This document provides a summary of Adobe Digital Insights' 2016 Holiday Recap Report. Some key findings include: - The 2016 US holiday shopping season saw $91.7 billion in sales, an 11% increase year-over-year, driven by strong late season shopping. - Smartphone usage increased but conversions lagged desktop, representing a $4.5 billion opportunity cost. - Larger retailers grew sales more than smaller retailers, widening the "digital divide". - International markets like the UK, France, and Canada saw similar or stronger growth than the US.

1. HOLIDAY RECAP
REPORT 2016
ADOBE DIGITAL INSIGHTS

2. Methodology
Adobe
Analytics
Adobe
Mobile Services
Adobe
Social
Most comprehensive and accurate report of its kind in industry
 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 **
 Report based on analysis of 1 trillion visits to over 4,500 retail websites and 55million SKUs
 2016 prediction within 0.13% accuracy
 96M Social Mentions From Sept 2015 - Dec 2015 & Aug 2016 - Dec 2016
Data from different Adobe Marketing Cloud solutions:
Based on analysis of aggregated and anonymous data
** Latest IR Top 500 Report 2016
Adobe
Marketing Cloud

3. Key Findings
1
2
3
4
Holiday season totals $91.7B and 11% year-over-year growth, driven by late season shopping
Smartphone usage increased, but created $4.5B opportunity cost from Thanksgiving – Cyber
Monday
The digital divide continues to increase: large retailers grew by 12.6% compared to others at 4.7%
The UK, France and Canada grew the same or more than the US (11%, 14% and 14% respectively)5
The Digital Price Index revealed steeper discounts this Black Friday, but higher price increases in
December

4. 1 / Holiday season totaled $91.7B and 11% year-over-year growth
Of the big three days, Black Friday grew the most
 Thanksgiving grew the same as the season
($1.93B Ι 11.5% YoY Growth)
 Black Friday grew fastest
($3.34B Ι 21.6% YoY Growth)
 Cyber Monday all-time spending record
($3.45B Ι 12.1% YoY Growth)
 Black Friday will catch Cyber Monday in 2017 if
patterns hold steady
More days generated over a billion dollars
 57 of 61 days exceeded $1B (4 of those days
over $2B, 2 over $3B)
Strong growth occurred late in the season
 Last two weeks grew by 19.2% compared to first
two weeks at 1.4%
 The $25B revenue mark was hit around the
same time as 2015, yet the $75B revenue mark
was hit 6 days quicker, indicating increased
spend later in the season

5. 1 / Growth driven by late season shopping
Revenue outpaced visit growth on 56 out of 61 days due to nominal increase in AOV and conversion
 Retailers were more effective at converting visitors: Conversion rates increased to 2.70% (vs. 2.63% last year), AOV increase d 0.8%
 Visit growth was consistently in the single digits until late in the season; even the major shopping weekend saw low growth ( 7.7%)
 Low visit growth suggests retailers may be reaching a visit plateau as fewer net new customer shop online
Strong growth occurred late in the season as consumers took advantage of later shipping options
 Seven days in last half of December grew in excess of 20% YoY

6. 1 / Search boosted Black Friday performance
Black Friday closed the performance gap with
21.6% YoY revenue growth vs. 12.1% on Cyber
Monday
 Black Friday closed the revenue gap with
Cyber Monday by $220M
Search activity and spend increased more on
Black Friday than on Cyber Monday
 Search spend increased 16% YoY on Black
Friday, compared to 5% YoY on Cyber
Monday
 CPCs were slightly lower on Black Friday
than on Cyber Monday (-7%)
 Impressions on Black Friday increased 20%
YoY, while Cyber Monday was essentially
flat (-2%)
Mobile search increased
 Mobile search doubled impressions on
both days (+101%)

7. 1 / Click and Collect and real-time delivery opportunity could be worth $2B in 2017
Once Cyber Monday passed, conversion rates
increased and AOV decreased until it was too late
to ship
 Conversion rates hold steady up to Thanksgiving,
averaging 2.4% the two weeks before
 Conversion rates increase 31% to 3.2% for the
two weeks after the shopping weekend
 AOV shrinks by -12% during the same
timeframe
Click and Collect could generate an additional $2B
 Emphasizing Click and Collect could promote
steady shopping behavior and maintain
conversion rates, which currently decrease by
29.8% from December 20-23 Nov. 29 –
Dec. 19
Dec. 20 –
Dec. 30 Difference
Conversion 3.15% 2.21% -29.8%
Actual Revenue $4.94B
Adjusted Revenue $7.04B $2.10B

