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© 2016 Adobe Systems Incorporated. All Rights Reserved.
ADOBE DIGITAL ECONOMY PROJECTSEPTEMBER 2016 UPDATE
© 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved.
Main takeaways: September
2
§ In the wake of this summer’s Brexit vote, the U.K. appears to be an attractive destination for travelers. International flights to London Heathrow and London Gatwick are down 8.6% and 8.5% month over month, in contrast to 2.3% decrease in overall prices for all international flights. Hotels in the UK saw a MoMincrease of 3.1% though they are down 18.3% YoY compared to September of 2015
§ Deflation is slowing across the U.K. in select DPI categories, revealing the first signs of inflationary pressures post-Brexit
§ Lower prices for flights to the U.K. as well as MoM declines in prices of flights to Madrid (-5.1%) and Paris (-4.3%) are making flights to Europe cheaper MoM (-5.5%) than international flights, which saw MoM deflation of only 2.3%
§ Labor Day sales in the U.S. contributed to continued deflation for appliances, TVs, and tablets. Appliance prices are down 1.5% between August and September, while TV prices are down 1.0% and tablets 1.3%. TVs, computers, tablets, and electronics have seen double-digit YoY deflation
§ Significant MoM inflation occurred in domestic flights (up 2.4%) where airlines are facing higher fuel prices and employment costs and for computers (1.4%), though both categories are still down YoY (7.0% and 10.3%). Other categories including international hotels, grocery, medical equipment, and non prescription drugs saw prices rise MoM
§ U.S. results signal continued economic stability and low inflation:
§ In the U.S. DPI domestic airfare prices are up from August 2.4% but still down 7.9% from last September, YoY
§ Our U.S. Job Seeking Index shows that online job searches have decreased, reflecting fewer job seekers in the labor market
§ Our U.S. Digital Housing Index shows the largest YoY increase since April in online searches for home purchases and rentals, revealing a strengthening housing market moving into the fall
© 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved.
Adobe Digital Insights Background
Based on analysis of aggregated and anonymous data from Adobe Marketing Cloud:• Adobe Analytics and Adobe Mobile Services
Thousands of brands worldwide including two thirds of Fortune 50 companies rely on Adobe Marketing Cloud:• $7.50 of every $10 spent online with top 500 U.S. retailers go through Adobe Marketing Cloud **• Adobe Marketing Cloud powers:
• 20 of the top 30 U.S. employers
• 9 of 10 largest hotel groups• 7 of 10 largest airlines
** Latest IR Top 500 Report 2015
3
AdobeAnalyt ics
AdobeMobile Services
© 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved.
Economist Advisors
4
Austan Goolsbee, University of Chicago§ Robert P. Gwinn Professor of Economics at The University of Chicago's Booth School of Business
§ Formerly served as President Obama’s Chairman of the Council of Economic Advisers
§ The youngest member of the cabinet of President Obama
Pete Klenow, Stanford University§ Professor, Department of Economics, Stanford University
§ Currently Visiting Scholar, Federal Reserve Bank of San Francisco
§ Member of editorial boards for Econometrica, American Economic Review, Quarterly Journal of Economics and others
© 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. 5
Digital Price Index(DPI)
Job Seeking Index(JSI)
Digital Housing Index(DHI)
© 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. 6
Digital Price Index(DPI)
© 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved.
Methodology – U.K.
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Based on analysis of aggregated and anonymous data• Fisher Ideal Price Index• $6 of every $10 spent online with top 100 European retailers go through Adobe Marketing Cloud **• Based on analysis 1 billion website visits and 100k products sold online
ONS: Consumer Price Index Adobe: Digital Price IndexQuantities Sold No YesProducts/quantities updated Annually Daily
Number of Products 180,000 100k(currently covered categories)
Data Collection Frequency Monthly DailyData Availability Monthly DailyOffline Prices Yes NoLong history Yes NoAll categories of spending Yes No
** Latest IR U.K. Top 500 Report 2015
© 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved.
Adobe DPI in the United Kingdom
8
• Our Digital Price Index in the U.K. for groceries shows that grocery prices have deflated by 2.9% YoY in September. Prices dropped 0.52% between August and September, continuing the trend of lowering food prices while the UK still enjoys pre-Brexit terms of trade with the EU
• For computers, we see YoY deflation of 13.7%. Deflation in this category appears to be slowing, as deflation slowed MoM from -1.0% in July to -0.7% in August to 0.3% in September.
• Similarly TV prices in the UK continue to fall; the DPI shows YoY deflation of 24.6% between September 2015 to September 2016. Deflation appears to be slowing in this category as well as deflation MoM was 1.3% between August and September, down from 2.9% between July and August.
© 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved.
Methodology – U.S.
