At the end of 2018, Adobe hit a major milestone in transitioning all 12 million of their core users from their perpetual product (Adobe Creative Suite) to their subscription cloud service (Adobe Creative Cloud). Adobe’s core audience comprises of mostly creative professionals, agencies, and small enterprises that create content. Between the US, Canada, and the UK, there are roughly 18 million creative professionals, and Adobe is the “de facto” creative tool that most professionals use. Adobe realized that having reached and penetrated 66% of their total addressable market, they needed to find ways to expand their value proposition (content creation) to new audiences. Moreover, to capture this sentiment of reaching new audiences, Adobe’s CEO, re-defined the “north star” for Creative Cloud; he stated,
Adobe has focused on three key strategic audiences: social media influencers, photo & video enthusiasts, and the next generation of creative professionals (students & job transitioners) to quickly deliver on this value proposition.
Simplifying Creativity for Social Media Influencers
In 2017, in the United States, approximately 17 million social media influencers generated over $6.8 billion of income by publishing content to social media platforms, which was a billion-dollar increase from 2016. Most of this income was generated across nine social media platforms.
Although a growing and lucrative industry, many influencers had several challenges to publishing content. Content creation tools were too complex for social media influencers editing needs. They also could not access and edit content away from the PC, and it was extremely time-consuming to publish content to each social media platform. Adobe acknowledged these roadblocks, but they really wanted to address the outcomes that social media influencers wanted to achieve. Influencers wanted to improve their confidence in content creation by achieving mastery and increase their reputation by producing high volume quality content. Therefore, to address these challenges and outcomes, Adobe introduced a new subscription product, Adobe Premiere Rush, priced at $9.99 per month. The thesis of Adobe Premiere Rush is to create a single destination for video creation that allows users to capture, edit and share professional-looking videos quickly to social media channels. Adobe, to simplify content editing, leveraged its artificial intelligence capabilities, Sensei, to create these features:
Adobe also wanted to improve access by extending value beyond the PC. With Apple being the #1 platform for creative professionals, Adobe Premier Rush was extended to iOS smartphones and tablets. This cross-device experience allowed users to access content via Adobe Cloud anywhere. To improve content velocity, Adobe integrated content publishing for each social media platform within the app.
The Adobe Premiere Rush app can “Russian Doll” into new distribution platforms (Android, which is in beta) as well as enterprise. Over 90% of companies reported using social media to generate awareness. This data point is further supported by +40K social media marketer roles on LinkedIn and Indeed. However, the largest opportunity for Adobe Premiere Rush is to provide the anchor to cross-sell opportunities for users to create a full end to end solution for content creation, marketing, analytics, and commerce. Social media influencers and marketers are now interested in analytics on content, tools to effectively reach and sustain a relationship with their audience, and ultimately creating a destination for customers to patronize them (commerce). This strategy would take influcencers from a $120 ARPU per year to +$1000
Photo Enthusiasts Seeking Aesthetic Perfection
Over 68% (168m) of US Adults edit photos before sharing it online. Instagram cultivated this user behavior by making it seamless to upload photos, but they also made it easy to beautify photos by providing “lite” editing functionality (filters, cropping, etc..). This change resulted in well over 40 billion photos being shared since Instagram’s inception. Adobe recognized this opportunity, and developed two free photo editing applications, Adobe Lightroom and Photoshop Express, giving users enhanced abilities to edit photos with richer filters, dynamic image cropping, simple collage creations, and photo cataloging. These features significantly improved photo quality; however, users still felt underserved in achieving their desired state of beauty. Users still clamored for aesthetic perfection in photos by wanting to improve the balance and form of images to achieve a heightened level of appreciation. To create aesthetic perfection, users wanted tools to remove facial blemishes, unwanted images, and improve the texture and angles of appealing backgrounds. Adobe Photoshop was the solution for these advance editing needs, but it was a PC based app, which made it cumbersome of having to transfer photos to a user’s PC. Besides, the advanced skill set needed to edit photos made the creation experience complex and time-consuming.
In 2018, Adobe released Adobe Photoshop CC, with an emphasis on liberating creativity and accelerating work. To ease the creation of aesthetically appealing images, Adobe focused on these features:
Much like Adobe Premier, they wanted to extend access beyond the PC. As a result, Adobe Photoshop CC for iPad will be released sometime in 2019.
By easing editing complexity and access, Adobe is hoping non-creative professionals, who enjoy photos, will choose its $9.99 photography subscription (includes: Adobe Photoshop, Lightroom, & 20 GB storage). However, Adobe sees this as the initial step on a user’s journey to explore and deepen his/her creativity within Adobe’s ecosystem. Users can further explore their creativity by participating in Adobe’s Behance (social network) to showcase their work and draw creative inspiration from their peers. Also, they can enrich their creativity by taking courses from Adobe’s Digital Learning Center. With new creative desires on the horizon, users want to transcend themselves into their optimal self by “iconizing” themselves via vector graphics and creating virtual avatars, two of the fastest growing creative trends. These creative ambitions would require an additional creative solution, Adobe Illustrator. Supported by the entire creative ecosystem, Adobe can upsell users to multiple creative solutions, while simultaneously extracting more revenue per user.
Adobe University for Next-Gen Creators
By 2030, it is projected that AI will eliminate 38% of jobs from the labor force. Highly structured jobs with minimal judgment and asocial (ex. record keeping) will give way to AI. The skills needed for the future will be judgment, analysis, care, leadership, communication, and creativity. With new creative verticals on the horizon (e.g., AR, VR, voice, commerce experiences, etc.), Adobe wants to position themselves as the leader for training the next generation of creative professionals. Although Adobe’s Sensei eases the use of creative tools, Adobe wanted to further democratize creativity by lowering the price point for students and job-transitioners to obtain training for creative roles.
As a result, in May 2018, Adobe announced a steep discount (95%) for their Creative Cloud licenses for K-12 at $4.99 per student (with a minimum 500 licenses required). With a creative solution, schools can integrate creative tools into the curriculum deeply, and students at an early age can explore and develop their creative aspirations. Universities also recognized the need for creative tools to be implemented into the curriculum. Kevin Watson, Auburn University’s IT Manager, stated, “It’s the standard creative tool (Adobe) in journalism, communications, marketing, and even business has a lot of footprint with it.” To fulfill this need, Adobe created the Creative Campus initiative which allowed universities to purchase university-wide subscriptions for its student body. Also, universities would receive an Adobe pop-up studio on campus to allow students to collaborate on Adobe applications. As of today, Adobe has Creative Campus initiatives with Auburn, USC, U of Miami, Cal-Berkley, Clemson and Penn State.
For those, whose jobs have been displaced, or individuals looking for continued development, Adobe has aggressively lowered the price of its Graphic Design Certification course from $1,200 to $39. This course includes over 300 lessons and 41 hours of training in Adobe Illustrator, InDesign, and Photoshop. Upon completing the course and receiving their certification, users can have immediate self-fulfillment by obtaining creative employment or participating in the gig economy.
By simplifying the use of creativity, improving access to tools, and preparing the users for future creative job opportunities (social good), Adobe is effectively creating its funnel for the next generation of Adobe Creative Cloud subscribers (sustainable revenue). These efforts have grown their total addressable market from 18m to 260m. The addressable user base not only grows by “14x,” but it also grows their revenue horizon from $2 Billion to $29 Billion.
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