8. 2 / Black Friday offered higher discounts, but December prices rebounded
Prices increased 3.5% in December 2016 vs. 1.9%
last year
• Overall, prices were down -6.1% in November 2016
(compared to -5.5% last year)
• Prices rebounded 3.5% in December, increasing
above level seen last year (1.9%)
• Prices online for Televisions dropped later in
November 2016 than in 2015, with more discounts
during the Black Friday week (Monday 11/21
through Cyber Monday), which accounted for more
than half of all Televisions units purchased between
November and December
• Television prices then increased more in December
2016 than they did in December 2015, a sign that
retailers were able to capitalize on later shopping

9. Smartphone traffic totaled 41% for the season (5.1% YoY), and is only slightly higher after Cyber Monday than earlier in the season
(40.3% vs 38.6%)
 Smartphone conversion jumps as the holiday goes full force (1.28% average conversion rate before the major shopping weekend,
increases to 1.65% after)
 Smartphone conversion is highest on Cyber Monday at 2.8%, but is still 26% below the desktop season average of 3.6%
Smartphone share of sales totaled 21%. (+23.5% YoY)
3 / Smartphone traffic increased but conversion still lags desktop

10. 3 / Consumer intention to buy continued to be lower on smartphones
Throughout the season, desktop visits converted at 2.4x the rate of smartphone visits (3.6% vs. 1.5%, respectively)
 The conversion gap remains consistent throughout the holiday season
 Conversion increases at the same rate on both devices, until it’s too late for shipping

11. Major Shopping Days and Holidays Turn Mobile
 Super Saturday (11/26) and Thanksgiving Day were top performers for mobile share of visits and revenue
 Thanksgiving Day increased mobile visits and revenue by 11.8% and 37.9% YoY, respectively
 Christmas Eve was the most mobile day in terms of share of visits from a mobile device, but lowest day in terms of sales
 Christmas Day drove the most mobile share of purchases, but second only to Christmas Eve as the lowest revenue day of the
season
3 / Mobile is strongest on some of the biggest revenue days as well as the smallest.

12. 3 / The mobile shift created a $4.5B opportunity cost from Thanksgiving to Cyber Monday
Smartphone visits remain less valuable than desktop, causing a drag on potential revenue
 During the 5-day holiday weekend smartphone conversion rates were less than half of desktop (2.2% vs. 5.1%) and tablet conversion
was nearly a full point lower
 With total visits up only 7.7% YoY it would seem that the multi-device experiences aren’t the normal consumer behavior.
Opportunity cost = Device Conversion Ratio * Actual 2016 Revenue by Device

13. 4 / Growing retailers adapted their marketing mix better than others.
Retailers that saw the most growth on Black Friday and Cyber Monday saw bigger shifts in how consumers accessed their site than
those with lower growth rates
 Display and Social had the largest traffic increases (193% and 27% YoY, respectively) for higher growth firms vs. 36% and 12% for
lower growth
 High performing websites saw more traffic from marketing outreach programs leveraging Email, Social, Referral and Display and less
from Search and Direct channels which rely on the consumer to take the initiative

14. During consumer’s planning phase of holiday shopping (November 1-23), websites who grew the most saw more than half of their
traffic come from mobile devices (54% vs. 46%)
 Once the major shopping weekend hit, the mobile gap disappeared and both websites who grew vs. those who didn’t tracked the
same share of mobile traffic (47%)
4 / High growth websites strategically took advantage of mobile browsing

15. 4 / Only 40% of retailers experienced above average growth on the two biggest days
Retail websites which grew averaged 48%
revenue growth on Black Friday and Cyber
Monday
 The remaining websites actually saw an
8% decline
Retail websites with higher revenue growth
improved other KPIs on Black Friday and
Cyber Monday as well
 Drove more traffic: 18% vs. -1%
 Improved conversion by 9% (vs. 1%)
 Had higher AOV: 11% vs. -3%
Growth isn’t necessarily associated with
‘mobile’. Higher growth websites saw 5%
more traffic come from desktop shoppers
than lower growth websites