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Based on analysis of aggregated and anonymous data• Fisher Ideal Price Index• Adobe measures 80% of all online transactions from top 100 U.S. retailers ** • $7.50 of every $10 spent online with top 500 U.S. retailers go through Adobe Marketing Cloud **• Based on analysis of 15 billion website visits and 2.2 million products sold online
BLS: Consumer Price Index BEA: Personal Consumption Expenditures
Adobe: Digital Price Index
Quantities Sold No No YesProducts/quantities updated Every 2 years Monthly Daily
Number of Products 83 thousand (all categories) 83 thousand (all categories) 2.2 million (currently covered categories)
Data Collection Frequency Bi-Monthly Monthly DailyData Availability Monthly Monthly DailyOffline Prices Yes Yes NoLong history Yes Yes NoAll categories of spending Yes Yes NoIndex Type Laspeyeres Fisher Ideal Fisher Ideal
** Latest IR Top 500 Report 2015
© 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved.
Big data in DPI decreases uncertainty
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DPI CPIAppliances 0.15% 0.46%Airfare 0.08% 0.51%Computers 0.28% 0.49%Furniture and bedding 0.07% 0.31%Grocery 0.10% 0.12%Hotels: domestic 0.04% 2.30%Medical equipment and supplies 0.20% 0.39%Nonprescription Drugs 0.18% 0.47%Sporting Goods 0.12% 0.31%Televisions 0.24% 0.60%Toys 0.25% 0.59%
© 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved.
Inflation rates by price ranges
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• Televisions have seen higher-ticket items deflate faster than lower-ticket items
• In computers, models priced above $1,200 showing the least deflation in the category
• Price bins are determined based on the price the product had when originally launched (first price).
© 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved.
The Importance of detail: Black Friday
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• DPI captures the effect of major discount holidays like Black Friday and Cyber Monday because it measures quantities and does so in real-time
• Lowest prices for TVs in 2015 were Thanksgiving and Black Friday
• Data demonstrates retailers trying to start sales earlier – the Sunday and Monday before Thanksgiving saw low prices
© 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved.
Measuring rapidly shifting consumer preferences
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• Electronics see an average of 80% of online spend on new* products**
• 16% of monthly online spend for groceries on new products
* Products that have been available for 1 year or less** A product is defined as an item for purchase which has an unique identifier (such as a SKU)
© 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved.
August 2016 Recap
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MoM: AugusttoSeptemer
MoM: AugusttoSeptember
Difference(percentage)
SameSign?
YoY:CumulativeAugust2015-2016
YoY:CumulativeAugust2015-2016
Difference(percentage)
SameSign?
DPI CPI DPIvs.CPI DPIvs.CPI DPI CPI DPIvs.CPI DPIvs.CPIAppliances 1.8% -0.9% 2.7% No -5.7% -2.9% -2.8% YesComputers -0.4% -0.7% 0.3% Yes -12.2% -6.9% -5.3% YesDomestic Hotels -2.1% -1.5% -0.6% Yes 2.3% 2.5% -0.2% YesFlights -3.6% -5.5% 1.9% Yes -3.2% -3.7% 0.4% YesFurniture and bedding 0.2% -1.2% 1.4% No -3.3% -2.9% -0.5% YesGrocery 0.0% 0.0% 0.0% No -0.9% -1.9% 1.0% YesMedical equipment and supplies -1.0% -0.2% -0.8% Yes -1.3% -0.1% -1.2% YesNonprescription Drugs -0.8% 0.2% -1.0% No -0.3% -1.2% 0.9% YesSporting Goods -0.5% -0.3% -0.2% Yes -5.7% -1.8% -3.9% YesTelevisions -2.9% -1.9% -1.0% Yes -20.9% -20.5% -0.4% YesToys 0.3% -0.1% 0.4% No -5.6% -8.1% 2.5% Yes
© 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved.
September 2016 Summary
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• Main deflation in September:• International flights, appliances, tablets,
televisions
• Main inflation in September:• Domestic flights, computers
YoY MoMAppliances -6.1% -1.5%Computers -10.2% 1.4%Electronics -10.7% -0.5%Flights -3.1% 1.3%Domestic Flights -5.7% 2.4%Intl Flights 0.0% -2.3%Furniture and bedding -3.4% -0.1%Grocery -1.0% 0.2%Domestic Hotels 1.0% -0.3%Intl Hotels -3.7% 0.1%Medical equipment and supplies -0.9% 0.3%Nonprescription Drugs 0.2% 0.1%Sporting Goods -5.5% -0.4%Tablet -20.4% -1.3%Televisions -20.8% -1.0%Toys -6.0% -0.8%
© 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved.
