Adobe's fourth monthly installment of the Digital Economy Project (DEP) covers key trends in pricing of online goods, housing, and job search. In terms of price data, the latest Digital Price Index (DPI) for May incorporates which price points within product categories are driving changes in prices.
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ADOBE DIGITAL ECONOMY PROJECT
MAY 2016
2. OVERVIEW
Adobe Digital Index background
Based on analysis ofaggregated and anonymous data from Adobe Marketing Cloud:
• Adobe Analytics and Adobe Mobile Services
Thousands ofbrands worldwide including two thirdsofFortune 50 companies rely on Adobe
Marketing Cloud:
• $7.50ofevery $10spent online with top 500 U.S.retailers go through Adobe Marketing Cloud **
• Adobe Marketing Cloud powers:
• 20 ofthe top 30 U.S.employers
• 9 of10largest hotel groups
• 7of10largest airlines
**LatestIR Top 500 Report 2015
Adobe
Analytics
Adobe
Mobile Services
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Digital Price Index
(DPI)
Job Seeking Index
(JSI)
Digital Housing Index
(DHI)
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Main takeaways: May
• Our Digital Price Index (DPI) shows strong signs of deflation in the goods and services we currently cover that are bought online
• Categories showing the most month-over-month deflation in May were tablets, televisions and appliances, with hotels and flights
showing month-over-month inflation mainly due to seasonality.
• The only covered category showing inflation in May is toys, with toys priced below $70 showing the most price increases
• In groceries, prices have decreased for three consecutive months
• For computers, we see that in May prices seem to have stabilized after two months of steep declines, with high-end computers
showing the least deflation
• Our Job Seeking Index showed signs that job seeking activity is increasing relative to recent months
• Our Digital Housing Index had the lowest YoY growth in the last 9 months
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Digital Price Index
(DPI)
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DIGITAL PRICE INDEX
Economist Advisors
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
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DIGITAL PRICE INDEX
Methodology
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 online products sold between May 2014 and May 2016
BLS: Consumer Price Index Adobe: Digital Price Index
Quantities Sold No Yes
Products/quantities updated Every 4 years Daily
Number of Products 83 thousand (all categories)
2.2 million
(currently covered categories)
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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DIGITAL PRICE INDEX
• 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)
Measuring rapidly shifting consumer preferences
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DIGITAL PRICE INDEX
• 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
The Importance of detail: Black Friday
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DIGITAL PRICE INDEX
Inflation rates by price bins
• Televisions have seem 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).
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DIGITAL PRICE INDEX
April 2016 Recap
MoM: April vs March MoM: April vs March Difference (percentage) Same Sign? YoY: Cumulative April 2015-2016 YoY: Cumulative April 2015-2016 Difference (percentage) Same Sign?
DPI CPI DPI vs. CPI DPI vs. CPI DPI CPI DPI vs. CPI DPI vs. CPI
Appliances -1.1% -0.3% -0.8% Yes -4.9% -3.7% -1.2% Yes
Computers -2.1% 0.0% -2.1% No -13.9% -7.7% -6.1% Yes
Domestic Hotels 1.6% -0.8% 2.4% No 2.8% -0.01% 2.8% No
Flights -0.9% 4.3% -5.2% No -4.6% 0.4% -4.9% No
Furniture -0.5% -0.2% -0.3% Yes -2.8% -2.6% -0.3% Yes
Grocery -0.2% 0.1% -0.3% No 0.5% -0.3% 0.8% No
Sporting Goods -0.7% 1.6% -2.3% No -5.5% -0.5% -5.0% Yes
Televisions -1.6% -1.8% 0.2% Yes -19.7% -16.1% -3.6% Yes
Toys -1.6% -0.4% -1.2% Yes -7.6% -8.1% 0.5% Yes
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DIGITAL PRICE INDEX
• Main deflation in May:
• Tablets, Televisions & Appliances
• Main inflation in May:
• Flights, Hotels & Toys
May 2016 Summary
YoY MoM
Appliances -4.5% -1.0%
Computers -12.7% -0.4%
Electronics -10.3% -1.4%
Flights -5.0% 4.1%
Flights: domestic -7.1% 4.1%
Flights: international -1.7% 3.1%
Furniture -3.4% -0.8%
Grocery 0.4% -0.2%
Hotels: domestic 2.6% 0.7%
Hotels: international -0.5% 0.7%
Sporting Goods -5.2% -0.4%
Tablets -21.5% -3.7%
Televisions -18.5% -2.0%
Toys -6.5% 0.4%
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• The data used contains transactions for~110K products between May 2014 and May 2016
• Products include large appliances such as fridges,ovens, washers, dryers as well as smaller appliances such as
vacuums, mixers, blenders etc.
