop technology services and solutions designed to help customers in life science, healthcare, and financial services organizations in North America and Europe.

The two firms will create a dedicated team with industry and digital marketing experience, sales personnel, and developers to integrate Adobe Marketing Cloud solutions with digital marketing services from Accenture Interactive. Accenture will expand its Adobe practice to deliver digital marketing solutions to clients at scale.

This is an expansion of an earlier tie-up to deliver the Accenture Customer Engagement (ACE), a cloud-based managed digital marketing service built on the underlying Adobe Marketing Cloud.

For Adobe CEO Shantanu Narayan, such alliances are reflective of both interest in digital marketing, but also in wider enterprise digital disruption, arguing that he sees:

digital disruption as this conversation that's happening in every single boardroom and the awareness and the recognition that the customer journey and digital experience is fundamental to making that transformation. We hear that everywhere we go.

I think marketing departments, CIOs, Chief Revenue Officers are recognizing that a platform is essential to helping with this particular transformation. What's fuelling our business is that the importance of digital transformation is now a board-level discussion rather than just a practitioner’s.

At that senior board level, the presence of the likes of Accenture as a partner is clearly a useful door-opener. Narayan says:

[The] announcement with Accenture just highlights how we can even further accelerate in the US what we're doing in healthcare, as well as in financial services with them.

An ecosystem of global partners allows us to scale Adobe Marketing Cloud to better engage with customers at every touchpoint. Eight of the 10 largest agencies and eight of the 12 largest system integrators have built digital marketing practices around Adobe Marketing Cloud.

Traction

So for Adobe, the focus on digital marketing and its marketing cloud continues unabated. Narayan cites some impressive stats to back up his claim that the firm continues to demonstrate traction in the space.

For its recent fourth quarter, Adobe Marketing Cloud revenues were $352 million, built on deals including Home Depot, Etihad Airlines, McDonald’s, Comcast Cable and Kaiser. Narayan says:

Adobe manages over 40 trillion customer data transactions through Adobe Marketing Cloud every year. And we are viewed as the expert in reporting and predicting major retail and consumer trends.

Adobe Marketing Cloud measures 80% of all online transactions from the top 100 US retailers, and over $7.50 out of every $10 spent online with the top 500 US retailers. Our widely covered Adobe Digital Index holiday shopping report measured $11 billion in sales from Black Friday through Cyber Monday and revealed that a third of sales came from mobile devices.

Key to this is the end-to-end nature of the Adobe offering, he adds:

We clearly have the most comprehensive integrated offering. I don't think that's in question. There are a number of players who are offering point solutions and we recognize that we have to deliver best-of-breed, but we have to integrate it better than ever before.

So we have a number of point product competitors. We have a number of the large enterprise vendors who also look at marketing as an opportunity. I would say for the most part our offering is clearly differentiated and the distinction between us and others as we keep innovating should continue to increase.

Narayan sees a major differentiator as being Adobe’s emphasis on the multi-platform customer experience:

The focus that we have for the digital marketing business in the Marketing Cloud, in particular, is how can we enable people to have a great experience across mobile devices, tablets, and create that compelling web experience that people want. From our point of view, everything starts with the content platform and the data intelligence.

That means drilling down on data management, he explains:

It's a means to both how are you spending your advertising dollars and ensuring that you get the return of investment on that? And the advertising part is just a small portion of our overall marketing cloud revenue as well as our offering.

So it's an important strategic part to enable people to understand who their customers are, the demographics, the profiles, so that they can effectively give them the offering that they need.

At the end of the day, it all comes back to that wider digital disruption agenda item, Narayan concludes:

For businesses, the digital disruption topic is absolutely dominating boardroom conversations. We realized that a direct compelling digital experience is so critical to enabling this transformation and our lead in digital marketing solutions enables all of these customers to make the transition happen.

My take

Adobe’s fourth quarter numbers made Wall Street happy last week.

Net income grew 153% to $222 million on revenue up 22% to $1.31 billion. For the full year, net income was $629 million vs. $268 million on revenue up 16% to $4.48 billion.

When the firm made its decision to move to a subscription-only model, there was a good deal of FUD among both customers and commentators. But the company has held its nerve and the returns are starting to show.