Adobe Digital Economy Project Digital Dollar -- August 2017

2. © 2017 Adobe Systems Incorporated. All Rights Reserved. Adobe Confidential. Background  For several months, the Adobe Digital Economy Project’s Digital Price Index (DPI) has released two indexes of topline inflation numbers in the monthly update: an index of total inflation (containing all retail, travel, and grocery categories) and one index less groceries (all categories except groceries)  The topline figures are produced by using the spending habits of the average household as measured by the Bureau of Labor Statistics (BLS) Consumer Price Index (CPI). The BLS surveys households once a year and does not make a distinction between online and offline shopping  However, consumers buy different things in different quantities online than in their broader shopping experience. The new headline digital inflation number now reflects online inflation rates applied to the mix of products people purchase online. The DPI can now be used to calculate inflation for online purchases and compare that to inflation in the broader economy (as measured by the CPI) 2

3. © 2017 Adobe Systems Incorporated. All Rights Reserved. Adobe Confidential. Findings  Across categories measured by both the CPI and the DPI, deflation is occurring across several key consumer categories. As the DPI has consistently shown, deflation is occurring faster online than in the broader economy in many of these categories  This means that consumers shopping exclusively online for particular kinds of products are experiencing more deflation than their offline counterparts, which makes the relative value of spending online higher than in the larger marketplace. The online dollar tends to go farther over time due to deflation  Over the past two years, since July 2015, the purchasing power of the online dollar in retail has risen to $1.06, compared to $1.03 for a dollar spent in the same categories in the larger economy  That difference might seem small, but savings from prices declining online can make a difference over the course of a year or more. By taking advantage of declining online prices, savvy shoppers can save $275 (vs just $150 for offline shoppers) in June 2017 for a sample basket of the fastest-declining products (see slide 5)  Over the long run, this can really add up. If online shoppers in the U.S. took all of their spending in 2016 and moved it offline, they would lose out on approximately $2.2 billion in savings from online deflation a year later 3

4. © 2017 Adobe Systems Incorporated. All Rights Reserved. Adobe Confidential. Online deflation is faster than total spending for comparable categories, leading to savings online 4 $1.06 $1.03 $0.99 $1.00 $1.01 $1.02 $1.03 $1.04 $1.05 $1.06 Value of a Dollar (Retail), July 2015 - July 2017 Digital Dollar Offline Dollar Note: dollar values indexed to July 2015 (July 2015 = $1.00)

5. © 2017 Adobe Systems Incorporated. All Rights Reserved. Adobe Confidential. Digital dollars go further: savings on a sample basket online vs. general deflation 5 $0.00 $50.00 $100.00 $150.00 $200.00 $250.00 $300.00 Digital Savings Offline Savings Savings in June 2017 from Deflation vs June 2016 Apparel Furniture and Bedding Personal care products Sporting Goods Jewelry Televisions $273.67 $148.36 Category Spend Digital Deflation Year-over- year Offline inflation year-over- year Savings From Digital Deflation Savings From Offline Deflation Apparel $1,200 -4.1% -0.6% $49.06 $7.67 Furniture and Bedding $1,000 -4.3% -0.8% $43.20 $8.20 Personal care products $300 -0.9% -0.6% $2.68 $1.81 Sporting Goods $400 -5.6% -2.0% $22.35 $7.95 Jewelry $600 -4.1% 1.5% $24.41 $9.23 Televisions $1,000 -13.2% -11.4% $131.97 $113.52 Total $4,500 $273.67 $148.36 Note: the above sample spending basket reflects categories where online deflation was highest relative to spending in the broader economy. This basket is not exhaustive of categories in the DEP or Digital Dollar analysis or of online spending in general.

6. © 2017 Adobe Systems Incorporated. All Rights Reserved. Adobe Confidential. Methodology Notes  Adobe Digital Insights (ADI) developed online spending weights by analyzing data from Adobe Analytics as well as data from Forrester and eMarketer  Adobe Analytics data contains price estimates for shopping categories across approximately 70% of online spending in the U.S. Approximately 30% of online spending occurs in categories that the DPI doesn’t have pricing information for, so those categories are left out of the analysis  The categories included in the Digital Dollar analysis include apparel, appliances, auto parts, computers, furniture & bedding, groceries, jewelry, medical equipment and supplies, nonprescription drugs, personal care products, pet products, tools & home improvement, televisions, and toys  July data are used in the Digital Dollar analysis because July 2017 is the latest month for which data from the CPI are available  The relative value in the Digital Dollar analysis is calculated by dividing cumulative inflation by $1.00. Higher or faster levels of deflation lead to higher relative values, or purchasing power, of an indexed dollar  For the complete methodology on the Adobe Digital Economy Project, please reference our latest monthly update 6