The document discusses an Adobe Digital Economy Project that uses aggregated online transaction and website visitation data to construct several economic indices, including a Digital Price Index, Digital Housing Index, and Job Seeking Index. It describes the methodology and key findings of these indices, such as electronics and television price deflation, grocery inflation, and a decline in online job seeking. The document also provides background on Adobe's digital marketing tools and the economists involved in the project.

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ADOBE DIGITAL ECONOMY PROJECT

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Adobe Spokespeople
2
Mickey Mericle,
Vice President, Marketing
Insights & Operations
Tamara Gaffney,
Principal Research Analyst,
Adobe Digital Index

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Economists Involved
3
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
 Formerly Senior Economist, Federal Reserve Bank of Minneapolis
 Currently Visiting Scholar, Federal Reserve Bank of San Francisco
 Member of editorial boards for Econometrica, American Economic Review,
Quarterly Review of Economics, Journal of Economic Perspectives and others

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Adobe Digital Index Background
4
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
Adobe
Analytics
Adobe
Mobile Services
** Latest IR Top 500 Report 2015

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Adobe Digital Economy Project: News Overview
5
Digital Price Index
(DPI)
Digital Housing Index
(DHI)
Job Seeking Index
(JSI)

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Digital Price Index: Important Industry Trends
 eCommerce outpacing traditional retail sales growth
 13% online sales growth during the 2015 holiday season
 vs 3% sales growth for traditional retail
 Click and collect
 Groceries and other items traditionally bought offline are increasingly
purchased online and picked-up in-store
 Share of digital transactions rising faster than expected as a result
 Price matching
 Retailers match online prices in-store to remain competitive
 Makes it easier to use online prices as an indicator of offline inflation
6

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Digital Price Index: Methodology
7
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 4 billion website visits and 1.2 million online products sold between Jan 2015 and Feb 2016
CPI: Consumer Price Index Adobe: Digital Price Index
Quantities Sold No Yes
Products/quantities updated Every 3 years Daily
Number of Products 80 thousand (all categories) 1.2 million (electronics, groceries)
Data Collection Frequency Bi-Monthly Daily
Data Availability Monthly Daily
Offline Prices Yes No
Long history Yes No
All categories of spending Yes No
** Latest IR Top 500 Report 2015

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Electronics: Methodology
8
** Wikipedia
• The data used contains transactions for ~1 M
products between Feb 2015 and Feb 2016
• Products span across dozens of different categories
such as televisions, laptops, Blu-ray players,
desktops, tablets, wearables, headphones, video
games, printers etc.

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1 / Deflation of Electronics
9
• Prices for electronics decreased 10.4% between Jan
2015 and Jan 2016
• For Feb, prices decreased 0.6% vs Jan
• Main deflation in Feb happening in televisions,
computers, cameras & smart watches
• For Jan, prices were up 1.1% over the previous month
• Main inflation in Jan for video games, computers
and tablets
* No CPI category exists for comparison

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2 / Strong Deflation of Televisions
10
• Between Jan 2015 and Jan 2016, DPI shows cumulative
deflation of 19.4%
• For the same period, CPI* has reported
cumulative deflation of 14.3%
• For Feb, prices decreased 1.5% vs Jan
• Main price decreases in Feb are for LG & Vizio
televisions
• For Jan, prices up 0.7% over the previous month
• Main price increases in Jan were for Samsung
televisions
• For the same period, CPI* reported deflation of
0.7%
* CPI category Television used for comparison

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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
3 / The Importance of Black Friday Week
11

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4 / Prices of Computers on the Decline
12
• Between Jan 2015 and Jan 2016, DPI shows
cumulative deflation of 13.1%
• For the same period, CPI* reported cumulative
deflation of 7.1%
• For Feb, prices decreased 0.8% vs Jan
• Main deflation items are Lenovo, Dell & HP
computers
• For Jan, prices up 1.2% over the previous month
• Main inflation items were Apple & Asus
computers
• For the same period, CPI* reported deflation of -
1.2%
* CPI category Personal computers and peripheral equipment used for comparison

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5 / Tablet Prices Declining Significantly
13
• This is an important category not specifically covered
by the CPI because of their small product coverage,
which we can cover
• Prices for tablets decreased 21.1% between Jan 2015
and Jan 2016
• For Feb, prices decreased 2.4% vs Jan
• Main price decreases are for Microsoft & Apple
tablets
• For Jan, prices up 2.7% over the previous month
• Main price increases are for Apple tablets
* No CPI category exists for comparison