Appliances
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• Adobe DPI shows cumulative deflation of -6.1% YoY (September 2015 to September 2016)
• Main YoY price decreases for Appliances priced between $600 and $1000
• For September 2016, prices decreased -1.5% vs August 2016 MoM
METHODOLOGY:
• The data used contains transactions for ~110 K products• Products include large appliances such as fridges, ovens, washers, dryers as well as smaller appliances such as vacuums, mixers, blenders etc.
© 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved.
Airfare
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• Adobe DPI shows cumulative deflation of -3.1% YoY (September 2015 to September 2016)
• For September 2016, prices increased 1.3% vs August 2016 MoM
METHODOLOGY:
• The data used contains transactions for ~370 K flight routes• Includes associated fees, where applicable
© 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved.
Airfare: domestic
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• Adobe DPI shows cumulative deflation of -5.7% YoY (September 2015 to September 2016)
• Main YoY deflation for flights Oregon, Illinois and Colorado
• Main YoY inflation for Hawaii, Florida
• For September 2016, prices increased 2.4% vs August 2016 MoM
METHODOLOGY:
• The data used contains transactions for ~370 K flight routes• Includes associated fees, where applicable
© 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved.
Airfare: international
19
• Adobe DPI shows cumulative inflation of 0.0% YoY (September 2015 to September 2016)
• Main YoY deflation for flights to Europe and Africa
• Main YoY inflation for flights to South America
• For September 2016, prices decreased -2.3% vs August 2016 MoM
METHODOLOGY:
• The data used contains transactions for ~370 K flight routes• Includes associated fees, where applicable
© 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved.
Electronics
20
• Adobe DPI shows cumulative deflation of -10.7% YoY (September 2015 to September 2016)
• Main YoY price decreases for Electronics priced between $200 and $500
• For September 2016, prices decreased -0.5% vs August 2016 MoM
METHODOLOGY:
• The data used contains transactions for ~1 M products• Products span across dozens of different categories such as televisions, laptops, Blu-ray players, desktops, tablets, wearables, headphones, video games, printers etc..
© 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved.
Electronics: computers
21
• Adobe DPI shows cumulative deflation of -10.2% YoY (September 2015 to September 2016)
• Main YoY price decreases for Computers priced between $700 and $1200
• For September 2016, prices increased 1.4% vs August 2016 MoM
METHODOLOGY:
• The data used contains transactions for ~1 M products• Products span across dozens of different categories such as televisions, laptops, Blu-ray players, desktops, tablets, wearables, headphones, video games, printers etc..
© 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved.
Electronics: televisions
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• Adobe DPI shows cumulative deflation of -20.8% YoY (September 2015 to September 2016)
• Main YoY price decreases for Televisions priced greater than $2000
• For September 2016, prices decreased -1.0% vs August 2016 MoM
METHODOLOGY:
• The data used contains transactions for ~1 M products• Products span across dozens of different categories such as televisions, laptops, Blu-ray players, desktops, tablets, wearables, headphones, video games, printers etc..
© 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved.
Electronics: tablets
23
• Adobe DPI shows cumulative deflation of -20.4% YoY (September 2015 to September 2016)
• Main YoY price decreases for Tablets priced between $350 and $550
• For September 2016, prices decreased -1.3% vs August 2016 MoM
METHODOLOGY:
• The data used contains transactions for ~1 M products• Products span across dozens of different categories such as televisions, laptops, Blu-ray players, desktops, tablets, wearables, headphones, video games, printers etc..
© 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved.
Furniture and Bedding
24
• Adobe DPI shows cumulative deflation of -3.4% YoY (September 2015 to September 2016)
• Main YoY price decreases for Furniture and bedding priced between $100 and $150
• For September 2016, prices decreased -0.1% vs August 2016 MoM
METHODOLOGY:
• The data used contains transactions for ~173 K products• Products include interior and exterior furniture, mattresses and other bedding products
© 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved.
Groceries
25
• Adobe DPI shows cumulative deflation of -1.0% YoY (September 2015 to September 2016)
• For September 2016, prices increased 0.2% vs August 2016 MoM
METHODOLOGY:
• Our dataset covers an estimated 30-40% of all online grocery purchases. It contains transactions for ~195k products• The mix of grocery products bought online is not the same as offline – the top category for online shopping is drinks (nonalcoholic), while for offline shopping it is meat
© 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved.
Hotels: domestic
26
METHODOLOGY:
• The data used contains transactions for ~250 K hotel properties• Includes associated fees, where applicable
• Adobe DPI shows cumulative inflation of 1.0% YoY (September 2015 to September 2016)
• Main YoY inflation for Nevada, Hawaii, Colorado and Tennessee
• Only state showing YoY deflation is New York
• For September 2016, prices decreased -0.3% vs August 2016 MoM
© 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved.
