Adobe steps up AI-powered marketing to take on rivals
(Bloomberg) -- Adobe Systems Inc., the company best known for Photoshop, has lately been spending its time trying to figure out what makes consumers tick.
The software maker has been quietly undertaking a project to help corporate customers automate their marketing efforts, part of an accelerated push into artificial intelligence. Called Perfect Path, the prototype system aims to use massive amounts of data and machine learning to analyze consumer behavior. The plan is to enable advertisers to more precisely target their customers and find the best way to persuade them to buy something.
Adobe Chief Executive Officer Shantanu Narayen has steered the company to diversify after decades of relying on Photoshop and other creative software used to alter digital media. The company successfully adopted a cloud-based subscription business model, and Adobe shares have soared on investor enthusiasm for its marketing and analytics efforts. Now, Narayen’s next goal is to turn the 35-year-old software maker into an AI powerhouse to enable the next generation of marketing for customers including Coca-Cola Co. and AT&T Inc.
To succeed in the burgeoning marketing-cloud business, though, Adobe will have to take on rivals such as Oracle Corp., Salesforce.com Inc. and International Business Machines Corp. While the company has made strides, sales growth in its advertising unit has lagged behind gains in its main creative software, despite competing in a larger overall market with more room to expand.
“Using artificial intelligence could be a game-changer,’’ Brad Rencher, an Adobe executive vice president, said in an interview. “Marketers think about the different paths for someone to go to their sites. Artificial intelligence can map out all the possible journeys of interactions."
The project would craft ad-targeting strategies based on background details sourced from brands, including a customer’s age, location, lifestyle, internet browser habits and shopping patterns -- even how frequently they visit a physical store. Adobe’s artificial intelligence tool, Sensei, would crunch all that data and come up with a recommendation on the best method for targeting that customer, including the best medium for communication.
The system is also designed to learn from its mistakes. If the tool gets no response when contacting a customer with personalized emails, it may choose instead to send a text message reminding customers about a sale on items they like or a shopping cart they abandoned on a store’s website. Retailers, the travel industry and financial services would all be target industries for the product, Adobe said.
Perfect Path, still officially in the concept stage, is emblematic of Adobe’s broader push to use artificial intelligence to challenge Oracle, Salesforce, IBM and Vista Equity Partners LLC’s Marketo in the $27 billion digital-marketing industry. That market should reach $53.1 billion in 2020, Adobe has estimated. The San Jose, California-based company has sought to leverage its creative software and clients in the marketing space, since many advertisers already use Adobe products to create campaigns.
Some of Adobe’s rivals have also sought to integrate AI to automate some functions for marketers, most notably Salesforce and IBM, but Adobe’s proliferating suite of advertising applications may prove helpful in recruiting existing customers to this new offering.
“One of the benefits of having the full Adobe stack is a lot of the products speak well to each other,” said Rob Roy, chief digital officer for Adobe customer Sprint Corp. “I think that’s where Oracle and IBM have fallen short.”
Adobe will unveil the project as part of a sneak peek for corporate clients and the general public at its annual Summit conference in Las Vegas on Wednesday, at an event co-hosted by comedian Leslie Jones.
Adobe’s shares gained 1 percent to $215.99 at 12:16 p.m. in New York. Its stock had climbed 67 percent in the past 12 months through Tuesday’s close.
The company made a serious foray into marketing with its 2009 acquisition of Omniture Inc., whose software managed advertising campaigns. While investors have been bullish on Adobe’s transition to a subscription-payment model away from lump-sum licenses, they’ve also been eager to see more consistent acceleration in the company’s marketing business. Sales in the division grew 16 percent to $554 million in the most recent quarter, slower than the digital-media unit, which posted a gain of 28 percent. Creative software brings in more than double the revenue of digital marketing.
While Adobe has touted its strides in using artificial intelligence to help clients create profiles on their customers, the company acknowledged that the advancements may make some leery amid a heightened focus on digital privacy in the wake of the Facebook Inc. scandal involving data sharing with political-advertising firm Cambridge Analytica.
“It’s a totally new world now, and I think that brands, media companies and individuals are all becoming very aware of this new frontier of privacy,” said Ann Lewnes, Adobe’s chief marketing officer. “I think consumers need to understand their options to opt out and to take action themselves to protect themselves. We all need to act responsibly -- we need transparency.”