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DPI: Measuring Rapid-Shifting Consumer Preferences
14
• 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)

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Groceries: Methodology
15
** Wikipedia
• Our dataset covers an estimated 30-40% of all online grocery purchases. It contains
transactions for ~195k products (2015-2016) and is heavily comprised of groceries bought
online and picked-up in store
• The percent of shoppers buying groceries online is small, but growing by 35% YoY as of
February
• Generally, those buying groceries online come from affluent backgrounds
• 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
• Still, a significant portion of online grocery shopping is dedicated to meats, dairy, fruits &
vegetables – more than 50%
• When it comes to products where there’s little substitution possible and consumer choice is
minimal (like milk and eggs), the DPI tracks almost perfectly with the CPI. This is a good
indication that prices online match offline prices well

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6 / Inflation of Groceries
16
• Between Jan 2015 and Jan 2016, DPI shows cumulative
inflation of .67%
• For the same period, CPI* reported cumulative
deflation of .4%
• For Feb, prices increased 0.2% vs Jan
• High inflation in Feb for fruits & vegetables, bakery
products, coffee & meats
• For Jan, prices up 0.5% vs December
• High inflation in Jan for coffee, fruits & vegetables,
juices & bottled water
• For the same period, CPI* reported inflation of
.3%
* CPI category “food at home” used for comparison

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Job Seeking Index: Methodology
17
• Based on analysis of aggregated and anonymous
data from more than 1 bil visits to U.S.
employment-search websites and top employer
career pages from Feb 2015 through Feb 2016
• Adobe Marketing Cloud powers 20 of the top 30
U.S. employers**
** Wikipedia

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7 / Decline in Online Job Seeking
18
US online job seeking is down 10.3% YoY in Feb

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Digital Housing Index: Methodology
19
Based on analysis of aggregated and anonymous data
from more than 2 bil visits to U.S. housing search
websites between Feb 2015 and Feb 2015

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8 / Online Housing Search on the Rise
20
Online search for purchases and rentals up 20.5% YoY
in Feb

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Appendix
22

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Adobe Spokespeople
23
Mickey Mericle,
Vice President, Marketing
Insights & Operations
Tamara Gaffney,
Principal Analyst,
Adobe Digital Index
Tyler White,
Sr. Manager,
Digital Economy Project
Luiz Maykot,
Lead Analyst,
Digital Economy Project

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Digital Price Index: Category Descriptions & Sample Statistics
24
• Groceries: grains, meats, drinks (excludes Alcohol), dairy, candy etc. purchased for consumption at home. Does not include prices for food
purchased at restaurant establishments. Similar to CPI’s Food at Home.
• Electronics: televisions, blu-ray players, laptops, desktops, tablets, wearables, headphones, video games, printers etc. The BLS does not
release specific inflation information for this category.
• Computers: laptops & desktop computers; includes additional equipment such as computer parts, monitors, keyboards etc. Similar to CPI’s
Personal Computers and Peripheral Equipment
• Televisions: includes televisions and excludes additional equipment such as OTTs, blu-ray players etc. Similar to CPI’s Televisions.
• Tablets: tablets & additional equipment such as covers, keyboards etc. The BLS does not release specific inflation information for this
category.
Category Number of Products (Feb ‘15 – Feb ‘16)
Groceries 195 k
Electronics 1 M
Computers 63 k
Televisions 33 k
Tablets 13 k

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Digital Price Index: Fisher Ideal Price Index
25
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𝑛𝑛
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∗
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𝑛𝑛
𝑃𝑃𝑖𝑖𝑖𝑖−1 𝑈𝑈𝑖𝑖𝑖𝑖
• 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.
𝐹𝐹𝐹𝐹𝐹𝐹 𝐹𝐹𝐹𝐹𝐹 𝜋𝜋𝑡𝑡 =

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Methodology Comparison: Fisher, Laspeyres and Paasche
26

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Annual Cumulative Inflation Rates
27

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Electronics Deflation in Detail
28
• 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

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Job Seeking Online: Traffic Sources
29
• Direct traffic to employment-listing websites is
higher than search traffic
• Search ranks second