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CNBC Transcript: Interview with Ann Lewnes, Executive Vice President and Chief Marketing Officer of Adobe.

Marketing.Media.Money profiles the chief marketing officers at some of the world's biggest brands, exploring their careers, their business challenges and how they are directing their significant advertising spend.

Following are excerpts from a CNBC interview with Julia Chatterley and Ann Lewnes, Executive Vice President and Chief Marketing Officer of Adobe.

JC: Thank you so much for joining us. I want to start by asking you what you want people to think when they see brand Adobe.

AL: Well I think most people have thought of us as the Photoshop company and the PDF company and that's our heritage, package software was where we kind of started. And over the past five or so years, we've really evolved our business and so we're almost at the end of our transformation, I would say. We took our creative software business and we evolved it into a cloud subscription business, so we're charging monthly now, which sounds as if it's not a big change, but massive kind of business model change. Then we're doing that to the Acrobat document cloud business as well, and then we also started into an adjacent business marketing automation technology, and all of this actually didn't sound like it made sense together but there was a strategy behind all this and the goal is to integrate all these things, so that when you are making content, you can manage that content, you can measure the effectiveness of the content and so the idea now is that we're really about customer experiences and digital experiences in particular, but you know it's often challenging to expand the perception of your brand so that's what we're working on right now.

JC: Do you think there's a mismatch, do you think when people think of Adobe they actually think of everything that you just mentioned there or actually they still go, yeah PDF Photoshop company?

AL: I think some people think more expansively about us and some people probably have not yet gotten there. I think everybody thinks that we have permission to move into those kind of adjacent areas, and so it makes sense to them when we explain it, but I think we're still working on it.

JC: You've obviously gone from a period where you were allowing customers to take content to make a product. You're now, as you said, looking at this marketing function as well and selling to marketers. How does your previous experience in that, kind of help with the focus that you have now?

AL: Content has always been the core of what marketing is about, so the people who are using our products, whether they were graphic designers or advertising professionals, they were really doing marketing and so what they weren't doing is they weren't able to really gauge the efficacy of what they were doing. So now, when you marry those two things, think of an ad agency, the creative director and the media people, and you put them together, you have hopefully a lot more impact because the creative people now can see how impactful their work is and the media people can help the creative people and tell them what you know is going to be working for them, so it's a very natural, I think, marriage.

JC: We'll come back to quantifying the impact of marketing, which I think is a critical element and something that we've seen shift, but for now you're in this unique position where you're actually marketing to marketers in an ecosystem that's changing at an incredibly rapid pace. For those individuals, for those marketers, what do you think the key challenges are today?

AL: Well it's a huge change. I mean it's a sea change in marketing but there's never been a better time to be in marketing, because marketing was always kind of the, the group of people who nobody really understood, you know, the impact of what they were doing. I was in Japan a couple of weeks ago talking to a chief marketing officer and he said in Japan they still think of us as the flower arrangers. And you know I think that's what a lot of people thought about marketing, and for the first time now, because of all this marketing technology, we have demonstrable evidence of what the impact of what we do. We have quantitative data that can show the results, and I think that's given us a seat at the table. We drive the business now in many cases and that's really, I think, brought up a lot of the reputation of marketers.

JC: If you look around, who do you see doing a great job, at this? Who's using this kind of technology and using the flexibility I guess that that provides to go, you know what this is wrong, we need to mix it up, we need to change it. Who do you see as a shining example of using the right marketing tools and skills today?

AL: I think there are certain categories that have been early adopters of digital marketing technology. I would say financial services very early on, travel and entertainment categories, media, retail, some of them, and now I would say automotive companies are really coming on strong. So there are bunch of categories that started early and there are a bunch of categories that are kind of a little lagging, like packaged goods. And I think you know folks who are really intent upon doing brand marketing and brand advertising, I think have been a little slower to adopt because they're not sure that digital is really going to be able to deliver that brand impact and I would say that's nonsense, because you know you can do very effective brand marketing online.

