In Adobe's mostly upbeat May quarter earnings report, which has its shares up about 4% in Wednesday trading, the company disclosed that its Digital Experience segment, which includes its marketing/advertising, e-commerce and customer analytics software offerings, saw revenue grow 34% annually to $784 million. Last year's acquisitions of marketing automation software firm Marketo and e-commerce software firm Magento helped, but Adobe indicated on its earnings call that organic growth for various marketing/advertising software products also improved.
Adobe forecasts its Digital Experience revenue will also grow 34% during its August quarter. Much like its bread-and-butter Digital Media business, the lion's share of Adobe's Digital Experience revenue now comes from software subscriptions; the segment's subscription revenue totaled $654 million last quarter.
Salesforce, for its part, reported two weeks ago that its Marketing and Commerce Cloud segment saw revenue rise 33% during the company's April quarter to $561 million. Though Salesforce did buy marketing analytics software firm Datorama for $800 million in July 2018, this growth appears to be mostly organic. Previously, the company spent $2.5 billion in 2013 to buy marketing automation software firm ExactTarget, and $2.8 billion in 2016 to buy e-commerce software firm Demandware.
Aiding both companies: Enterprise software spending has been healthy, and (as chief marketing officers see their IT budgets grow) marketing/advertising software spend has been growing faster than the enterprise software market at-large. The online ad market's continued growth has helped fuel greater investments in the space, as have efforts by businesses to take a more integrated approach towards engaging with current and potential customers across channels such as websites, apps, social media platforms and retail stores.
Share gains against major historical rivals such as Oracle (ORCL) and IBM (IBM) might also be helping Adobe and Salesforce out. While Oracle doesn't break out its marketing/advertising software revenue, Bloomberg reported earlier this year that Oracle's Data Cloud ad software business, which was pieced together via several acquisitions, had carried out layoffs and had been stung by Facebook's (FB) efforts (following the Cambridge Analytica scandal) to restrict the use of offline purchase data to deliver targeted ads.
IBM, meanwhile, recently struck a deal to sell its marketing and commerce software business to private Centerbridge Partners. Last October, Big Blue had mentioned that marketing and commerce software was one of the software fields in which it was facing "challenges and headwinds."
Adobe and Salesforce both still appear to be investing aggressively in further growing their marketing software sales. One area of interest for both as of late: Launching customer data platforms (CDPs) that provide an integrated view of the customer data a company has obtained about customers from various touchpoints and apps, with the goal of leveraging that data to engage more quickly and effectively with them.
On Tuesday, Salesforce, which estimates that its average client uses 15 "significant" data sources to understand their customers, unveiled a CDP that it claims will let companies "personalize every engagement based on a single view of the customer." Just a day earlier, Adobe rolled out a beta version of its CDP, which it unveiled in March. On Adobe's Tuesday earnings call, CEO Shantanu Narayen argued that the data provided by Adobe's popular content management offerings for marketers helps differentiate its CDP, as does the company's efforts to work with SAP (SAP) and Microsoft (MSFT) to ease data-sharing between each firm's apps.
AI/machine learning investments have also been an area of interest for each firm's marketing software businesses. Adobe has leveraged its Sensei AI platform to do things such as segment groups of potential customers into audiences, predict future customer actions and derive insights from how customers engage with websites and apps. Salesforce has used its Einstein AI platform to do things such as recommend when and how often to send e-mails, and to predict how customers will respond to marketing messages based on their past browsing and purchase activity.
Adobe's Digital Experience segment and Salesforce's Marketing and Commerce Cloud segments both get less media attention than other parts of their respective company's operations. But they've each become pretty important growth drivers.