16. Large retailers grew more throughout the
holiday season
 Large retailers grew by 12.6%, compared
to others at 4.7%
And had exceptional performance from
Thanksgiving – Cyber Monday:
 More RPV: 37% for each visit
 More shopping carts: Consumers were
19% more likely to convert (4.2% vs. 3.6%)
 Larger shopping carts: Consumers spent
15% more per basket
Larger shopping carts were driven by more
items (+27%) at a lower price (-9%)
 Note: Differences aren’t a result of mobile
devices, as share of revenue is the same
for both groups at 35%
4 / Top retailers widened the digital divide

17. Belgium, France and Canada saw stronger growth than the US, while ANZ and Austria were essentially flat
 The UK tracked the US up +11% YoY to $30.8B
 Growth in the UK came from a combination of Black Friday sales starting earlier in the week and late season ordering on Monda y,
Dec. 19
5 / International growth varied across countries

18. The UK is the most mobile with $3.80 out of every $10 coming from a mobile device
 France is the least, with mobile accounting for $2.50 out of $10
5 / Mobile visits outpace mobile revenue across the globe

19. In the US, growth came late in the season as retailers improved their ability to ship and deliver in a shorter time frame
In countries outside the US, shopping patterns changed based on promotional activity by retailers
 ANZ saw more sales timed around sales events (November Click Frenzy, Black Friday, Cyber Monday)
5 / Retail promotions shaped consumer behavior

20. Retailers saw the same pattern of online sales from smartphones and desktops as 2015
 As the strongest performer in Europe with 11% growth, the UK saw increases pretty much throughout the season
 Several UK retailers made “Black Friday” a weeklong event
 France saw the most change with both early and late increases in holiday spend. The traditional “shop on Sunday” is starting to even
out.
 Other that the late season shopping, Germany was business as usual this year.
5 / European spending patterns remained consistent year-over-year

21. 5 / The last Monday before Christmas (Dec 19th) was a major shopping day in most countries.
Late shopping helped drive the holiday
season totals across countries
 Across countries, growth on Dec 19 th was
nearly 4x that of the season (34% vs. 9%)
Consumers focused on xx from major retailers
– both pure plays and brick and mortar.

22. 5 / Spend shifted to key shopping days in other countries
Boxing Day (Dec. 26) shifted to Black Friday
and Cyber Monday in ANZ
 Consumers spent $32M less on Boxing Day
and $93m more on Black Friday and Cyber
Monday
 UK Boxing Day growth was in line with the
overall season (+11%)
 Canadian Boxing Day grew slower than
overall season 5% vs. 13%
Canada and the UK showed growth on Cyber
Monday at the expense of Black Friday

24. Measuring rapidly shifting consumer preferences
• Electronics see an average of 77% of
online spend on new* products**
• 17% 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)

25. Inflation rates by price ranges
• Televisions have seen higher-ticket items
deflate faster than lower-ticket items in 2015
• For computers, mid-range models priced
between $700 and $1,200 showed the
highest deflation last year
*Price bins are determined based on the price the product had when originally launched
(first price).

26. Inflation by price ranges
• Tablets have seen higher-ticket items
deflate faster than lower-ticket items
• The greatest price decrease and increase in
November and December were for tablets
priced between $350 and $600
*Price bins are determined based on the price the product had when originally launched
(first price).

27. Inflation by price ranges
• The highest priced televisions have have
seen faster deflation than lower priced
items
• The greatest price decrease in November
and increase in December were for TVs
priced between $600 and $1,000
*Price bins are determined based on the price the product had when originally launched
(first price).

28. Inflation by price ranges
• Mid-range computers have seen faster
deflation than lower and higher priced
models
• The greatest price decrease in November
were for mid range computers between
$700 and $1,200 while the greatest price
increase in December were for lower priced
models between $300 and $700
*Price bins are determined based on the price the product had when originally launched
(first price).

29. Share of Visits and Sales Breakdowns

30. Share of Visits and Sales Breakdowns

31. Spending steadily increases until mid-December
Retailers see the same pattern of online sales from smartphones and desktops as 2015
 Smartphone share of revenue on Black Friday increased 47% in 2016, approaching levels seen on Cyber Monday
 Cyber Monday still sees the bulk of purchases from desktops (69% in 2016)

32. Thanksgiving – Cyber Monday mobile trends
Between Thanksgiving and Cyber Monday, mobile share of revenue increased to 36% (+16% YoY)
 Mobile share of visits increased 11%, accounting for over half of all traffic (55%) during this same time period
 The shopping event starts on mobile and ends on desktop as people return to work
 Mobile accounts for 37% more revenue on Thanksgiving compared to Cyber Monday