JC: So this is one of the challenges of your business because you are selling to marketers, so they're savvy in some ways, but at the same time when you're talking about digital and their understanding of technology I guess, there are limitations and perhaps they're not willing to recognize those limitations.

AL: I have been surprised by how much as a profession we have lagged, quite frankly, from a technology standpoint and I think we've been very slow to adopt technology. So I, you know, I implore my colleagues, I'm always telling them, you guys this is what is going to change kind of your entire trajectory in your profession, because for the first time you will really have credibility and you will really be able to be at the same level as a lot of the other kind of core functions within the company, so I think every single marketer should be moving as quickly, accelerating as quickly as they can to digital.

JC: By far the vast proportion of your budget goes on digital. What does that focus give you?

AL: Yeah so about 75 percent of our marketing dollars go to digital and that's everything from our website, to all the media that we use. What it gives us is a lot of ability to look into and get under the covers of what the actual impact is. So you know early on we said we're going to spend 75 percent of our money on digital and everybody was like these people are mad. But now I think we were you know we were a little early but I think now we were all the wiser because we really understand what's going on.

JC: Talk to me about Livefyre because this is basically a company that searches for that content that's related to your brands and helps you get it out there.

AL: Yeah it's a perfect company for Adobe to acquire. They really focus on user generated content, that's where the world is going. Everybody is a creator now, people are posting things left and right, and if you want to be able to share that and use that content you need a mechanism to do that so. This is a perfect acquisition for us.

JC: You said it was standalone company but that still means that current customers of them, could be competitors. That can't continue for the long run, can it, you're going to do something about that?

AL: I think the world is currently in a state where companies who partner together might also be competitors and I think especially in the technology field there's a lot of co-opetition. And I don't think that's going to go away.

JC: What is your investment strategy when you look at possible future acquisitions? When you're looking at growing out the brand?

AL: Well our goal is again to really help people build these digital experiences so wherever there is an opportunity, you know, to fill a gap - Livefyre is a good example, so we didn't have something that was really focused on user generated content, fits in nicely with the rest of our platform. I mean there are areas that we're always exploring and you know opportunistic things happen as well so stay tuned.

JC: OK so we're joined by Charlie Crowe our guest contributor, the CEO of C-Squared. Charlie, Vulnerabilities. What does the brand lack?

CC: Oh goodness me. Relevance to influencers? How does Adobe bring its brand into the every day bloggers and vloggers that are becoming so powerful and also linked back to some of your clients and with brands who are all trying to do deals with these new young kids who have got amazing social following, so how are you working in that space?

AL: Yeah well we are, we have a huge education business that's always been one of our key verticals and getting into schools has always been really important to us. We always had a very large presence in universities and now were going and focusing more on K through 12 and again every kid you know, every kid in Silicon Valley where we live takes a Photoshop class, takes a web design class and that's becoming table stakes now to move up into secondary education. So we think we have a big opportunity there. We also do a lot on the corporate responsibility side so we have been going into under-served communities helping kids who might not have ready access to software and letting them express themselves through our software, so we take the education of the students segment really seriously.

JC: Charlie, you talked about video in the fact that 80 percent of Internet traffic is going to be driven by video.

CC: Yeah, related to video in some way.

JC: I love that stat. Talk to me about video and your focus there.

AL: Video is my most exciting area.

JC: See your eyes light up!

AL: I do, I love video because it works, it's unbelievable. So, video stats in advertising are exploding. Short form, long form video across the board has really exploded and it's very, very high in terms of its impact. And I think the other great thing about video is it's one of the key formats that works on a phone. And you see kids, you know, watching full length features on phones. That's one of the only advertising formats that I've seen to be successful so I think everybody should be investing heavily in video.

CC: The definition of a view of video right now as we all know is two seconds of view time for just over half of the video itself. Which to many people, certainly many brands is not really sufficient to qualify what a true view might be. What's your view on that?

AL: So we look at video completions, that's how we measure the success of something. And back from my television advertising days, you had to watch the first 10 seconds of a 30 second advertisement in order to really get counted has a view, and now we look at the full 30 seconds or 60 seconds of a video completion. So we have a campaign that we've been running about, targeted at marketers. We have over 250 million video completes and that's the stat that we use. A lot more people have a video start but we look at video completes.