Appliances
methodology
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DIGITAL PRICE INDEX
Appliances prices decreased 4.5% YoY, driven by big appliances
* CPI category “Appliances” used for comparison
• Between May 2015 and May 2016, DPI shows
cumulative deflation of 4.5% YoY
• For May, prices decreased 1% vs April MoM
• Main deflation items in May are for high-ticket
appliances (above $600)
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• The data used contains transactions for~1M products between May 2014and May 2016
• Products span across dozens ofdifferent categories such as televisions, laptops, Blu-ray players,desktops, tablets,
wearables, headphones, video games, printers etc.
Electronics
methodology
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DIGITAL PRICE INDEX
Cameras and smart watch prices decline in May
• Prices for electronics decreased 10.3% between May
2015 and May 2016 YoY
• For May, prices decreased 1.4% vs April MoM
• Main deflation in May happening in televisions,
tablets, cameras and smart watches
* No CPI category exists for comparison
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DIGITAL PRICE INDEX
Deflation for computers slows in May, driven by high-end market
• Between May 2015 and May 2016, DPI shows
cumulative deflation of 12.7% YoY
• For May, prices decreased 0.4% vs April MoM
• Main price decreases for computers priced
between $700 and $1,200
• Main price increases for high-end computers
(priced above $1,200)
* CPI category “Personal computers and peripheral equipment” used for comparison
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DIGITAL PRICE INDEX
High-end televisions drive price decreases in May
* CPI category “Television” used for comparison
• Between May 2015 and May 2016, DPI shows
cumulative deflation of 18.5% YoY
• For May, prices decreased 2% vs April MoM
• Main price decreases in high-end televisions
(above $2,000)
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DIGITAL PRICE INDEX
Tablets see large price decline in May
• Between May 2015 and May 2016, DPI shows
cumulative deflation of 21.5% YoY
• For May, prices decreased 3.7% vs April MoM
• Main decrease in May for tablets priced between
$350 and $550
• This is an important category not specifically broken
out in the CPI
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• The data used contains transactions for~370K flight routes between April 2015and May 2016
• Includesassociatedfees,whereapplicable
Flights
methodology
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DIGITAL PRICE INDEX
Flight prices down 5% YoY
• Between May 2015 and May 2016, DPI shows
cumulative deflation of 5% YoY
• For May, prices increased 4.1% vs April MoM
* CPI category “Airline fare” used for comparison
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DIGITAL PRICE INDEX
Domestic flight prices down 7.1% YoY
• Between May 2015 and May 2016, DPI shows
cumulative deflation of 7.1% YoY
• For May, prices increased 4.1% vs April MoM
• Main inflation states were Texas, California and
Florida
• Main deflation states were Washington, Georgia
and Hawaii
* No CPI category exists for comparison
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DIGITAL PRICE INDEX
International flight prices down 1.7% YoY
• Between May 2015 and May 2016, DPI shows
cumulative deflation of 1.7% YoY
• For May, prices increased 3.1% vs April MoM
• Main price increases in May were for North
American and European destinations
• Main price decreases in May were for Asia
* No CPI category exists for comparison
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• The data used contains transactions for~173K products between May 2014 and May 2016
• Products include interior and exterior furniture, mattresses and other bedding products
Furniture and bedding
methodology
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DIGITAL PRICE INDEX
Furniture and bedding prices decrease, especially for patio
* CPI category “Furniture and bedding” used for comparison
• Between May 2015 and May 2016, DPI shows
cumulative deflation of 3.4% YoY
• For May, prices decreased 0.8% vs April MoM
• Main deflation items in May are for Patio
Furniture
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• Our dataset covers an estimated 30-40% ofall online grocery purchases. Itcontains transactions for~195kproducts (2015-
2016)and is heavily comprised ofgroceries bought online and picked-up in store
• The percent ofshoppers buying groceries online is small, but growing by 35% YoY as of February
• The mix ofgrocery products bought online is not the same as offline – the top category foronline shopping is drinks
(nonalcoholic), while foroffline shopping itis meat
• Still, a significant portion of online grocery shopping is dedicated to meats, dairy, fruits and vegetables – more than 50%
• When itcomes 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
Groceries
methodology