Hotels: international
27
METHODOLOGY:
• The data used contains transactions for ~250 K hotel properties• Includes associated fees, where applicable
• Adobe DPI shows cumulative deflation of -3.7% YoY (September 2015 to September 2016)
• Main YoY inflation for Oceania and North America destinations
• Main YoY deflation for African and European destinations
• For September 2016, prices increased 0.1% vs August 2016 MoM
© 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved.
Medical Equipment and Supplies
28
• Adobe DPI shows cumulative deflation of -0.9% YoY (September 2015 to September 2016)
• Main YoY price decreases for Medical equipment and supplies priced greater than $135
• Main YoY price increases for Medical equipment and supplies priced between $0 and $10
• For September 2016, prices increased 0.3% vs August 2016 MoM
METHODOLOGY:
• The data used contains transactions for 6,000 products• ” includes supportive and convalescent equipment, dressings and first aid kits, and medical equipment for general use
© 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved.
Nonprescription drugs
29
• Adobe DPI shows cumulative inflation of 0.2% YoY (September 2015 to September 2016)
• Main YoY price decreases for Nonprescription Drugs priced greater than $40
• Main YoY price increases for Nonprescription Drugs priced between $15 and $25
• For September 2016, prices increased 0.1% vs August 2016 MoM
METHODOLOGY:
• The data used contains transactions for 16 K products• Includes all non-prescription medicines taken by swallowing, applying on your skin (such as topicals), inhaling, as suppositories, or enemas.
© 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved.
Sporting Goods
30
• Adobe DPI shows cumulative deflation of -5.5% YoY (September 2015 to September 2016)
• Main YoY price decreases for Sporting Goods priced between $40 and $100
• For September 2016, prices decreased -0.4% vs August 2016 MoM
METHODOLOGY:
• The data used contains transactions for ~300 K products• Products include small equipment and accessories (balls, gloves, uniforms) as well as large equipment such as treadmills, weightlifting tools etc.
© 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved.
Toys
31
• Adobe DPI shows cumulative deflation of -6.0% YoY (September 2015 to September 2016)
• Main YoY price decreases for Toys priced between $70 and $200
• For September 2016, prices decreased -0.8% vs August 2016 MoM
METHODOLOGY:
• The data used contains transactions for ~249 K products• Products include toys, games as well as playground equipment
© 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. 32
Job Seeking Index(JSI)
© 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved.
Online job seeking sees steep decline
33
METHODOLOGY:
• Based on analysis of aggregated and anonymous data from more than 1 billion visits to U.S. employment-search websites and top employer career pages
• Adobe Marketing Cloud powers 20 of the top 30 U.S. employers**
• US online job seeking is down 17.9 % YoY in August
• This is indicative of a strong labor market and fewer workers looking for jobs. These data reinforce recent findings from the U.S. Department of Labor stating that U.S. jobless claims are the lowest in decades
© 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved. 34
Digital Housing Index(DHI)
© 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved.
Online housing search growth rises
35
METHODOLOGY:
• Based on analysis of aggregated and anonymous data from more than 2 billion visits to U.S. housing search websites
Online search for purchases and rentals up 17.0% YoY in September, the strongest housing market in the DHI since April 2016, signaling that the housing sector is picking up more steam heading into the fall
© 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved.
Digital Price Index: Fisher Ideal Price Index
∑ 𝑃#$𝑈#$&'(#)'
∑ 𝑃#$&'𝑈#$&'(#)'
∗∑ 𝑃#$𝑈#$(#)'
∑ 𝑃#$&'𝑈#$(#)'
• The Fisher Ideal Price Index uses quantities purchased on the current period (month) and a previous period (previous month) to determine actual consumer’s preferences. Instead of assuming that consumers preferences for what goods to buy are constant over a certain number of years, it is able to account for the fact that they are constantly changing what they buy.
𝐹𝑖𝑠ℎ𝑒𝑟𝜋$ =
© 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved.
Methodology Comparison: Fisher, Laspeyres and Paasche
© 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved.
Annual Cumulative Inflation Rates
© 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved.
Electronics Deflation in Detail
• The average price paid for an iPad mini (all models) has decreased by about 40% since the iPad mini 1 was introduced in November 2012.
• Although the initial price tag of new models remains constant at around $400, the automatic discount of previous models causes the average price to consistently fall: when the iPad mini 3 was introduced at an average price of $450, the price for the iPad Mini 2 was reduced by 25% to $300.
• This data only includes iPad minis sold in retail websites
© 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved.
Inflation Rates by Price Bins, May (MoM)
© 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved.
Inflation Rates by Price Bins, May (MoM) – Cont’d
© 2016 Adobe Systems Incorporated. All Rights Reserved.© 2016 Adobe Systems Incorporated. All Rights Reserved.
Job Seeking Online: Traffic Sources
• Direct traffic to employment-listing websites is higher than search traffic
• Search ranks second