CC: And you just value the completes.

JC: You have your own verification process, more broadly, whether it's video, whether its clicks on the website. Do you think it's necessary to have an industry body be an outside arbiter of what that engagement is if you're looking, in your cases, at the completions on the video, are you more stringent than perhaps an outside body would be?

AL: I think you need both. I think you need to be, you know, to establish where your own indicators are for success. But I also think having some industry body that's neutral coming up with some standards is really going to help get a lot of companies that might be resistant to moving money to digital to do that. If you look at Nielsen, you know, they may not have the perfect metrics but it's a standard and people feel comfortable investing. Despite kind of the old model that they have, I mean digital is so much more quantitative. However people aren't used to the metrics and so I think we do need some industry standards as well as having our own standards.

CC: Yeah I think Ann's absolutely right and I think one of the big issues with the movement of money to digital right now is not just the issue of your ability and the issue of ad fraud and those issues which you may come on to. It's the standards. I mean what should the dwell time be for a video on a mobile phone. Should it be 10 seconds, 20 seconds? What does 'good' look like? When you analyze your marketing capabilities and that of your customers on the platform, do you have a sense of what that should be? Those sorts of metrics?

AL: Yeah so I mean I don't have a perfect answer. I think that the standards that we need have to be very simple. You know, when you look at the old standards for television or for print advertising, they're pretty simple standards. And so I think we have to, you know, create a set of standards that are very easy for people to implement. You know whether it's on mobile phones, whether it's on tablets, they'll be different standards right because people have different usages when they're on a desktop PC versus when they're looking at something on a phone, so they'll have to be adaptable by a device. But you know there are bodies that are looking at this, I think we could use this pretty quickly.

JC: You were talking about shaping the business, whether it's targeting marketers, whether it's shifting, simplifying the business and going for individual consumers. How important is e-commerce for you and what you are doing online?

AL: Yeah e-commerce is very important for us because the transaction is one of the most important parts of any enterprise's usage of digital. So we have been working with all the major e-commerce companies from the beginning of moving into this area and we have a content management system that hooks right into e-commerce capabilities so it's critical for us.

CC: I think we call this, for those who don't know the jargon in media, we call this attribution really, which is trying to attribute the digital ad back, or pin it back to an actual transaction online. If that's a customer acquisition or indeed selling some stuff. So attribution is a very exciting new area of advertising both online and obviously off line. It's the magic bullet isn't it? How is your attribution product fairing and do you see that as being an increasingly important part of the portfolio that you have?

AL: Yeah attribution is everything. So what we are doing is looking at the entire journey that a customer comes through because in the early days you were just looking at last touch attribution and all of the last touch attribution would perhaps come from search. When you look at the entire journey you see social playing a critical part - word of mouth and kind of social, early on in the journey is absolutely important. Then you might, depending on the type of business that you're in for enterprise, it could be public relations, it could be analyst relations. But being able to actually look back and see what the attribution model is, that's huge.

CC: Yeah, and again to explain, attribution used to be the last click, you'd analyse the last click that was made before the transaction point. What Ann is saying is that we're getting more sophisticated in the industry now, going backwards from the last click and actually revealing that the last click may not well have been the main point of the influence where the ad was seen. I think you rightly say it depends on the industry, the particular brand at the time.

JC: How much personalization is too far? Because from my experience, you know, I can look at a product, generally shoes, I look at them online I'll make a decision actually I'm not going to buy them. And then wherever I go those shoes pop up again where I'm like actually I made a conscious decision not to buy those shoes, and now you're hounding me. So it gets to a point where actually the marketing is painful. How do you stop that? How do you calibrate that?

AL: Yeah that's plain bad marketing and it's actually very challenging not to do that. That's called retargeting when we've identified you as being interested in something and then we you know basically torment you until you purchase it or forever hate us. And so the goal is again to be able to get you back to look again. We have rules and guidelines at Adobe for instance - we will only touch you three times after that if you don't come back. Same for e-mail and you know there has to be some governance or else the consumer is really not going to appreciate your brand and they're not going to buy anything from you.