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DIGITAL PRICE INDEX
Online Groceries prices down in May, driven by juices & drinks
• Between May 2015 and May 2016, DPI shows
cumulative inflation of 0.4% YoY
• For May, prices decreased 0.2% vs April MoM
• Main deflation in May for juices & nonalcoholic
drinks
* CPI category “Food at Home” used for comparison
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• The data used contains transactions for~250K hotel properties between April 2015and May 2016
• Includesassociatedfees,whereapplicable
Hotels
methodology
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DIGITAL PRICE INDEX
Domestic hotel prices increase by 2.6% YoY
* CPI category “Other lodging away from home including hotels and motels” used for comparison
• Between May 2015 and May 2016, DPI shows
cumulative inflation of 2.6% YoY
• For May, prices increased 0.7% vs April MoM
• Main price increases in California, Illinois and
Washington
• Main price decreases in Florida, Arizona &
Louisiana
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DIGITAL PRICE INDEX
International hotel prices increase 0.7% in May
• Between May 2015 and May 2016, DPI shows
cumulative deflation of 0.5% YoY
• For May, prices increased 0.7% vs April MoM
• Main price increases for hotels in North America
and ANZ
• Main price decreases in Asia and South America
* No CPI category exists for comparison
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• The data used contains transactions for~300 K products between May 2014and May 2016
• Products include small equipment and accessories (balls, gloves, uniforms) as well as large
equipment such as treadmills, weightlifting tools etc.
Sporting Goods
methodology
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DIGITAL PRICE INDEX
Sporting goods
• Between May 2015 and May 2016, DPI shows
cumulative deflation of 5.2% YoY
• For May, prices decreased 0.4% vs April MoM
• Main deflation in high-ticket sporting goods
(above $350)
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• The data used contains transactions for~249 K products between May 2014and May 2016
• Products include toys,games as well as playground equipment
Toys
methodology
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DIGITAL PRICE INDEX
Toys have inflation in May, driven by products below $70
* CPI category “Toys” used for comparison
• Between May 2015 and May 2016, DPI shows
cumulative deflation of 6.5% YoY
• For May, prices increased 0.4% vs April MoM
• Main price increases for May were for toys priced
below $70
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5
Job Seeking Index
(JSI)
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JOB SEEKING INDEX
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 from May 2015 through May 2016.
Adobe Marketing Cloud powers 20 of the top 30 U.S. employers**
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JOB SEEKING INDEX
Online Job Seeking declines
• US online job seeking is down 8.1% YoY in May
• Government reported May Unemployment Rate at
4.5% (down 15.1% YoY), due in large part to a
contraction in the labor force
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8
Digital Housing Index
(DHI)
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DIGITAL HOUSING INDEX
Methodology
Based on analysis of aggregated and anonymous data from more than 2 billion visits to U.S. housing search
websites between May 2015 and May 2016.
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DIGITAL HOUSING INDEX
Online housing search growth slows
• Online search for purchases and rentals up 14.8%
YoY in May
• NAR reports existing home sales increased 1.7%
YoY in April
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DIGITAL PRICE INDEX
Digital Price Index: Fisher Ideal Price Index
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𝑃𝑃𝑖𝑖𝑖𝑖 𝑈𝑈𝑖𝑖𝑖𝑖−1
∑𝑖𝑖=1
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𝑃𝑃𝑖𝑖𝑖𝑖−1 𝑈𝑈𝑖𝑖𝑖𝑖−1
∗
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𝑃𝑃𝑖𝑖𝑖𝑖 𝑈𝑈𝑖𝑖𝑖𝑖
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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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DIGITAL PRICE INDEX
Methodology Comparison: Fisher, Laspeyres and Paasche
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DIGITAL PRICE INDEX
Annual Cumulative Inflation Rates
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DIGITAL PRICE INDEX
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
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DIGITAL PRICE INDEX
Inflation Rates by Price Bins, May (MoM)
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DIGITAL PRICE INDEX
Inflation Rates by Price Bins, May (MoM) – Cont’d
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DIGITAL PRICE INDEX
Job Seeking Online: Traffic Sources
• Direct traffic to employment-listing websites is
higher than search traffic
• Search ranks second