JC: But we are in a transitional phase, we're in a testing phase so...?

CC: We're in a very delicate phase I think because we're testing things but we run the risk of alienating consumers you've said and those consumers may not forgive the brands. So we could end up destroying through the view ability issues and the retargeting issues, the whole digital marketing ecosystem and of course no one really wants that, I doubt whether consumers want it either. Where do we find the leadership in the industry to give us the barriers and the permissions to try and make sense of all this?

AL: Well restraint is critical. And it's hard to restrain yourself because you have these new tools, you have the ability to get data on everything that you do and so you're all excited and potentially you overdo it. So when we were doing television advertising there were rules. There were a number of GRPs that you looked at for a given 30 second commercial and that's kind of what you spent against. Three times you know, that was what the goal was and I think we need to establish those kinds of…

JC: It will come, it's just a case of time. What about mobile as well because this is also a change, you walk past a shop and then that targets you as well, which I have to admit, I find a bit creepy.

AL: Yeah it can be creepy but again, if it's something, if you are a you know a Starbucks customer and they know you like Frappuccinos and it's a hot day and you're walking by a Starbucks and they give you a coupon you might not hate it as much. So I think again it depends on the circumstance and it depends on the product. There are some things that are probably not appropriate to be targeting you at when you're walking down the street. But in terms of mobile I think, I think video is a killer kind of format for advertising on mobile devices. I also think the key job of the marketer is to develop great applications because once you download a mobile application you have a captive, you have a captive customer it's basically advertising on a continual basis. Think of the apps that you use every day that are engaging to you whether it's your bank application, whether it's your coffee application.

JC: Charlie, any last thoughts?

CC: I think privacy is an interesting issue to sort of debate at the end. Some markets we have cookie consent, some markets it's implied, some markets it's explicit, like France. Privacy gets consumers very perplexed and anxious. You're right in the heart of this debate. I think fifty-one trillion consumer data processes you did last year or something ridiculous. So you know a lot about people. But how much do you think should we know about people and what's your take on where the levels of privacy should be.

AL: Yeah well the data that we collect is all anonymous data so we don't know anything about individuals, we look at it in aggregate and we look at it on behalf of our customers. We take privacy super seriously because we're you know, purveyors of data. And I think the key thing is to be very transparent about what you are doing with people's data and to always offer them an opportunity to opt out because you know it's up to the consumer what they want to hear from you.

CC: Could you ever foresee a future where consumers, maybe my children, might actually be willing to part with more of their personal data in a transaction literally, put it up for auction if you like in order to you know, control the amount of advertising that they receive from brands, I mean could you have a sliding scale maybe it could be an Adobe platform. Can you see a future where we we're more conscious of our privacy and understand that it is a valuable asset that brands want to have?

AL: Well I mean if you look at what people post on social media, I think you see some of the most extraordinary lack of privacy and maybe people feel kind of guilty after they do it but I think we're living in a world where people are being incredibly open and transparent. And so I can absolutely foresee you know a time when people are trading information in order to get goods.

JC: They might not even need to be paid to give it, is kind of what I think she is saying… (laughs).

AL: Exactly. I just read an article about consumers who are using toothpaste for instance, they're doing selfies or doing small videos and then they get paid for that by the company and they're willingly doing this. So I think it's already happening.

CC: It's a new era.

JC: We'll wrap up. Final comment. Marketing.Media.Money, what's your message to those in the marketing industry out there and how they need to get involved and get engaged?

AL: You need to create a great experience for your customers across every possible area that you have, whether it's your website, your mobile application, your in-store experience. You need to learn about your customers, you need to not be afraid of digital, digital is your friend, it's a gift to marketing, it's what's put us on the map.

JC: Great. Thank you so much.

AL: Thank you very much.


Contact:

Sarah Whiteacre

CNBC

+44 (0) 20 3618 7121

Sarah.Whiteacre@cnbc.com


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